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, which resulted 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.

Its average market capitalisation in 2022 was €1,645,669,576.

1992

• ●The Group adopted an international growth policy, acquiring various credit insurance companies and establishing new subsidiaries or branches. It started with the acquisition of an equity interest in La Viscontea, an Italian surety bond insurance and credit insurance company.
• ●This international growth policy was also based on the creation of the CreditAlliance network, in order to enter into various strategic partnerships, especially in emerging countries (located in Latin America, Asia and Africa).

1993

The Group acquired a stake in London Bridge Finance, a UK financial company providing credit insurance services. The Company’s local branch, Coface LBF, has since taken over this business.

1996

The Group acquires an initial stake (later fully acquired by Coface) in Allgemeine Kredit, a German company providing domestic and export credit insurance solutions.

1997

The Group acquires an initial stake (later fully acquired by Coface) in Österreichische Kreditversicherung, the leading Austrian credit insurer.

2002

The Group took an equity interest in the portfolio of Continental in the United States.

2014

As part of its sales development, Coface reorganised its international network of partners, CreditAlliance, and renamed it Coface Partner, to draw on the strength of networks of larger scale than the Group’s own commercial network.

2019

With the aim of achieving growth in new high-potential markets, Coface finalised the acquisition of PKZ, the leading provider of credit insurance in Slovenia, and created the Coface entity in Greece. In this way, Coface extended its business and strengthened its presence in key geographic regions For Trade.

2020

With the acquisition of GIEK Kredittforsikring AS, Coface strengthened its position in the Nordic market. This will increase services available to Norwegian exporters, allowing them to contribute more to the country’s economic development.

2023

The Group acquires Rel8ed, a North American data analytics boutique. The acquisition brings new, rich data sets and analytics capabilities.

2002

Until 2010, the Group was positioned as a multi-service player specialised in trade receivables management for companies.

2011-2013

In 2011, as part of the refocusing of its activities on its core business – credit insurance – the Group launched the Strong Commitment strategic plan and took around 80 far-reaching measures to clarify and optimise its business model around credit insurance. The implementation of this plan addressed three essential concerns:

• focusing on the fundamentals of credit insurance, its core business;
• establishing the conditions for sustainable and profitable growth; and
• implementing structured, flexible governance focused on innovation.

2015

• ●On July 29, 2015, the French State announced its decision to transfer the State guarantees management activity carried out by Coface to the Bpifrance group, and that it had reached an agreement with Compagnie française d’assurance pour le commerce extérieur on the financial terms of such transfer. The management of State export guarantees was a services business that Coface carried out on behalf of the French State.

• ●The amended French Finance Act of December 29, 2015 (No. 2015-1786) provided for the transfer of this activity no later than December 31, 2016. The December 29, 2016 Finance Act (No. 2016-1917, Articles 47 and 127) set the effective date of the transfer at January 1, 2017.

2016-2019

In the first half of 2016, the Group was faced with declining profitability. To respond to this volatile environment, Coface’s management developed a three-year strategic plan, Fit to Win, with two ambitions:

• to become the most agile international credit insurer in the sector, and
• to move its business model towards greater capital efficiency.

The strategic plan was completed successfully in 2019. Coface exceeded all the objectives set in the Fit to Win plan. The decline in the combined ratio to 77.7% for the 2019 financial year (better than the target of 83% through the cycle) was a perfect illustration of this.

In three years, turnover increased by 9% at constant FX and perimeter, to reach €1,481 million in 2019. Net income amounted to €146.7 million, with an annualised return on average tangible equity (RoATE) of 8.9% (9.1% excluding non-recurring items).

Coface improved its capital efficiency, obtaining approval of its partial internal model by the regulator, the ACPR.

In three years, €48 million in savings were achieved, surpassing the objective set in the strategic plan.

2020-2023

In 2020, Coface began a decisive step in its development by launching a new four-year strategic plan, “Build to Lead”.

Built on two pillars, it plans to strengthen the Group’s leadership in the credit insurance market by standing out with its expertise in risk and information services, while simplifying its operating model. The plan also aims to seize growth opportunities by developing adjacent activities that complement Coface’s long-standing credit insurance business, for example information services, surety bonds, Single Risk coverage and factoring.

Despite a highly volatile economic environment during 2020, 2021 and 2022, the Group continued to implement this strategic plan, investing in operational efficiency, service quality, technological resources and sales efficiency. These investments are bearing fruit as evidenced by the resilience of its core credit insurance business and growth in adjacent businesses such as information services and factoring.

Although Coface’s turnover declined slightly in 2020, the year of the global crisis caused by Covid-19, it achieved an excellent operating performance in 2021 and 2022. Throughout the period, and in challenging circumstances with a downturn followed by a sharp recovery in economic activity and the emergence of new risks (inflation, rising interest rates, international conflicts, etc.), Coface’s teams worked hard to continue supporting their clients and help them navigate this uncertain environment.

Coface’s commitment to supporting the economy is reflected in a significant increase in commitments (€666.9 billion at the end of 2022 versus €537.2 billion at end-2019) and the relevance of its services, which is illustrated in particular by a record level of customer retention (92.9 at end-2022).

The purpose of credit insurance is to protect a company against default on the 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 €8 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 €1.8 billion of premiums. In 2022, the Single Risk business accounted for approximately 1.4% of the Group’s consolidated turnover.

The Group believes that the credit insurance sector has significant growth potential. The credit insurance penetration rate in the total volume of trade receivables worldwide remains very low, estimated at between 5% and 7%, which means that there is a genuine opportunity for conquering new markets. However, 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 (1). In 2020, however, the market contracted by more than 5% due to the economic crisis caused by Covid-19, which has given way to a strong recovery since 2021, strengthened by the effects of inflation in 2022.

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 global credit insurance market comprises three types of participants: global insurers, national or regional players and niche players.

There are three global insurers: Coface, Allianz Trade (formerly Euler-Hermes, a Belgian subsidiary of the Allianz group, which is listed on the Frankfurt stock exchange) and Atradius (a Dutch company belonging to Grupo Catalana Occidente, which is listed on the Madrid Stock Exchange). In 2021, these three insurers accounted for around 61% of the global market (2).

The other participants are national or regional players and some of them are derived from or are still public export insurance agencies. These include Sinosure (China), the largest by size, followed by Nexi (Japan), K-Sure (South Korea), EDC (Canada) and Cesce (Spain). There are also private local players, such as the German R+V.

Lastly, a growing number of participants tackle credit insurance with a niche strategy. This strategy allows them to partly bypass the high cost of establishing and maintaining a global debtor information database. These players generally delegate more broadly the selection of risks to policyholders that can demonstrate effective risk management; the insurer provides its financial strength to absorb shocks that exceed a significant deductible. Among the players in this segment, AIG (United States) is the largest in terms of credit insurance earned premiums.

The Group’s activities are mainly focused on credit insurance, which represented 89.8% of turnover in 2022. 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 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 its information offering to develop new markets. The new ICON sales portal has been launched and the activity has entered the acceleration phase, in line with the Group’s strategic plan.

The Group generates its consolidated turnover of €1,812 million from approximately 100,000 (1) clients. Average annual income per client is less than €30,000 and is generated in very diversified business sectors and geographic regions.

The Group considers that it is not dependent on any individual policyholders. For the financial year ended December 31, 2022, the largest policyholder accounted for less than 1.2% of its consolidated turnover.

The following table shows the contribution of these activities to the Group’s consolidated turnover at December 31 for the 2020-2022 period:

For the financial year ended December 31, 2022, credit insurance products and related services generated turnover of €1,627 million, accounting for 89.8% of the Group’s consolidated turnover.

The following table shows the contribution of this business line to the Group’s consolidated turnover during the 2020-2022 period (in thousands of euros and as a percentage of the Group’s total).

Credit insurance allows a creditor (the seller/supplier), with a term commercial debt held on its debtor (the buyer/client), to ask an insurer to cover the risk of non-payment of the trade receivable, in exchange for payment of a premium. It is one of the key hedging instruments for the trade receivables of companies that grant payment terms to their clients.

The following diagram illustrates the credit insurance mechanism.

The service proposed by the Group to its policyholders entails much more than compensating the losses they sustain; it also includes preventing claims and providing assistance in developing a profitable and solvent clientele.

Preventing the risk of non-payment through credit insurance solutions requires collecting relevant, reliable and up-to-date information about debtors and their economic environment. Information held by the Group on debtor solvency is the basis for its credit insurance offerings. This information is used when making decisions on the coverage granted by its underwriters on a daily basis.

The Group grants complete or partial coverage, generally covering a portfolio of debtors (or a stream of business) of a given policyholder, as opposed to underwriting one insurance policy to cover a single debtor risk. Credit insurance policies are generally entered into for a period of one year with automatic renewal.

Within the context of these policies, the Group authorises each new debtor that is presented by the policyholder, and through the credit limit granted, establishes the maximum amount of risks it is prepared to accept for this debtor. It may reduce or cancel its credit insurance coverage at any time, sometimes subject to prior notice, for the future deliveries of goods or services by the policyholder to the debtor concerned, in order to reduce payment default risk. This reduction or cancellation allows the policyholder to be warned of if the Group’s concerns with regard to that debtor’s soundness increase.

In certain offers, the Group may give its policyholders some autonomy, depending on their expertise, in setting credit limits for outstanding receivables up to an amount provided for in their credit insurance policy.

In the event that a receivable is not paid by the debtor, the Group handles the recovery of unpaid receivables to limit the loss and release the policyholder from managing this dispute phase. As such, the policyholder preserves its commercial relations with its debtor as much as possible. The Group conducts negotiations and, if necessary, legal proceedings, to recover the amounts due.

By using credit insurance, companies secure their margins by insuring themselves against the financial impacts of an unpaid receivable, while benefiting from information tools regarding the solvency of their debtors and the collection of unpaid receivables. They also benefit from regular exchanges with the Group’s sector and country specialists.

Present directly through subsidiaries or branches and covering a geographical area that accounts for nearly 97% of the world’s gross domestic product, the Group relies on its international network of local partners. Coface sells its credit insurance solutions and adjacent services in 100 countries, giving it critical mass and a geographical footprint spanning all continents. It is one of three global players in the credit insurance market.

The Group has refocused and enhanced its range of solutions to adapt to the specific needs of identified market segments: SMEs, mid-market companies, large international corporations, financial institutions, clients of distribution partners.

The Group offers numerous credit insurance solutions which are harmonised at a global level; the main ones are described below.

The pricing of credit insurance is generally reflected in the premiums. Related services are generally subject to specific pricing depending on policyholders’ actual consumption of each service (number of clients monitored, number of debt collection files).

The Group considers the fair compensation of risk as an important issue. Accordingly, it has developed a pricing methodology within a proprietary computer tool (PEPS – past and expected profitability system) and associated commercial governance. The Group considers that it has a benchmark pricing methodology, including, for example, a risk-based analysis and cost-of-capital approach directly linked to the portfolio of insured risks and the capital allocated. Furthermore, adjustments and improvements are made routinely to ensure that the pricing methodology contributes to controlled and relevant underwriting in the various markets.

A separate methodology applied by a small team of experts is used for medium term Single Risk coverage, for which the default probabilities series are more limited.

The Group’s business essentially consists of the sale of insurance coverage or services relying on the acquisition and management of relevant, reliable and up-to-date information on debtors and their environment. The Group runs a network of 53 centres dedicated to collecting, processing and analysing financial and solvency information on all of the Group’s debtor risks worldwide.

Information is key to every stage of the Group’s risk monitoring process and is compiled within its ATLAS database (2). It is first collected, specifically from some 100 information providers, for initial administrative processing. It is then analysed by the team of 340 credit analysts for the purpose of evaluating debtors according to the debtor risk assessment (DRA) scale, which is used by the entire Group. The risk underwriters use the DRA to decide on the amount of risk to be underwritten for each policyholder. This analysis is also based on various tools and methods, including several decision-making engines, conventional invoicing tools and algorithms such as artificial intelligence.

Lastly, this information, which is collected, enhanced, analysed and used by the Group, is updated regularly to allow tracking of debtor risks. Moreover, all of the Group’s businesses rely on EASY, its debtor identification database, which facilitates communication between the Group and its partners and clients (3).

The following diagram illustrates the central place of information for the Group’s activities:

The collection, use and preservation of reliable, updated and secure information constitutes a major issue for the Group, in order to:

• ●guide its pricing policy and enhance the quality of its credit insurance offerings;
• ●obtain, specifically at the local level due to its close proximity to the risk, microeconomic information on debtors and their economic environment, to support underwriting decisions under its risk management policy, while offering its policyholders a debtor risk-tracking solution;
• ●facilitate its receivables management and debt collection activity.

This policy also allows the Group to obtain macroeconomic information, which is analysed by the Economic Research Department’s teams. These teams are distributed between head office and the Group’s various regions, to ensure local coverage. They conduct studies internally for the Group’s businesses, and externally for policyholders and the public (journalists, academics, prospective clients, banks, brokers, partners and so on). External production essentially takes the form of “panoramas” (country and sector risks, corporate defaults), which are published on its website (www.coface.com). Their purpose is to help businesses assess and prevent risks, and to make their decisions using the most relevant and recent information.

The following diagram illustrates the network of information on the Group’s businesses:

Under the previous strategic plan, Fit to Win, the Group allocated substantial investments to business information in order to improve risk management by both enhancing its local presence and adopting new technologies (artificial intelligence).

The Group has established a harmonised process for all of its risk underwriters in 45 countries to strengthen and support the management of risks attached to its various businesses. The risk underwriting decision is, by default, made by the risk underwriter of the debtor’s country, who is best placed to know the local economic environment. Where applicable, a second risk underwriter is able to adjust this initial decision upward or downward, because they are best qualified to determine the policyholder’s business or strategic position. This organisation allows for proximity with both the debtor and policyholder, including for major export transactions. In all, approximately 10,000 risk underwriting decisions are made each day.

Risk underwriting decisions relating to Single Risk coverage are made by a dedicated team within the Group’s Risk Underwriting Department.

To make their decisions, risk underwriters rely on the information collected, which is then subject to a summary internal analysis by the DRA (debtor risk assessment), the drafting and updating of which are carried out in line with debtor quality and the Group’s commitments. They also use the weighted assessment of portfolio (WAP), a concise indicator that measures a policyholder’s average debtor portfolio quality. Lastly, Coface has implemented detailed management of its risks, through 38 sectors and five different country risk levels (forming a matrix of 150 risk categories).

Risk underwriters:

• ●work in real time and as a network, thanks to the ATLAS risk centralisation system, a risk underwriting and management IT tool used by all Group entities (4);
• ●have no sales objective for the Group’s products and services, and their compensation is in no way linked to their commercial impact. This is to ensure an impartial application of the Group’s policies in terms of risk management;
• ●have underwriting authorities of up to €10 million according to their expertise, seniority and skills. For coverage beyond €10 million, they are required to abide by a double-signature procedure for decisions up to €40 million at the regional level. Decisions relating to coverage greater than €40 million and particularly sensitive cases are validated by the Group Risk Underwriting Department.

The new generation of risk underwriting decision-making engines used since 2019 has increased the instant response rate to 66%. This increase in the proportion of coverage resulting from decision-making engines allows underwriters to:

• ●free up more time for complex decisions,

• ●manage the risk portfolio,
• ●manage disruption in business cycles, such as the 2008-2009 crisis or the Covid-19 pandemic in 2020.

Commercial underwriting involves determining pricing components (premium, bonus and penalty rates), technical parameters (maximum credit term, cash outflow limits) and the appropriate clauses to match a policyholder’s needs and risk profile. Commercial underwriting focuses on the contract, whilst risk underwriting deals with coverage of the buyers of the entity to be insured. The scope of coverage depends on the clauses applied. The two activities are therefore complementary. For this reason, the Group has a Commercial Underwriting Department that oversees commercial underwriting, risk underwriting, claims & collections and recovery.

Commercial underwriting is conducted at all levels of the Group (countries, regions and head office) in close collaboration with the risk underwriting teams.

This operational supervision complements the business lines, which together form the risk management system. It optimises the support provided to clients by ensuring we are more selective in the quality of debtors covered, that we verify the profitability of the underwritten businesses, and that technical expertise is better shared among the Group’s underwriting centres.

This business is governed by the Group’s rules, which allocate delegation levels on the basis of the seniority and experience of the employees concerned. Beyond certain risk levels and according to the nature of the request, decisions are taken at the Group’s headquarters, either by the Commercial Underwriting Department or by the Group Underwriting Committee.

The Group Underwriting Committee consists specifically of Group commercial underwriting, risk underwriting and commercial underwriting directors. This committee meets every day to review all commercial proposals for new business or policy renewals that exceed local delegations.

To market its credit insurance products and complementary services, the Group uses several distribution channels, the breakdown of which changes according to local markets. Specialised brokerage is largely dominant on the international scale, although in certain markets direct sales are historically more common.

The following diagram illustrates this multi-channel distribution model of the Group’s service offerings. The breakdown between direct and indirect sales is expressed as a share of total collected premiums.

Fronters, who can also act as business contributors, are partner insurers who issue insurance policies on behalf of the Group in countries where it does not have a licence. With its network of partners, many of which are members of the Coface Partner network, the Group serves policyholders in some 40 countries in which it has no direct commercial presence or specific licence.

In terms of non-specialist contributors, banks are a key distribution channel, opening up new client bases, with better transformation rates for prospects.

For the financial year ended December 31, 2022, factoring represented €70 million, or 3.9% of the Group’s consolidated turnover.

Factoring is a financial technique whereby a factoring company (the factor) finances and, as applicable, manages the trade accounts of a company by acquiring its trade receivables. Depending on the type of factoring, in the event of an unpaid receivable, the loss may either remain at the expense of the factor, or it may be recovered from the company.

The Group’s factoring offering allows businesses to fund their trade receivables and optimise their liquidity:

• ●by having immediate access to cash on the transfer of their receivables (subject to a security retention);
• ●by reducing their client risk, in the absence of recourse (by transferring non-payment and debt collection risks);
• ●by financing their growth without being held up by an increase in their working capital requirement.

The following diagram illustrates the factoring mechanism:

Factoring mitigates the risks associated with the financing of trade receivables, thanks to the analysis performed on the chosen counterparties, the evaluation of their solvency, and the recovery mechanisms for unpaid receivables. The Group offers such factoring solutions in Germany and Poland.

The Group combines its factoring business with its credit insurance expertise to offer the following products:

• ●factoring with recourse: a factoring product with recourse on the client in case of payment default;
• ●full factoring without recourse: a product combining factoring services and credit insurance. In the event of a claim, the client is covered by credit insurance for its unpaid invoices;
• ●in-house factoring with or without recourse: the client manages the relationship with its buyer, particularly in the case of a payment default, allowing it to preserve its business relationship;

• ●reverse factoring: the Group’s client in this case is the buyer, who offers advance payment to its supplier through the factoring company;
• ●maturity factoring: a service derived from full factoring for which financing only occurs at the invoice due date (late payment protection).

The Group is active in the German and Polish markets.

In Germany, the factoring market expanded in relation to 2021, with €309 billion in factoring receivables in 2022.

The German factoring market is dominated by five players, which, according to the Coface Group’s estimates, account for approximately 60% of the market: PB Factoring GmbH, Coface Finanz GmbH, BNP Paribas Factor GmbH, Targobank AG et Commerzfactoring (JV Commerzbank and Targobank).

In Poland, the factoring market was extremely dynamic, with growth of 35% in the first nine months of 2022. Coface Poland Factoring is the seventh largest provider with a market share of 7%.

The Polish factoring market is led by the following eight players, which share approximately 85% of the market (according to estimates by the Coface Group and the association of Polish factors): Pekao Faktoring, ING Commercial Finance, BNP Paribas Factoring, Santander Factoring, mFaktoring, Bank Millennium, Coface Poland Factoring and PKO Faktoring.

For the financial year ended December 31, 2022, bonding generated turnover of €59 million, or 3.2% of the Group’s consolidated turnover, primarily in Italy.

As a complement to its main credit insurance activities, the Group draws on its debtor risk management capabilities to offer bonding solutions in some countries (mainly in France, Italy, Germany, Austria, Romania and Spain) to meet the specific needs of companies in certain markets.

Bonding consists of a commitment to pay the beneficiary of the bond in the event of a default or breach by the bondholder of its contractual obligations. The coverage provided by a surety bond allows a corporate bondholder to reassure its commercial or financial partners, in order to postpone immediate payment and/or to avoid reducing its borrowing abilities. For the bondholder, these are off-balance sheet commitments. Furthermore, in certain sectors, a surety bond is needed to run a business or access specific markets.

The surety bonds issued by the Group have a fixed term (from a few weeks to a maximum of five years) and the associated risks can be shared among several market players (generally banks and insurers).

The Group selectively offers a range of specific surety bonds to help businesses obtain domestic or export contracts:

• ●contract surety bonds:
  • ●tender bonds (a guarantee for the buyer that a supplier taking part in a call for tenders will be able to offer the services announced in its response, if it wins the contract),
  • ●performance bonds (a guarantee for the buyer that the seller will execute the contract),
  • ●advance payment bonds (a commitment to return the advance paid by the buyer in the event that the seller does not pursue the contract),
  • ●holdback bond (a guarantee covering any faults occurring during the warranty period),
  • ●subcontracting bonds (to guarantee the payment of any subcontractors the company employs);
• ●customs and excise bonds: allow bearers to benefit from customs duties credits or even, in some markets, to cover amounts payable as indirect contributions or excise taxes, or to postpone the payment thereof;
• ●environmental surety bonds: cover expenses linked to monitoring a site, keeping a facility safe, any interventions in the event of accidents or pollution and the restoration of the site after the activity is discontinued;
• ●legal bonds for temporary employment companies: to cover the wages and social security contributions of temporary employees, in case the business becomes insolvent;
• ●payment guarantees: covering the amounts owed by the bondholder as payment for its purchases and services rendered by a beneficiary.

The global surety bond market is largely dependent on the regulatory framework of the various countries. It is therefore fragmented into national markets. Indeed, the local legal context determines the characteristics of the product as well as the requirements in terms of a mandatory surety bond, which makes it difficult to determine the scope of this market. In addition, the practice of certain business sectors or certain types of operations may also influence this market.

The Group estimates that this market represents between €10 billion and €15 billion in turnover, or more than the credit insurance market. Although this market largely dominated by banks, insurers rank second, with approximately €6 billion in turnover, mainly because they cannot access some national markets for regulatory reasons. This is the case in India and several countries in the Middle East and North Africa. According to the Coface Group’s estimates, the world’s largest market, the United States, accounts for approximately half of the global surety bond market. In Europe, Italy is by far the leading market, and in Asia, South Korea has the highest percentage of turnover from surety bonds issued.

As of December 31, 2022, this business line generated consolidated turnover of €55 million.

Coface has a unique high added value database. This database draws on its recognised expertise in credit risk, including its analysis of companies’ financial statements and in-depth knowledge of their payment behaviour, its economic research and forecasting models, and its use of data science to exploit the wealth of its data. Coface’s teams use this infrastructure to make more than 10,000 credit decisions on a daily basis, helping its policyholders choose their business partners.

Thanks to the quality of its information, its global network, and its expertise in transforming raw data into value-added data, the Group is in a strong position to offer business information services. This activity, which has strong synergies with its core business line in credit insurance, has a digitalised business model and is based on partnerships. Coface has proven expertise in this area and is one of the leaders in business information in several countries (Israel, Poland, Romania).

The need for information in managing business relationships with customers or suppliers has intensified in recent years. Information is vital to anticipate the risks of non-payment by companies. Coface naturally meets a number of these needs with its trade credit insurance business, by offering access to:

• ●standard, global information, available fast;
• ●micro information (on a company’s financial health) and macro information (sector information, country risk, etc.);
• ●high quality, constantly updated information;
• ●risk expertise that transforms information into decision-making.

This access is now available through Coface’s information offering, which draws on its credit insurance strengths and processes.

It provides companies and financial institutions with a comprehensive sales decision support service, to meet three main needs:

• ●reporting: descriptive data (information reports, alerts, risk management dashboard, etc.);
• ●scoring: predictive data (scoring, buyer risk assessment, etc.);
• ●decision-making: bespoke data for decision-making (simple or advanced credit opinions, etc.).

The objective is to enable companies and financial institutions to manage their risk strategy more effectively as part of their business activity.

The launch of the platform called ICON, developed by Coface under the new Build to Lead strategic plan, offers an innovative, digital, global solution for business information services.

ICON is accessible all over the world, 24 hours a day, 7 days a week, via the internet or through enhanced connectivity with client information systems via APIs.

A full range of services with easy-to-read indicators, adapted to the needs of businesses, is provided:

URBA (Universal Risk Business Assessment) incorporates all the products described below to give a 360° view of a company’s situation. It has been launched gradually in the different regions since the end of 2022. Customers can access all URBA information and analyses via APIs or through a dynamic user interface. URBA contains portfolio management and corporate risk monitoring options.

To obtain complete information about a company and carry out an in-depth risk analysis, the Full Report provides detailed financial data, a credit score, a recommended maximum credit amount and our assessment of the company on an eleven-point scale (from “Insolvency procedure/bankruptcy” to “Excellent risk”), the DRA, based on Coface’s experience as a credit insurer.

Comprehensive reports are available in nearly 200 countries. A monitoring service is available to provide notifications when there are changes to one of the indicators identified as being key to tracking a company’s risk (financial data, ownership, credit rating, etc.)

If an in-depth analysis such as the one available in the Full Report is not necessary, Coface offers an instant report that provides a summary of the key aspects needed to assess business partners, with fewer details. This report includes a quick rating (“Low”, “Medium” or “High”), Coface’s assessment and a maximum recommended credit limit.

Monitoring is also available for these reports: notifications are sent in the event of changes in a company’s solvency, late payments, etc.

With the debtor risk assessment, Coface determines a company’s ability to meet its short term financial commitments. The DRA is produced using information available in the Group’s single high added value database, on a scale of 0 to 10 (from “Insolvency/bankruptcy procedure” to “Excellent risk”). The DRA is used on a daily basis to monitor the Group’s own credit insurance portfolio. A company’s DRA takes into account its past assessments and its current default probability. Monitoring is also available on request.

Credit Opinions provide a recommended credit limit for a company. This is an effective way to assess the solvency of debtors, prospects, and any company with which the client is considering doing business. The Credit Opinion report includes the DRA and country risk assessment, thereby providing a holistic approach to a company’s risk profile.

Two products based on credit opinions are available to meet various business needs:

• ●@Credit Opinion expressed as an index, for small business portfolios or high turnover portfolios, covering exposures up to €100,000;
• ●Advanced Opinion, a specific recommended exposure amount.

Other products are also available:

Portfolio Insights and Selectio are interactive portfolio management tools that provide the client with in-depth information on the risk presented by all its trading partners (debtors, buyers, customers, etc.) wherever they are in the world, cross-referenced with Coface’s expert macroeconomic assessments. Selectio is currently only available in Italy.

Coface also provides its expertise in economic assessment to help its clients make the right strategic and operational decisions by anticipating the various risks affecting economies and sectors at the global level thanks to Economic Insights. This interactive platform enables risk monitoring in more than 160 countries and the main business sectors.

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 1,013 people in the Western Europe region, generated turnover of €359.6 million in this region, accounting for 19.8% of its total turnover for the financial year ended December 31, 2022.

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 in France, where the Group also sells surety bonds and Single Risk policies. 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 via 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 direct sales teams 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.

The Group, which currently employs approximately 699 people in the Northern Europe region, generated turnover of €372.2 million in this region, accounting for 20.5% of its total turnover for the financial year ended December 31, 2022.

The countries where the Group operates in this region are mature credit insurance markets. There is strong pricing pressure due to intense competition and the low company insolvency rate. However, payment defaults have begun to rise since Q3 2022. The effects of the pandemic led to a sharp rebound in client activity in 2022. Activity was also driven by inflation, which underpinned underlying insured turnover growth and hence premium growth. The Group mainly sells credit insurance services and related credit management solutions such as information services, Single Risk coverage and debt collection. In Germany, it also offers factoring and surety bonds.

The Group’s offering in this region is marketed through a combination of direct sales by its own sales teams and sales through its partners (brokers and banks).

The Group continues to invest in this region, with a focus on profitable growth. In Germany, Northern Europe’s primary market, the core services were enhanced to best meet client needs, including a credit insurance offering tailored to partner banks. In 2022, a strong focus was placed on the development of the business information offering, which recorded strong growth, particularly in the large key accounts segment. The factoring strategy to provide financing solutions for M&A and cross-border transactions continues to confirm its effectiveness.

The creation of the “Nordics” platform strengthened the Group’s presence in the region while promoting its growth in the Nordic markets. While the mainstays were Denmark and Sweden until 2019, the acquisition of Norwegian credit insurer GIEK Kredittforsikring in 2020 – now part of the Group – significantly expanded Coface’s footprint in the region. In summer 2022, the launch of the Group’s flagship credit insurance product “TradeLiner” marked a major and final step towards the integration of the Norwegian branch into the Group. There is also considerable growth potential in Finland with the recruitment of new talent to strengthen the local teams.

Although historically characterised by a broker-centred distribution model, the Group is successfully pursuing its multi-distribution business model in the Dutch market. The new information offering which has been rolled out has also enhanced the range of services offered to clients. In addition, the launch of factoring services in 2022 strengthens the Group’s presence on the Dutch market. Marketing activities have been ramped up to make the brand more visible across the Netherlands.

The Group, which currently employs approximately 995 people in the Central Europe region, generated turnover of €178.5 million in this region (with the biggest contributions coming from Austria, Poland, Romania and Russia), accounting for 9.9% of its total turnover for the financial year ended December 31, 2022.

In this region, the Group is the only supplier of integrated credit management solutions comprising credit insurance, business information and debt collection services for both insured and uninsured businesses. It offers factoring solutions in Poland, and, since 2022, surety bonds in Romania.

GDP growth rates in 2022 were solid, mainly driven by good first-half results. The war in Ukraine has since impacted the region’s economies with rising energy and food prices and supply chain disruptions. Inflation reached double digits, limiting households’ propensity to spend, while investment was limited by soaring financing costs. These developments are fuelling fears of recession and are maintaining inflationary pressure.

The Group has the most extensive network in Central and Eastern Europe and the largest local footprint, offering services in 18 countries, directly or indirectly.

The Group’s strategy in this region is built on the cornerstone of supporting the development of distribution, and growing while keeping risks under control.

As these emerging markets are stable in terms of credit insurance, the Group’s strategy is to achieve sound growth while controlling risk. The strategy also involves diversifying the service offering, mainly through the systematic cross-selling of information services to policyholders. The Group successfully integrated PKZ, a company acquired in 2019, which was successfully transformed into the Group’s Slovenian branch in autumn 2022. With this strategic acquisition, the Group strengthened its position on the Adriatic market, and clients now benefit from the full strength of the Group.

The Group, which currently employs approximately 867 people in the Mediterranean and Africa region, generated turnover of €480.6 million in this region, accounting for 26.5% of its total turnover for the financial year ended December 31, 2022.

The Group sells credit insurance policies and surety bonds, as well as information and debt collection services.

In terms of credit insurance, this region has both emerging and mature markets (Italy, Greece, Spain and Portugal). The Group has unique geographic coverage in the credit insurance market in the region. It is directly present in eight countries and in a position to operate its business in Middle Eastern and African countries through partnerships with top-tier insurers. It applies its strategy through regional centres in Casablanca, Dubai, Madrid, Milan, Istanbul, Tel Aviv and Johannesburg tasked with coordinating the management of its establishments and partner networks. In Italy, Coface is a benchmark in the surety bond market.

In 2022, the Trade Information Offering experienced strong and promising growth in Italy and achieved encouraging results in Spain. In Israel, Coface BDI is the undisputed leader in the information market.

According to the size and the configuration of markets in the region, the Group combines (i) sales through insurance intermediaries (brokers, agents) or partnerships with banks and (ii) direct sales. The relative contribution of the different channels varies significantly according to the specific characteristics of the market. While agents have a wide reach in Italy and Spain, brokers play a major role in Portugal, Turkey, the Gulf States, Saudi Arabia, and South Africa, and Israel and Morocco rely more on direct sales. In West African countries, the Group promotes credit insurance through partners (insurers, banks), to whom it supplies credit insurance contracts and back office services. The Group has competent qualified teams in Dubai and the Western and Central Africa region to establish agreements with local fronters and provide solutions in countries such as Senegal, Tunisia, Côte d’Ivoire, the Gulf countries and Saudi Arabia. Partnerships with banks were increasingly important in most countries in 2022.

In the three mature credit insurance markets of Italy, Spain and Portugal, the Group reported further substantial production and an exceptionally high level of client loyalty, while gradually adapting its premium rates and underwriting to the actual risk situation. This performance is the result of a sales strategy with a multi-channel distribution approach and efficient customer segmentation.

The Group, which currently employs approximately 224 people in the North America region, generated turnover of €168.0 million in this region, accounting for 9.3% of its total turnover for the financial year ended December 31, 2022.

The Group directly issues credit insurance policies in the United States and in Canada, two markets that are under-penetrated in terms of credit insurance due to low product awareness. It mainly sells credit insurance services, as well as information and debt collection services. The Group also offers Single Risk coverage on a limited scale.

The Group has completed the reorganisation of its distribution channels with a focus on being close to its clients. The process of bringing the sales teams in-house in order to improve sales efficiency is now complete. The Broker Connect team has established strong relationships with the main brokers. In the same vein, the Coface Global Solutions team serving large multinationals was strengthened.

The Group expanded its offering by launching credit insurance solutions including non-cancellable credit limits. This strengthens the Group’s competitive position in the key accounts segment and allows it to fully cover the needs of its international broker partners.

To improve customer proximity, the Group has reorganised its distribution channels for credit insurance and expanded its offerings with solutions including non-cancellable credit limits and hybrid services. It has also adopted new standards to simplify operations, ensure internal efficiency and improve service quality and the customer experience.

The Group is also continuing to expand its business information offering.

The Group, which currently employs approximately 452 people in the Latin America region, generated turnover of €101.6 million in this region, accounting for 5.6% of its total turnover for the financial year ended December 31, 2022.

The portfolio of products sold by the Group in the region essentially consists of credit insurance policies, but also includes debtor information and debt collection services.

Latin American GDP slowed in 2022 after a strong rebound in 2021. Inflation continued to accelerate throughout 2022, leading central banks to raise their key rates further. In contrast, activity in the region benefited from higher commodity prices.

In terms of credit insurance, countries in this region are considered high-risk markets with volatile economies. Credit insurance policies are sold directly in a dozen countries, the main ones of which are Argentina, Brazil, Chile, Colombia, Ecuador, and Mexico, and in other countries where policies are signed by partners.

The Group has dedicated enhanced information management teams in Argentina, Brazil, Chile, Colombia, Ecuador, Mexico and Peru (where one of the Group’s three shared information management service centres is located – see Section 1.3.1. “Credit insurance and related services”).

Given the classification of this region’s countries, the Group’s strategy entails supporting the development of sales and growth by managing risks and focusing on developing the most profitable segments in specific countries.

The sales approach is based on targeted prospecting, by market and sector, with pricing and conditions adjusted to real risk profiles.

The Group’s offer in this region is marketed by a combination of direct sales by its own sales teams and sales via its partners. In 2022, the region continued to develop its business information offering and focused on improving the customer experience in Credit Insurance. The strategy also consisted of diversifying the range of services, particularly through new information products for companies and the systematic cross-selling of information services to policyholders.

The Group, which currently employs approximately 452 people in the Asia-Pacific region, generated turnover of €151.3 million in this region, accounting for 8.3% of its total turnover for the financial year ended December 31, 2022.

The Group has a direct presence in 14 markets: Australia, China, Hong Kong SAR, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

In terms of credit insurance, most countries in the region have high risk profiles – with the exception of Japan, South Korea, Singapore and Australia, which are economically mature markets.

The region offers business information and debt collection services. It also boasts a service centre in India which is used by the region and the Group for various back office and middle office services, including the processing of debtor information, the production of information reports and support for sales, IT and finance operations (see Section 1.3.1 “Credit insurance and related services”).

In Asia-Pacific, the Group distributes its products directly and through partnerships with insurers (fronters). The Group has branches with direct insurance licenses in Australia, Hong Kong SAR, Japan, New Zealand, Singapore and Taiwan, and has the largest partner network in the region, with 32 partners. Lastly, consistent with the Group’s multi-channel strategy, the region has its own direct sales teams and also uses specialised brokers and banking partners to sell its offering.

The Group also has two specialist teams in the region – ‘Japanese Solutions’ and ‘China Desk’ – which provide international Japanese and Chinese companies with a single point of access to its services. In 2022, the Group also strengthened its organisation around the business information offering for non-insured segments.

The Build to Lead – 2023 strategic plan launched in 2020 consolidated the successes of the Fit to Win plan by reinforcing Coface’s expertise, synergies and agility. It aims to assert Coface’s leadership in credit insurance by placing the client at the centre of the Coface strategy, while creating growth opportunities in adjacent activities offering significant synergies.

The Covid-19 health crisis and the resulting economic disruption confirm the importance of the ambitions of resilience, responsiveness in client service, and agility that are set out in the Build to Lead plan. These ambitions are upheld, while the priorities have been adjusted to take account of changes in the economic environment.

The Build to Lead strategic plan aims to create the conditions for profitable and resilient long term growth for Coface. To do this, it relies on two guiding principles:

• ●strengthening the Group’s leadership in the credit insurance market by placing its clients and partners at the heart of its strategy; and
• ●creating growth opportunities, in particular by developing adjacent activities that complement Coface’s long-standing credit insurance business, for example information services, surety bonds, Single Risk coverage and factoring;

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 is committed to four objectives throughout the cycle:

• ●return on average tangible equity (RoATE) of 9.5%;
• ●a combined ratio of 80%;
• ●a solvency ratio between 155% and 175%;
• ●a dividend payout target of at least 80% of net income.

For Coface, being a leader is not a matter of size but of being the best in its field:

• ●in anticipating and managing risk;
• ●in providing effective solutions for its clients, meeting their needs as closely as possible.

This ambition has three priorities:

The Group is continuing to improve its operating model. This frees up time and energy to better meet client requirements, to stand apart for the quality of its service and to indirectly reduce its costs.

The Group is implementing service quality programmes to put the client at the centre of its actions. It is instilling a client-oriented mindset and practices drawing on exemplary executives and managers, training and incentives.

With its X-Liner product range (GlobaLiner, TradeLiner, EasyLiner and TopLiner), Coface offers simple, standardised and scalable solutions. Similarly, the Group is continuing to simplify and modernise its IT infrastructure and practices to improve efficiency and agility. It intends to improve its connectivity with its clients by developing application programming interfaces (APIs).

Coface continues to innovate and is investing in data and technology to manage its risks, boost sales and improve operational efficiency.

This will increase the Group’s resilience and reduce risk volatility. This expertise lies at the heart of Coface’s value proposition and is a differentiating factor on the market.

The digital revolution is significantly increasing the available sources of information and processing capacities. The Group is actively exploring the opportunities offered by new technologies to build sustainable leadership.

Rolled out in 2021, the partial internal model enables:

• ●a dynamic allocation of capital based on anticipated losses for each exposure;
• ●better matching of the prices of our coverage with the corresponding risks thanks to more detailed risk management.

Coface wants to continue to achieve profitable growth by differentiating its approach by region and by client segment.

In “mature” markets where credit insurance has a high penetration rate and competition is intense, Coface invests in:

• ●maximising client retention;
• ●improving the operational efficiency of its sales forces; and
• ●coordinating its network of distribution partners.

In developed but ‘under-penetrated’ economies in terms of credit insurance, such as the United States or Japan, Coface aims to increase opportunities for contact with clients and prospects by adapting its offering and extending its distribution to different market segments.

In ‘volatile risk’ markets, the Group establishes a long term presence so it can seize profitable growth opportunities. To do this, Coface is reinforcing its knowledge of the local economic fabric, developing its local underwriting expertise and building long term relationships with local partners.

Coface adjusts its offer to the type of client:

• ●key accounts (CGS);
• ●mid-market customers;
• ●SMEs; and
• ●financial institutions.

The GlobaLiner offering for international groups provides standardised and scalable management of various policies around the world.

The TradeLiner offer for mid-market customers offers a standardised and scalable structure that meets the specific characteristics of different markets.

The EasyLiner offer for the SME segment includes easy-to-use digital client journeys and can be sold by partners, particularly banks.

The financial institutions segment is expanding particularly strongly, backed by dedicated sales and underwriting teams. Coface is expanding in this segment by strengthening relations with target financial institutions.

Coface’s global network is a major asset both in terms of risk management and in serving its clients abroad. Coface has continued its geographical expansion by stepping up its direct presence through acquisitions (Slovenia, Norway) and via partners.

The Group continues to seek out and develop strategic partnerships that allow it to diversify its client portfolio and strengthen its presence in regions where it sees growth potential and where it does not hold an operating licence.

Coface wants to expand in adjacent activities that offer synergies with its trade credit insurance business and in which the Group has solid experience. This strategy aims to build up a portfolio of growth opportunities besides credit insurance and to diversify its risks. Coface has set aside capacity to finance this growth, possibly through external acquisitions.

Coface wants to draw on its strengths to develop a range of services offering synergies with credit insurance and with low capital requirements, in particular information about companies.

To do this, Coface intends to leverage the significant amount of data generated by its credit insurance business. Its constantly updated real time database covering 200 countries (600 people dedicated to collecting and entering data from external and internal sources) and its solid experience in data analysis and processing form the foundation of the Group’s information services. Coface is investing in a comprehensive platform including access to data, a range of products focused on credit risk in the broad sense, systems for processing and delivering the offering, and dedicated sales teams. It is managing this expansion internally on high potential markets but does not rule out targeted acquisitions or partnerships.

The Group offers factoring solutions in Germany and Poland. Coface has begun to restore growth to its business by expanding in high-potential and high-yield niches (particularly in international factoring and among investment funds).

Coface has established a client base in surety bonds and Single Risk coverage by leveraging its underwriting expertise and distribution capabilities. The Group plans to develop these activities in existing regions and enter new markets where it has existing strengths. A Group-wide department was created to accelerate growth and boost profitability. In addition, Coface continues to deploy its third-party debt collection business. To do this, it draws on its near global debt collection capabilities and its expertise in credit insurance.

The Group is constantly upgrading its business model to manage its capital more efficiently. Achieving an appropriate return on capital is a factor of long term competitiveness and a major driver of value creation for shareholders. The Solvency II prudential framework reinforces this focus on both regulatory and economic capital.

The Group’s capital management policy meets two main objectives: maintaining the financial solidity provided to clients and financing its profitable growth. These targets are measured by its robust solvency ratio and a recurrent financial rating of at least A from the rating agencies.

At the same time, the Group has demonstrated its ability to use instruments that make its balance sheet more efficient (subordinated debt, share buyback programme). It also pursues an active strategy in terms of available reinsurance options.

Based on the partial internal model and stress tests performed during the own risk and solvency assessment (ORSA), the Group has established a comfort scale that was approved by the Board of Directors under the Build to Lead strategic plan. It aims to maintain a solvency ratio above 100% in the event of a crisis equivalent to that of 2008-2009, and takes into account the flexibility needed for its growth requirements.

A target coverage level of 165% with a comfort zone of between 155% and 175% is compatible with these targets over the period of the strategic plan.

The following chart shows the action plan to be implemented depending on where the Group’s solvency ratio is positioned.

Coface has also announced a policy of paying a dividend equal to or higher than 80% of net income, provided that its solvency remains in the target zone.

Coface was able to demonstrate its agility and resilience throughout 2022 in an uncertain economic environment. Strengthened by its corporate culture and a solid balance sheet, Coface is confidently continuing with the execution of its Build to Lead strategic plan, which is more relevant than ever.

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 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, Data Lab 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.

Within the key functions (risk, actuarial, compliance and audit), the links between the head office and the regional departments are hierarchical in nature, in order to strengthen the coherence of the orientations of these functions at the level of the whole Group, and to ensure the independence of the proper execution of control activities. 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, 2022:

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.

Led by Cyrille Charbonnel, this department includes Commercial Underwriting, Claims & Collections and Recovery, Risk Underwriting, Risk Portfolio Management, and Special Risk Underwriting:

• ●Commercial Underwriting examines business decisions requiring head office approval and sets underwriting standards in contractual matters;
• ●Claims & Collections and Recovery is in charge of indemnification and debt collection procedures;
• ●Risk Underwriting defines and controls the credit risk underwriting policy and monitors its application. Specifically, it oversees the largest outstanding amounts, as well as the most at risk, and analyses the monthly reports on credit risk activity for the Group as a whole. In addition, it underwrites major risks and coordinates risk underwriting centres in the Group’s seven regions;
• ●Risk Portfolio Management is in charge of analysing the effectiveness of risk management and implementing the measures necessary for its improvement, and is responsible for enhanced information (individual analyses of buyers) destined for risk underwriting;
• ●the Commercial Underwriting Department is supplemented by two offices responsible for monitoring specific risks: Single and Political Risk, and business conducted with financial institutions.

Led by Nicolas Garcia, this department is tasked with structuring, organising and coordinating the Group’s commercial activity. Its responsibilities extend to indirect and direct distribution networks and the client portfolio in our three segments: key accounts (CGS), mid-market (segment A, B and C) and financial institutions. This department includes:

• ●Mid-market and sales operations, which mainly coordinates mid-market sales (segments A, B and C), monitors sales and the Group’s tools used by the Commercial Department (invoicing, contract management and reporting tools, etc.);
• ●Brokerage, in charge of structuring, the brokered sales strategy for all client segments, and coordinating the main international brokerage firms at Group level;
• ●Financial Institutions, in charge of implementing the strategy, sales and sales teams dedicated to this segment;
• ●Global Solutions, devoted to international key accounts, which handles strategy, the coordination and management of sales teams and quality of service in this segment.

Led by Nicolas Stachowiak, this department is in charge of internal audit function. In particular, it performs three levels of periodic controls in accordance with Solvency II requirements, and reports directly to the CEO, according to an audit plan approved by the Board of Directors.

Led by Phalla Gervais, this department, working with all the Group’s operational departments and entities, is tasked with steering and monitoring the Group’s financial performance in all the countries in which it does business.

It is responsible for:

• accounting and taxation;
• the publication of regulatory statements;
• financial communications, investor relations and relations with rating agencies;
• the establishment of balance sheet protection measures (particularly for reinsurance);
• asset management, Group funding and purchasing.

In accordance with the new rules governing the insurance sector and the banking system, the actuarial function has been separated from the Risk Department and reports directly to Phalla Gervais:

• ●the Risk Department is in charge of supporting general management to ensure the Group’s long term solvency and profitability, and of monitoring compliance with the requirements laid down by the Solvency II Directive. It includes the risk management and internal control functions as described in the Solvency II Directive;
• ●the Actuarial Department is responsible for analysing and processing the financial impacts of risk, and pricing, among other duties. It works on solvency modelling and provisioning under Solvency II (internal model).

Led by Carole Lytton, the general secretariat includes the following functions:

• ●the Legal function, which advises all Group entities and defends the Group’s interests with respect to third parties. It handles all aspects of the company’s life and activity, with the exception of tax and employment law issues. The Legal Department, with the support of its network of correspondents in the Group’s various regions, is in charge of the legal and regulatory watch, the compliance of insurance policies and of all products sold by the company with laws in France and abroad, and contracts with suppliers. It advises the departments in charge of compensation and participates in partnerships and acquisitions. The Legal Department is also responsible for the good governance of the Group’s companies. As such, it acts as secretary of the board for French companies. The General Secretary is secretary of the Board of Directors of COFACE SA;
• ●the compliance function, which ensures the Group observes all the rules governing its activities in France and abroad; it sets rules governing the company’s activities in terms of international sanctions, anti-money laundering, anti-corruption and personal data protection; it ensures compliance with the rules that govern the issuing of licences held by Group entities; it is responsible for the dissemination of these rules and their understanding by all employees, for the definition of level one compliance controls and the implementation of level two controls throughout the Group;
• ●Human Resources, which is in charge of providing change management support to general management and all employees. It manages human resources procedures and policies, and implements initiatives for talent and skills development, compensation and performance management;
• ●Communications, which defines and implements the Group’s internal and external communications strategy, both in France and abroad. For internal communications, the teams contribute to change management and to furthering employees’ understanding of the Group’s strategy. For external communications, the teams are responsible for developing the Group’s brand awareness and protecting its reputation. It carries out this task in liaison with general management;
• ●CSR, which implements applicable legislation, defines the company’s strategy and submits it to the Board of Directors. It is also in charge of training employees on CSR issues and promoting knowledge within the company. It works with the support of other functions that are highly involved in this area, such as the Group Human Resources Department, the Group Compliance Department, the Finance and Risk Department and coordinates their work.

Led by Keyvan Shamsa, this department has four units:

• ●a cross-business unit in charge of IT administration, architecture, data management, the deployment and management of the Group’s shared IT resources, and security;
• ●a functional unit covering the Coface businesses, which conducts impact studies and supports the implementation of various IT projects for the Group and users;
• ●a unit in charge of infrastructure and operations;
• ●an international unit comprising the seven regions and providing coordination and consistency between the business, Business Technology matters and the regions.

Led by Declan Daly, this department is responsible for managing the client service and operational excellence programme as part of the Build to Lead strategy. It focuses on improving the client experience and implementing more efficient business processes. It is responsible for:

• ●the strategy and establishment of shared service centres;
• ●the client experience and business process management;
• ●the Transformation office, whose main responsibilities include the project portfolio, the operational management of major strategic projects related to the Build to Lead plan, Coface’s transformation programme and change management;
• ●the implementation of the digitisation programme.

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 ensure 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.

With the pandemic, information systems now extend to staff members’ homes. In accordance with the business continuity plan (BCP), the Group has strengthened its resources to maintain the required level of 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 main applications and operational tools directly linked to the services the Group provides to its clients, and referred to in this Universal Registration Document, are described below.

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 some jurisdictions, the activity of business information and/or debt collection 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 on the one hand, and an accounting component on the other. The companies of the Group operating outside of the European Union are likewise subject to a prudential regime.

The regulations derived (i) from Directive No. 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 ordinance and decree into the French Insurance Code in April and May 2015, and (ii) from its implementing texts, including the delegated regulations of the European Commission (“the Commission”), notably delegated Regulation (EU) 2015/35 supplementing the aforementioned directive, came 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 management 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 application of IFRS rules including IFRS 4, phase 1. This standard requires that the references used for insurance contracts as defined by IFRS be a recognised set of accounting guidelines. The Group has thus adopted the French principles to show the accounting of the insurance contracts. The provision for equalisation is not accepted under IFRS, and was thus eliminated in the IFRS financial statements. Furthermore, the Group must apply IFRS 4, paragraph 14, and specifically proceed to conduct liability adequacy tests.

IFRS 4 on insurance contracts will be replaced by IFRS 17 on January 1, 2023. In addition, IFRS 9 on financial instruments traded on spot or derivatives markets will be applicable to insurance holding companies on January 1, 2023.

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 to those of the common law of contracts – with the exception of the provisions of Articles 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 operating under the freedom to provide services) and L.113-4-1 (explanation due to the policyholder by the credit insurer upon termination of cover) of the French Insurance Code.

Factoring is regulated as a financial service (and not as a banking activity) by the German banking law and is defined as the ongoing acquisition of receivables based on a master agreement, with or without recourse against the ceding company. As a financial service, as defined in German banking law, the factoring business is regulated and subject to oversight by the two German financial regulation authorities, the Deutsche Bundesbank and BaFin (the Federal Financial Supervisory Authority), which notably requires authorisation to conduct such activities.

In Poland, factoring activities that are performed within the context of the local Civil law scheme on the transfer of receivables are not specifically supervised, with the caveat that they are subject to Polish anti-money laundering regulations.

The law and regulations applicable to the Group’s factoring activities in Germany and Poland do not impose any quantitative requirements in terms of regulatory capital or liquidity. At the Group level, regulatory capital requirements are calculated in accordance with the Basel regulations applicable to banking activities (see Section 3.4.2 “Group Solvency”).

Information and debt collection activities may be subject to specific regulation in some countries (e.g. Denmark, South Korea, etc.) and require a licence to carry out the activity or a declaration of the activity to the relevant local authority. Local legislation may regulate the exercise of these activities. It should be noted that in terms of debt collection, although there is a restrictive framework, it mainly concerns the activity of collecting debts from private individuals and is not applicable to the collection of commercial debts or only partially.

board of directors
Structure and operation

10 
Directors

60% 
Independent directors

50% 
women directors

95% 
average attendance rate 

at board meetings

Following the disposals carried out in 2021 between Natixis and Arch Capital Group, on January 6, 2022, Natixis sold its remaining stake in COFACE SA, representing 10.04% of the share capital, to institutional investors. Natixis no longer holds any shares in COFACE SA.

The disposal of this remaining stake had no impact on the organisation of the Board of Directors of COFACE SA, which is still made up of ten directors, including four appointed by Arch Capital and a majority of six independent directors, including the Chairman.

The tables, as well as the biographies, presented below are established as of December 31, 2022 and therefore do not take into account the change in the name of the Appointments, Compensation and CSR Committee (cf. Section “Appointments, Compensation and CSR Committee” in paragraph 2.1.8.).

The Board of Directors has ten members. Information relating to the members of the Board of Directors, including their principal offices outside the Coface Group as at December 31, 2022 is provided in the section below (2).

The Board of Directors has established Internal Rules which can be consulted on the website at http://www.coface.com/Group/Our-organisation, in the Board of Directors tab.

The Board of Directors meets as often as required in the interests of the Company, and at least once per quarter.

Board meetings are convened by the Chairman. However, directors representing at least one third of the Board members may convene a meeting of the Board, detailing the agenda, if there has been no meeting for more than two months. Where the duties of CEO are not performed by the Chairman, the Chief Executive Officer may also ask the Chairman to convene a Board meeting to consider a fixed agenda.

Board meetings are held either at the registered office or any other location indicated in the convening notice. From March 2020 and until July 2022, Board of Directors’ meetings were mainly held by video-conferencing or telecommunications because of the Covid-19 pandemic. The convening notice is in the form of a simple letter or e-mail sent to the Board members within a reasonable period of time before the scheduled date of the meeting. It is sent out by the Board Secretary.

In the event of an emergency as defined below (“Emergency”), the following accelerated procedure may be applied.

An Emergency is defined as an exceptional situation (i) marked by the existence of a brief period of time, imposed by a third party on penalty of being time-barred, and for which a failure to comply could result in harm to the Company or one of its subsidiaries or (ii) which requires a quick response from the Company that is incompatible with the application of the Board of Directors’ usual time frame for a convening notice.

In an Emergency, the meeting may be convened using all appropriate methods, even verbally, and the time frames for convening and holding the meeting of the Board of Directors shall not be subject to the provisions described above, insofar as the Chairman of the Board of Directors of the Company has:

• ●first sent notice to the directors providing the basis for the Emergency as defined above; and
• ●sent all directors, with the convening notice for said Board meeting, all the information needed for their analysis.

Meetings of the Board of Directors are chaired by the Chairman of the Board of Directors or, in his absence, by the oldest director or by one of the Vice-Chairmen, as the case may be.

In accordance with the legal and regulatory provisions, and except when adopting decisions relating to the review and closing of the annual parent company and consolidated financial statements, directors participating in the Board meeting by video conference or telecommunication that meet the technical criteria set by the current legal and regulatory provisions are deemed to be present for the purposes of calculating the quorum and the majority.

Each meeting of the Board of Directors must be long enough for useful and in-depth debate on the agenda. Decisions are made by a majority of the votes of the members present or represented. In the event of a tie, the Chairman of the Board of Directors shall have the casting vote.

In the event of a malfunction in the video conference or telecommunications system, as noted by the Chairman of the Board of Directors, the Board may make valid decisions and/or move forward with just the members who are physically present, provided that the quorum conditions are met.

Pursuant to the terms of Article 21 of the Company’s Articles of Association, and Article 3.4 of the Board of Directors’ Internal Rules, the Board carries out the inspections and verifications which it deems necessary. The Chairman or the Chief Executive Officer must send each director all the documents and information needed to fulfil their duties.

The directors must have access to the information that will allow them to make an informed decision, sufficiently in advance of the meeting of the Board of Directors. However, for urgent matters, or when respect for confidentiality so requires, and in particular when sensitive strategic, commercial or financial information is at issue, this information may be provided during the meeting. Directors shall likewise receive, if they so request, a copy of the minutes of the Board of Directors’ deliberations.

Furthermore, the directors receive all useful information on the events or operations which are significant for the Company in between meetings.

The Company has set up a Group-level governance system based on a clear separation of responsibilities with a system for the provision of information. This governance system includes the following key functions: the risk management, compliance, internal audit and actuarial functions (see Section 5.3.1 “Internal control system”). Each key function operates under the ultimate responsibility of the Board of Directors, to which it reports.

• ●Information at the initiative of the Board of Directors.
• The Board of Directors consults key function managers, directly and at its own initiative, whenever it deems this necessary and at least once a year. This consultation can take place in the absence of the Chief Executive Officer if the Board members consider it necessary. The Board of Directors may refer this consultation to a specialised Board committee.
• ●Information at the initiative of a Head of a key function.
• The Heads of functions may inform the Board of Directors, directly and at their own initiative, of the occurrence of certain events that warrant this action. They must do so immediately upon encountering a major problem that falls within their purview. The Head of the key function must send a written report of the problem to the Chairman. The report must include a detailed explanation of the problem as well as all the elements required to understand it. The report must include recommendations for resolving the problem. The Chairman then communicates this report to the Board members.

The Board of Directors held nine meetings in a Board of Directors format. A presentation of IFRS 17 and training in this new accounting standard were offered to members after two of these meetings. It also held a strategic seminar devoted to a more in-depth review of the themes of the company’s strategic plan presented in February 2020.

The average attendance rate was 95% (including the attendance rates of Olivier Zarrouati (75%) and Éric Hémar (75%) whose mandates expired in 2022, the average attendance rate would be 92%).

The main subjects reviewed by the Board of Directors in 2022 were:

The Company is vigilant with regard to the diversity of the members of its Board of Directors to ensure that it operates in a manner appropriate to the Company’s business and development, in compliance with applicable regulations. The Company also refers to the provisions of the Corporate Governance Code of Listed Companies (AFEP-MEDEF Code) in implementing its diversity policy. Several criteria are applied:

• ●Number of directors
• The number must reflect the size of the Company and the aforementioned diversity. In 2022, there were ten directors.
• ●Seniority and age of directors
• The Company complies with regulations on the terms of directorships and strives to have a wide range of ages represented on its Board. In 2022, the average age of directors was 53.
• ●Proportion of independent and non-independent members
• The Company complies with the rules applicable to companies with many shareholders and no controlling shareholder. Independent directors account for 60% of Board members. Two thirds of the directors, including the Chairman, sitting on the Audit and Accounts Committee and the Appointments, Compensation and CSR Committee are independent directors. Three-quarter of members of the Risk Committee are independent directors, including the Chairman.
• ●International diversity
• The Company takes into account international diversity and at December 31, 2022, 50% of directors were non-French nationals.
• ●Gender equality
• In 2022, the proportion of women on the Board was 50%.
• ●Skills and expertise
• The Company ensures its directors possess specific skills in certain fields to ensure that the Board has the requisite expertise in terms of finance, insurance regulations, human resources and digital technology.

As in previous years, COFACE assessed the work of its Board of Directors and its specialised committees, in accordance with the recommendations of the Corporate Governance Code of Listed Companies (AFEP-MEDEF Code).

The assessment for the 2022 financial year was carried out via a questionnaire and focused on the following themes:

• ●the composition of the Board of Directors;
• ●the organisation of Board of Directors’ meetings;
• ●the quality of the information given to the Board;
• ●the quality of the discussions;
• ●the composition and operation of the specialised committees;
• ●interaction between directors and with the Chief Executive Officer;
• ●the individual contribution of each Board member.

In general, the Board's overall performance is judged to be satisfactory or very satisfactory in terms of the organisation of the Board and its work, the quality of the documentation provided, the involvement and competence of the directors, including their collaborative spirit, the responses obtained from the Company to their questions, and the relationship of trust with the Chairman and the Chief Executive Officer.

For 2023, it was recommended that more emphasis be placed on the following topics: cyber security, operational risk, information products, CSR, presentations by regional managers, human resources policy, business development and acquisition strategy.

It was also suggested that more informal events should be organised to ensure a better knowledge between directors.

Pursuant to the AFEP-MEDEF Code, the Board of Directors must review the status of independent directors every year. As such, during the meeting of December 8, 2022, the Board was asked to examine the situation of the six (6) directors who are not members of ARCH Group with regard to the criteria set out in the code. For each director concerned, this assessment is based on the independence criteria set out in the AFEP-MEDEF Code and the analysis of the High Committee on Corporate Governance (HCGE) included in the Guide to Applying the AFEP-MEDEF Code, which was revised in December 2022.

In order to evaluate the independence of directors, and in the absence of any other dependence criteria, Coface attaches particular importance to any business relationship with a company in which the directors hold senior management positions.

A review of all the criteria set out in the code, as mentioned in the table below, showed that Bernardo Sanchez Incera, Isabelle Laforgue and Sharon MacBeath currently do not meet any of the criteria of dependence. Nathalie Lomon, Laurent Musy and Laetitia Léonard-Reuter, who respectively hold management positions at SEB, Terreal and Generali, must be considered with regard to the business relationship between Coface and these companies. It is recalled that in these circumstances, Coface assesses any impact this business relationship could have on the director’s independent judgement. To do this, Coface analyses a range of items, including the nature of the business, the size of the contract, the existence of an alternative provider for the director’s company, and the importance of the turnover generated for Coface by this business relationship.

SEB is a Coface policyholder. However, the analysis did not identify any dependent relationship between the two companies. The premiums paid by SEB amount to less than 1% of Coface’s total premium income. Competition on the credit insurance market provides SEB with an alternative in the event of a termination in its relations with Coface. This affiliation does not therefore affect the independence of Nathalie Lomon.

Terreal Group is a Coface client in credit insurance and surety bonds, for a limited volume and premium amount in both cases. It also has a business information contract in Poland. All of Coface’s resulting revenues amounted to a little under 0.004% of turnover. Terreal also has alternatives on the French market. This situation therefore does not affect the independence of Laurent Musy.

Generali is not a policyholder, but has concluded half a dozen distribution agreements with Coface in different countries (Malaysia, Germany, Italy, Hungary, Portugal). To date, these partnerships are limited. The resulting annual revenues represent less than 0,02% of Coface turnover, and a very limited amount for Generali. This relationship therefore does not affect the independence of Laetitia Léonard-Reuter.

The percentage of independent directors on the Board was 60% as at December 31, 2022.

Pursuant to Article 18 of the Company’s Articles of Association, the Board of Directors may decide to form, with or without the participation of individuals who are not directors, committees or commissions to examine issues that the Board itself or its Chairman refers for their assessment. These committees or commissions perform their duties under its responsibility.

The Board of Directors has established an Audit and Accounts Committee, a Risk Committee, and an Appointments, Compensation and CSR Committee, whose composition, powers and rules of operation are described below.

In accordance with the recommendation of the Corporate Governance High Committee (HCGE) dated August 31, 2021, the internal rules have been amended to incorporate the possibility for Board Committees to request external technical studies on matters falling within their remit, at the company’s expense, after having informed the Chairman of the Board of Directors or the Board. The Committees shall report to the Board on the conclusions thereof.

During financial year 2022, the members of the Audit and Accounts Committee were Laetitia Léonard-Reuter (Chairman), David Gansberg and Isabelle Laforgue.

Two thirds of the members of the Audit and Accounts Committee are independent members of the Board of Directors. It thus conforms to the recommendation of the AFEP-MEDEF Code according to which this committee must have a majority of independent members.

• ●Members
• The Audit and Accounts Committee shall comprise at least three members, who have the appropriate and requisite qualifications to exercise their functions effectively, including particular expertise in financial or accounting matters. They are appointed from among the directors of the Company for the duration of their term of office as members of the Board of Directors.
• At least two-thirds of the members of the Audit and Accounts Committee are independent members of the Board of Directors.
• ●Chairman
• The Chairman of the Audit and Accounts Committee will be one of the members of the Audit and Accounts Committee nominated by the Company’s Board of Directors from among the independent members for the duration of his/her term of office as a director.
• The Chairman of the Audit and Accounts Committee will exercise his/her functions in accordance with the Audit and Accounts Committee Internal Rules.
• The Chairman of the Audit and Accounts Committee will set the dates, times and places of the meetings of the Audit and Accounts Committee, set the agenda and chair its meetings. The convening notices for the meetings will be sent by the Committee’s Secretary,
• who reports to the Board of Directors on the opinions and recommendations expressed by the Audit and Accounts Committee for the Board of Directors to consider.
• The Chairman of the Audit and Accounts Committee will ensure that the preparation and due process of the work of the Audit and Accounts Committee is monitored between each of its meetings.

The role of the Audit and Accounts Committee is to ensure that matters concerning the development and verification of accounting and financial information are monitored, in order to facilitate the Board of Directors’ duties of control and verification. In this regard, the committee issues opinions and/or recommendations to the Board of Directors.

Accordingly, the Audit and Accounts Committee will, in particular, exercise the following principal functions:

• ●Monitoring the preparation of financial information
• The Audit and Accounts Committee must examine the annual or half-year parent company and consolidated financial statements before they are presented to the Board of Directors, to ensure the accounting methods used to prepare these financial statements are appropriate and consistent.
• The Audit and Accounts Committee reviews in particular the level of technical provisions and any situations that could create a significant risk for the Group, as well as all financial information and quarterly, half-year or annual reports on the Company’s business, or that produced for a specific transaction (such as an asset contribution, merger or market transaction).
• It reviews the accounting treatment of all major transactions.
• The examination of the financial statements is accompanied by a presentation by the Statutory Auditors indicating the key points not only of the results of the statutory audit, in particular the audit adjustments and significant weaknesses in internal control identified during the audit, but also of the accounting methods used, as well as a presentation by the Chief Financial Officer describing the Company’s risk exposure and its material off-balance sheet commitments.

It examines the scope of consolidated companies.

• ●Monitoring the control of the external audit of financial statements
• The Audit and Accounts Committee is responsible for monitoring the statutory audit of the parent company and consolidated financial statements by the Company’s Statutory Auditors.
• The Audit and Accounts Committee has regular discussions with the Statutory Auditors during the Audit and Accounts Committee meetings dealing with the review of the procedures for preparing financial information and the review of the financial statements in order to report on their performance and the conclusions of their work.
• The Audit and Accounts Committee also monitors the Company’s Statutory Auditors (including without the presence of the executives), in particular their working schedule, potential difficulties encountered in the exercise of their duties, modifications which they believe should be made to the Company’s financial statements or other accounting documents, irregularities, anomalies or accounting inaccuracies which they may have identified, uncertainties and material risks relating to the preparation and treatment of accounting and financial information, and material weaknesses in internal control that they may have discovered.
• It is responsible for monitoring the independence of the Statutory Auditors and ensuring compliance with the professional code of conduct.
• The Audit and Accounts Committee shall meet the Statutory Auditors at least once a year without the presence of senior management. In this respect, the Audit and Accounts Committee also reviews, with the Statutory Auditors, the risks affecting their independence and the preventive measures taken to mitigate such risks. It must, in particular, ensure that the amount of the fees paid by the Company and the Group, or the share of such fees in the revenues of the firms and their networks, would not impair the independence of the Statutory Auditors.

At the same time, the Statutory Auditors will also present to the Audit and Accounts Committee a report on compliance with their obligations regarding the professional code of conduct for Statutory Auditors and with professional auditing standards.

To this end, the Audit and Accounts Committee must, in particular, ask to receive each year:

• ●the Statutory Auditors’ statement of independence;
• ●the amount of the fees paid to the network of Statutory Auditors by the companies controlled by the Company or the entity controlling the Company in respect of services that are not directly related to the Statutory Auditors’ duties; and
• ●information concerning the benefits received for services directly related to the Statutory Auditors’ duties.

• ●Selection and renewal of the Statutory Auditors
• The Audit and Accounts Committee oversees the selection and renewal of the Statutory Auditors, and submits the result of this selection to the Board of Directors. When the Statutory Auditors’ term expires, the selection or renewal of the Statutory Auditors may be preceded, at the suggestion of the Audit and Accounts Committee and the decision of the Board of Directors, by a call for tenders overseen by the Audit and Accounts Committee, which will approve the specifications and choice of firms consulted, and ensure the selection of the “best bidder” and not the “lowest bidder”.
• The Audit and Accounts Committee reports regularly on the exercise of its duties to the Board of Directors and informs it without delay of any difficulties encountered.
• ●Approval of the provision by the Statutory Auditors of services other than account certification
• Pursuant to the provisions of Article L.822-11-2 of the French Commercial Code, the committee approves the provision by the Company’s Statutory Auditors of services other than account certification. In this case, it makes this decision after having reviewed the risks affecting the independence of the Statutory Auditors and the preventive measures taken by the Statutory Auditor in this regard.
• ●Internal control duties
• The Audit and Accounts Committee provides its opinion on the organisation of the Audit Department.
• The committee receives a copy of the Company’s annual audit plan. It reviews this plan, in cooperation with the Risk Committee.
• It is responsible for monitoring internal audit recommendations. It receives regular summary reports from management.
• ●Annual budget
• Before the beginning of each financial year, it reviews the Company’s draft budget and monitors the budget process throughout the financial year.

• ●Frequency of meetings and procedures for convening meetings
• The Audit and Accounts Committee is convened whenever necessary and at least four times a year. The Audit and Accounts Committee will, in particular, meet prior to each Board meeting if the agenda includes the examination of a matter within its remit and sufficiently in advance (at least two days) of any Board meeting for which it is preparing resolutions.
  • ●Ordinary convening of meetings
  • Meetings of the Audit and Accounts Committee are called in writing, with convening notices issued by the committee’s Secretary and sent to each member. The Chairman of the Company’s Board of Directors may, as necessary, refer a matter to the Chairman of the Audit and Accounts Committee and request the convening of said committee to discuss a specific agenda.
  • ●Extraordinary convening of meetings
  • Two members of the Audit and Accounts Committee may ask its Chairman to convene a meeting of the committee to discuss a certain agenda or to add one or more points to the agenda in accordance with the limits and powers of said committee. In the event that the Chairman of the Audit and Accounts Committee does not grant this request within a period of 15 days, the two members may convene the Audit and Accounts Committee and set the agenda for its meeting.
  • If the Company’s Statutory Auditors consider there is an event which exposes the Company or its subsidiaries to a significant risk, they may ask the Chairman of the Audit and Accounts Committee to convene a meeting of said committee.
  • ●Form and timing for convening meetings
  • The notice convening the Audit and Accounts Committee contains the detailed agenda for the meeting and is sent to the members of the Audit and Accounts Committee with reasonable prior notice. The information allowing the members of the Audit and Accounts Committee to issue informed advice during this meeting is sent to the members of said committee, to the extent possible, sufficiently in advance of the meeting.
  • In case of an urgent matter, the Audit and Accounts Committee may be convened at any time by its Chairman, acting under an exceptional procedure. In this case, the Audit and Accounts Committee meeting does not need to comply with the time limits for the above convening notice as long as the urgent matter is declared in the convening notice and the information allowing the members of the Audit and Accounts Committee to issue informed advice has been sent prior to the meeting.
• ●Attendance at Audit and Accounts Committee meetings
• If any member is unable to attend a meeting of the Audit and Accounts Committee, he or she may participate in the meeting by telephone or video conference.

• Only the members and the Secretary of the Audit and Accounts Committee are entitled to attend its meetings.
• At the Chairman’s proposal, the Audit and Accounts Committee may invite to any of its meetings any executive of the Company (including an executive of any of the principal subsidiaries) capable of informing the work of the Audit and Accounts Committee, as well as the Statutory Auditors of the Company.
• ●Quorum and majority rule
• The opinions and recommendations expressed by the Audit and Accounts Committee can only be valid if at least half of its members (including the Chairman) are present.
• No member of the Audit and Accounts Committee may represent another member.
• The opinions and recommendations of the Audit and Accounts Committee will be adopted if the Chairman and the majority of members present at the meeting vote in favour.
• ●Secretariat and minutes of meetings
• The Secretary of the Company’s Board of Directors is responsible for the secretariat of the Audit and Accounts Committee.
• The opinions and recommendations of the Audit and Accounts Committee will be included in a written report. One copy of the report will be sent to all members of the Audit and Accounts Committee and another, if required, will be sent by the Chairman to the directors of the Company.

The Audit and Accounts Committee met five times in 2022. The average attendance rate was 88% (this participation rate includes a rate of 50% for Éric Hémar, the other directors each had a 100% attendance rate).

Its main work included:

• ●the approval of the annual financial statements for the 2021 financial year;
• ●an examination of the quarterly and half-yearly financial statements for the 2022 financial year;
• ●the IFRS 17 project;
• ●a review of off-balance sheet commitments;
• ●the approval of the internal audit policy;
• ●the presentation of the 2023 budget;
• ●the examination and approval of the 2023 audit plan;
• ●regular updates on the audit activity.

The principle of a Risk Committee was decided by the Board of Directors during its meeting of April 24, 2018.

In 2022, the Risk Committee was composed of Nathalie Lomon (Chairman), Janice Englesbe, Isabelle Laforgue and Laurent Musy.

• ●Members
• The Risk Committee shall comprise at least three members, who have the appropriate and requisite qualifications to exercise their functions effectively, including expertise in risk management. They are appointed from among the directors of the Company for the duration of their term of office as members of the Board of Directors.
• The Risk Committee has a majority of independent members from the Board of Directors.
• ●Chairman
• The Chairman of the Risk Committee is an independent member of the Risk Committee nominated by the Board of Directors for the duration of his/her term of office as a director.
• The Chairman exercises his/her functions in accordance with the Internal Rules of the Risk Committee.
• The Chairman of the Risk Committee sets the dates, times and places of its meetings, establishes the agenda and chairs its meetings. The convening notices for the meetings are sent by the Risk Committee Secretary,
• who reports to the Board of Directors on the opinions and recommendations expressed by the Risk Committee for the Board of Directors to consider.
• The Chairman of the Risk Committee will ensure that the preparation and due process of the work of the Risk Committee are monitored between each of its meetings.

The role of the Risk Committee is to ensure that the risk management and monitoring mechanisms are effective and that there are efficient operational internal control measures in place, to review the compliance of reports sent to the regulator, monitor the management of the Group’s capital requirements, and monitor the implementation of recommendations from internal audits of areas under its responsibility. The Risk Committee carries out all of these duties in order to facilitate the Board of Directors’ duties of control and verification. In this regard, the committee issues opinions and/or recommendations to the Board of Directors.

Accordingly, the principal functions of the Risk Committee include the following:

• ●Efficiency of risk management systems
• The Risk Committee reviews the major asset and liability risks (including subscription risks, market risk and funding risk), and ensures that effective monitoring and management mechanisms are in place. In this regard, it evaluates the various risk management policies on an annual basis.
• Each year, it reviews the internal assessment carried out by the Company of its risks and solvency (ORSA).
• It is kept updated on the Company’s risk appetite.
• It receives and reviews the results and updates of risk mapping carried out by the Company.
• ●Review of all regulatory reports relating to the Company
• The Risk Committee receives and reviews the regulatory reports required under regulations (in particular SFCR, RSR, anti-money laundering report, actuarial reports), before they are approved by the Board.

• ●Changes in prudential regulations
• The Risk Committee is informed of any regulatory changes that may have an impact on the Group’s solvency or governance. It is also informed of solutions introduced to reduce any negative effects of these changes.
• ●Compliance
• The Committee monitors the activity of the compliance function on an ongoing basis. It receives results of Level 1 and Level 2 compliance controls.
• ●The committee is responsible for monitoring the Group’s capital requirements.
• It monitors, in particular, the drafting of the partial internal model, the compilation of the file for the regulator, and the results of the model.
• It also examines the governance and major changes to the model.
• ●The committee ensures that all Level 1 and Level 2 operational controls are in place.
• It receives a summary of the results of these controls. It is informed of action plans implemented following these controls and is regularly updated on the progress of these action plans.
• The Risk Committee is informed of any loopholes in the internal control system and of the corrective actions implemented to address them. It is informed of the actual implementation of these corrective actions.

• ●Frequency of meetings and procedures for convening meetings
• The Risk Committee will be convened whenever necessary and at least four times a year. The Risk Committee will, in particular, meet prior to each Board meeting if the agenda includes the examination of a matter within its remit and sufficiently in advance (at least two days) of any Board meeting for which it is preparing resolutions.
  • ●Ordinary convening of meetings
  • Meetings of the Risk Committee are called in writing, with convening notices issued by the committee’s Secretary under the conditions set out in paragraph 3, Section 1 b) of the Risk Committee Internal Rules and sent to each member. The Chairman of the Company’s Board of Directors may, as necessary, refer a matter to the Chairman of the Risk Committee and ask them to meet with said committee to discuss a specific agenda.
  • ●Extraordinary convening of meetings
  • Two members of the Risk Committee may ask its Chairman to convene a meeting of the committee to discuss a certain agenda or to add one or more points to the agenda in accordance with the limits and powers of said committee. In the event that the Chairman of the Risk Committee does not grant this request within a period of 15 days, the two members may convene the Risk Committee and set its agenda.
  • If the Company’s Statutory Auditors consider there is an event which exposes the Company or its subsidiaries to a significant risk, they may ask the Chairman of the Risk Committee to convene a meeting of said committee.
  • ●Form and timing for convening meetings
  • The notice convening the Risk Committee contains the detailed agenda for the meeting and is sent to the members of the Risk Committee with reasonable prior notice. The information allowing the members of the Risk Committee to issue informed advice during this meeting is sent to the members of said committee, to the extent possible, sufficiently in advance of the meeting.
  • In case of an urgent matter, the Risk Committee may be convened at any time by its Chairman, acting under an exceptional procedure. In this case, the Risk Committee meeting does not need to comply with the time limits for the above convening notice as long as the urgent matter is declared in the convening notice and the information allowing the members of the Risk Committee to issue informed advice has been sent prior to the meeting.
• ●Attendance at Risk Committee meetings
• If any member is unable to attend a meeting of the Risk Committee, he or she may participate in the meeting by telephone or video conference.
• Only the members and the Secretary of the Risk Committee are entitled to attend its meetings.
• At the Chairman’s proposal, the Risk Committee may invite to any of its meetings any executive of the Company (including an executive of any of the principal subsidiaries) capable of informing the work of the Risk Committee, as well as the Statutory Auditors of the Company.
• ●Quorum and majority rule
• The opinions and recommendations expressed by the Risk Committee can only be valid if at least half of its members (including the Chairman) are present.
• No member of the Risk Committee may represent another member.
• The opinions and recommendations of the Risk Committee will be adopted if the Chairman and the majority of members present at the meeting vote in favour.
• ●Secretariat and minutes of meetings
• The Secretary of the Company’s Board of Directors will be responsible for the secretariat of the Risk Committee.
• The opinions and recommendations of the Risk Committee will be included in a written report. One copy of the report will be sent to all members of the Risk Committee and another, if required, will be sent by the Chairman to the directors of the Company.

The Risk Committee met five times in 2022. The average attendance rate was 100%.

It considered:

• ●the overall risk map and internal control system;
• ●the Russia/Ukraine situation;
• ●the partial internal model;

• ●risk policies;
• ●risk appetite indicators;
• ●regulatory reports: ORSA, RSR and SFCR and the anti-money laundering report;
• ●compliance actions;
• ●actuarial reports;
• ●the Cyber Resilience mission;
• ●regulatory news;
• ●the refinancing of subordinated debt issued in 2014.

The principle of an Appointments and Compensation Committee was decided by the Board of Directors during its meeting of July 15, 2014. The Appointments and Compensation Committee is made up of Sharon MacBeath (Chairman), Bernardo Sanchez Incera and Nicolas Papadopoulo.

The Appointments and Compensation Committee is chaired by an independent director, and two thirds of the committee are independent members of the Board of Directors. It thus conforms to the recommendation of the AFEP-MEDEF Code according to which this committee must have a majority of independent members.

Since February 2023, the Committee is also responsible of examining the strategies and actions carried out by the Company in the field of CSR.

• ●Members
• The Appointments, Compensation and CSR Committee has at least three members, appointed from among the members of the Company’s Board of Directors for the duration of their term as director.
• The Appointments, Compensation and CSR Committee shall comprise 2/3 of independent members of the Board of Directors who are competent to analyse compensation-related policies and practices and the company’s risk policy.
• ●Chairman
• The Chairman of the Appointments, Compensation and CSR Committee will be one of the members of the Appointments, Compensation and CSR Committee nominated by the Company’s Board of Directors from among the independent members for the duration of his/her term of office as director.
• The Chairman of the Appointments, Compensation and CSR Committee will convene the meetings of the Appointments, Compensation and CSR Committee, determine the agenda and chair the meetings.
• The Chairman will report to the Board of Directors on the proposals and recommendations put forward by the Appointments, Compensation and CSR Committee in order for the Board of Directors to consider them, and will ensure that the preparation and due process of the work of the Appointments, Compensation and CSR Committee is monitored between each of its meetings.

• ●Role of the Appointments, Compensation and CSR Committee
• In all matters relating to the appointment of executives (and separate from any issues related to their compensation), the Chief Executive Officer will be involved in the work of the Appointments, Compensation and CSR Committee.
• The Appointments, Compensation and CSR Committee shall prepare the resolutions of the Company’s Board of Directors on the following topics:
• ●Compensation conditions
• The Appointments, Compensation and CSR Committee is responsible for formulating proposals for the Company’s Board of Directors concerning:
  • ●the level and terms of compensation of the Chairman of the Board of Directors, including benefits in kind, retirement and personal protection plans, as well as grants of stock options or warrants, as applicable,
  • ●the level and terms of compensation of the Chief Executive Officer (CEO), and, as the case may be, the Deputy CEO, including benefits in kind, retirement and personal protection plans, as well as grants of stock options or warrants, as applicable,
  • ●the rules for the distribution of directors’ attendance fees to be allocated to the Company’s directors and the total amount to be submitted to the approval of the Company’s shareholders, and
  • ●the compensation policy.
• ●Appointment process
• The Appointments, Compensation and CSR Committee:
  • ●makes proposals to the Board of Directors regarding the appointment of members of the Board of Directors by the Ordinary Shareholders’ Meeting, and the appointment of the members of General Management,
  • ●establishes and keeps an up-to-date succession plan for members of the Board of Directors and the key executives of the Company and the Group.
• In its specific role of appointing members of the Board of Directors, the Appointments, Compensation and CSR Committee shall consider the following criteria: 

• the desired balance in the membership of the Board of Directors with regard to the composition and evolution of the Company’s ownership; 
• the desired number of independent Board members; 
• the proportion of men and women required by current regulations; 
• the opportunity to renew terms; and 
• the integrity, competence, experience and independence of each candidate. The Appointments, 

• Compensation and CSR Committee must also establish a procedure for selecting future independent members and undertake its own evaluation of potential candidates before they are approached in any way.
• The qualification of an independent member of the Board of Directors is discussed by the Appointments, Compensation and CSR Committee, which drafts a report on the matter for the Board. Each year, in light of this report and prior to the publication of the annual report, the Board of Directors will review each director’s situation with regard to the criteria of independence as defined by the Internal Rules of the Board of Directors.
• The committee is also responsible for the review, development, implementation and monitoring of the CSR strategy and initiatives.
• ●Resources and prerogatives of the Appointments, Compensation and CSR Committee
• The Appointments, Compensation and CSR Committee receives all documents and information required for the completion of its tasks from the Company’s Chief Executive Officer. It may, moreover, if requested by the Company’s Board of Directors, order any study or analysis by experts outside of the Company relating to the compensation of corporate officers in comparable companies in the banking sector.

• ●Frequency of meetings and procedures for convening meetings
• The Appointments, Compensation and CSR Committee is convened whenever necessary and at least once a year. The Appointments, Compensation and CSR Committee will, in particular, meet prior to each Board meeting if the agenda consists of the examination of a matter within its remit and sufficiently in advance of any Board meeting for which it is preparing resolutions.
  • ●Ordinary convening of meetings
  • Meetings of the Appointments, Compensation and CSR Committee are called by its Chairman, with convening notices sent to each member. The notice of meeting is sent by the Secretary of the Appointments and Compensation Committee. The Chairman of the Company’s Board of Directors may, as necessary, refer a matter to the Chairman of the Appointments, Compensation and CSR Committee and ask them to meet with said committee to discuss a specific agenda.
  • ●Extraordinary convening of meetings
  • Two members of the Appointments, Compensation and CSR Committee may ask its Chairman to convene a meeting of the committee to discuss a certain agenda or to add one or more points to the agenda in accordance with the limits and powers of said committee. In the event that the Chairman of the Appointments, Compensation and CSR Committee does not grant this request within a period of 15 days, the two members may convene the Appointments, Compensation and CSR Committee and set its agenda.
  • ●Form and timing for convening meetings
  • The notice convening the Appointments, Compensation and CSR Committee is sent to the members of the Appointments, Compensation and CSR Committee with reasonable prior notice and contains the detailed agenda for the meeting. The information allowing the members of the Appointments, Compensation and CSR Committee to issue informed advice during this meeting is sent to the members of said committee, to the extent possible, sufficiently in advance of the meeting.
• In case of an urgent matter, the Appointments, Compensation and CSR Committee may be convened at any time by its Chairman, acting under an exceptional procedure. In this case, the Appointments, Compensation and CSR Committee meeting does not need to comply with the time limits for the above convening notice as long as the urgent matter is declared in the convening notice and the information allowing the members of the Appointments, Compensation and CSR Committee to issue informed advice has been sent prior to the meeting.
• ●Attendance at meetings of the Appointments, Compensation and CSR Committee
• Only members of the Appointments, Compensation and CSR Committee are entitled to attend its meetings. The Secretary of the Appointments, Compensation and CSR Committee also participates in these meetings.
• If any member is unable to attend a meeting of the Appointments, Compensation and CSR Committee, he or she may participate in the meeting by telephone or video conference.
• ●Quorum and majority rule
• The opinions and proposals expressed by the Appointments, Compensation and CSR Committee can only be valid if at least half of its members (including the Chairman) are present.
• No member of the Appointments, Compensation and CSR Committee may represent another member.
• The opinions and proposals of the Appointments, Compensation and CSR Committee will be adopted if the majority of the members present, including the Chairman, vote in favour.
• ●Secretariat and minutes of meetings
• The Secretary of the Company’s Board of Directors is responsible for the secretariat of the Appointments, Compensation and CSR Committee.
• The opinions and proposals of the Appointments, Compensation and CSR Committee will be included in a written report. One copy of the report will be sent to all members of the Appointments, Compensation and CSR Committee and another, if required, will be sent to the directors of the Company.

The committee met five times in 2022. The average attendance rate was 100%.

It examined and/or set:

• ●the compensation policy of the Chairman of the Board for 2022;
• ●the compensation policy of the directors for 2022;
• ●the compensation policy due or paid to the Chief Executive Officer for 2021;
• ●the compensation policy of the Chief Executive Officer for 2022;
• ●a Long-Term Incentive Plan (LTIP) for 2022;
• ●delivery of the 2019 LTIP;

• ●succession plans (including for members of the Executive Committee);
• ●the 2022 compensation policy;
• ●the review of the implementation of a supplementary pension plan for the members of the Executive Committee;
• ●replacement of three directors whose terms expired at the end of the Combined Shareholders’ Meeting of May 17, 2022;
• ●the external assessment of the activities of the Board of Directors;
• ●the actions implemented by the Human Resources Department.

All persons that perform functions as director, executive manager, head of key functions, general manager of a branch, or who have the authority to sign on behalf of the Company, should be fit, under all circumstances, to implement sound and prudent management based on their professional qualifications, knowledge and experience.

The assessment of fitness includes an evaluation of professional diplomas and qualifications, relevant knowledge and experience in the insurance sector, as well as in the sectors of finance, accounting, actuarial services and management. The assessment takes into account the various entrusted tasks.

Furthermore, to assess the fitness of members of the Board of Directors, their training and their experience with respect to their responsibilities are taken into account, in particular the experience acquired as Chairman of a Board or a committee. In appraising each person, the assessment also takes into account the fitness, experience and responsibilities of the other members of the Board of Directors. When terms of office have been previously exercised, fitness is presumed owing to the experience acquired. For new members, the assessment considers the training they may receive throughout their term of office.

The Company ensures that directors collectively have the necessary knowledge and experience in the insurance and financial markets, Group strategy and its economic model, its governance, financial analysis and actuarial system, and the legal and regulatory requirements applicable to the Group, which are appropriate to assume the responsibilities conferred on the Board of Directors.

Evaluating a person’s probity includes an assessment of his/her honesty and financial strength, based on tangible evidence concerning his/her character, personal behaviour and professional conduct, including any relevant information of a criminal, financial or prudential nature, for the purpose of this assessment.

The functions of director, executive director, head of key function, general manager of a branch, or the authority to sign on behalf of the Company cannot be performed by any person who has been the subject, within the past ten years, of:

• ●a final sentence;
• ●a final measure of personal bankruptcy or any other final prohibition measure.

Persons serving as executive manager, head of key functions, general manager of a branch, or who have the authority to sign on behalf of the Company, are required to provide as proof, a declaration of absence of bankruptcy and a police record or, failing that, an equivalent document issued by a competent judicial or administrative authority of the original Member State of origin of these persons.

This fitness and probity policy will be applied by all direct or indirect subsidiaries of the Company and may be adapted in line with any stricter local regulations in this area.

The Company’s fitness and probity policy was reviewed on November 29, 2018 and approved by the Board of Directors on December 18, 2018 to extend to independent directors the obligation to provide the Company with a police record to prove their probity.

Pursuant to the Directors’ ethics charter, which can be consulted on the website at http://www.coface.com/Group/Our-organisation, on the Board of Directors tab, a director must inform the Board of Directors of any conflict of interests, including potential conflicts, in which he or she may be directly or indirectly involved. The director shall refrain from participating in discussion and decision-making on the subjects concerned.

The director shall also inform the Chairman of the Appointments, Compensation and CSR Committee of any intention to accept a new directorship in a listed company that does not belong to a group of which the director is an executive, in order to allow the Board of Directors, at the proposal of the Appointments, Compensation and CSR Committee, to decide, if necessary, whether such an appointment would be incompatible with being a director of the Company.

The director shall inform the Chairman of the Board of Directors of any conviction for fraud, any indictment and/or public sanction, and any prohibition to manage or govern that may have been issued against them, as well as any bankruptcy, sequestration or winding-up proceedings in which they may have been involved.

To the Company’s knowledge, there is no service contract binding the members of the Board of Directors to the Company or to one of its subsidiaries and providing for the award of benefits.

To the Company’s knowledge, there are no familial ties between the members of the Board of Directors and the other executive corporate officers of the Company.

To the Company’s knowledge, none of the members of the Board of Directors have been convicted of fraud during the last five years. None of these people have participated as a manager in a bankruptcy, sequestration or winding-up proceedings in the last five years, and none of these people were subject to charges and/or an official public sanction handed down by a statutory or regulatory authority (including designated professional bodies). None of these people were prevented by a court from acting as a member of an administrative, management or supervisory body of an issuer, nor from taking part in the management or performance of the business of an issuer in the last five years.

To the Company’s knowledge, as of the date of this Universal Registration Document, there are no potential conflicts of interest between the duties of the members of the Board of Directors and the executive directors of the Company, as regards the Company and their private interests.

To the Company’s knowledge, no pact or agreement has been entered into with any shareholders, clients, suppliers or other parties by virtue of which any member of the Board of Directors or any executive officer of the Company has been appointed in such capacity.

As of the date of this Universal Registration Document, no restrictions have been accepted by the members of the Board of Directors or the executive directors of the Company as concerns the disposal of their interests in the Company’s share capital, with the exception of the rules relating to the prevention of illegal insider trading and the recommendations of the AFEP-MEDEF Code imposing an obligation to retain shares.

The Company voluntarily refers to all recommendations of the Corporate Governance Code of Listed Companies (the AFEP-MEDEF Code (9)). The Company makes copies of the AFEP-MEDEF Code available for the members of its corporate bodies at all times.

Within the context of the rule to “comply or explain” provided for by Article L.22-10-10 of the French Commercial Code, and by Article 28.1 of the AFEP-MEDEF Code, the Company believes that its practices comply with the recommendations of the AFEP-MEDEF Code. However, as of the date of publication of the Universal Registration Document, certain recommendations are not applied, for the reasons presented in the following table:

The Board of Directors has established specific procedures in its Internal Rules which are aimed at limiting the powers of the Company’s general management.

Pursuant to the terms of Article 1.2 of the Board of Directors’ Internal Rules, the following are subject to prior authorisation from said Board, based on a simple majority of the members present or represented:

• ●extension of the Company’s activities to significant businesses not performed by the Company; and
• ●any interest, investment, disposal or any establishment of a joint venture carried out by the Company or one of its significant subsidiaries, for a total amount that is greater than €100 million.

These factors are published in Section 7.4 “Factors that may have an impact in the event of a public offer”.

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 meeting held on February 5, 2020.

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

The Chief Executive Officer of the Company created the Group Management Board. It comprises eight members (see also Section 1.7. “Group organisation”): 

• ●the Chief Human Resources Officer; 
• ●the Group Chief Operating Officer; 
• ●the Underwriting Director; 
• ●the Commercial Director; 
• ●the General Secretary; 
• ●the Chief Financial and Risk Officer; 
• ●the Business Technology Director; and 
• ●the Strategy and Business Development Director (see also Section 1.7. “Group organisation”).

The Management Board is the decision-making body of Coface. It generally meets every week to 

• ●examine and validate the Group’s main strategic guidelines and steer management, 
• ●in particular, concerning 
  • ●strategy and budget, 
  • ●major investments and projects, 
  • ●definition of the organisational structure and human resources, 
  • ●monitoring of operational performance and results, 
  • ●in addition to control and compliance of activities. 

In 2022, it continued to meet on average twice a week.

In addition to Xavier Durand, the following persons were members of the Group Management Board on the date of publication of the Universal Registration Document:

Xavier Durand also chairs the Executive Committee.

The Executive Committee is composed of the members of the Group Management Board and the seven regional directors (see also Section 1.7 “Group organisation”).

It helps to prepare the Group’s strategy and reviews key operational matters or strategic initiatives.

Like the Management Board, the Executive Committee pays particular attention to monitoring the efficiency of internal control, internal audit and risk management systems that are considered essential to the Group’s smooth internal governance.

It meets each month to review the progress of the Group’s cross-disciplinary projects and the implementation of the strategic plan. In 2022, it also continued to meet twice a month.

Furthermore, the Executive Committee members contribute, as a team, to setting up and disseminating Coface’s managerial culture.

In addition, the Chief Executive Officer convenes the main managers of the various head office functions for a meeting of this committee once a month. This committee focuses on information and discussions relating to the main areas of reflection and action.

Since the fourth quarter of 2022, the Executive Committee meets once a quarter in the form of a “CSR Committee”. On this occasion, it examines the company’s strategy, the main projects and potential initiatives relating to CSR.

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 included in the sections below present a summary of compensation and benefits of any kind that are paid to corporate officers of the Company, and to members of the Company’s Board of Directors by:

• the Company, 
• companies controlled, pursuant to Article L.233-16 of the French Commercial Code, by the company in which the mandate is performed, 
• companies controlled, pursuant to Article L.233-16 of the French Commercial Code, by the Company or companies that control the company in which the mandate is performed and 
• the Company or companies that, pursuant to the same article, control the company in which the mandate is exercised. 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 within the meaning 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’s HR Department and is reviewed by the Appointments, 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 country level 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 abilities 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 individual and collective performance over a given year into account 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 the front office functions:
    • ●quantitative objectives related to the financial performance of the operating entity account for 15% of variable compensation,
    • ●predominantly quantitative objectives related to the performance of the function in question account for 45%,
    • ●40% of the objectives are determined individually during the annual performance review meeting. 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 30%, and targets set individually for 70% 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 using 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 influence 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 a fixed or open-ended employment contract, 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 handled 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;
• ●corporate benefits: employee benefits are determined by each Group entity in order to be as close as possible to local concerns. The Group ensures consistency of practice and guarantees a level of social protection that is competitive in the market and respectful of its employees worldwide. In order to meet the need for fairness and competitiveness in the compensation of members of the Executive Committee, the Board of Directors decided, at its meeting of February 15, 2022, to implement a supplementary pension plan for members of the Executive Committee who do not have a specific scheme. The main features of this plan are:
  • ●defined contribution pension scheme (in France, in the form of an insurance policy governed by Article 82 of the French General Tax Code),
  • ●contribution of 10% of the beneficiary’s base salary (invested in the plan, with compensation for additional charges and taxes),
  • ●withdrawal as a lump sum or an annuity on liquidation of pension entitlements.

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 is wholly or partly comprised of these components, 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;

• ●persons holding the key functions described in Articles 269 to 272 of Regulation 2015/35: audit, risk, and actuarial (compliance key function is exercised by the General Secretariat);
• ●persons 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 proportion of the Company’s total turnover determined each year.

In 2022, 31 employees fell within the regulated category. The Appointments, 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 sets specific compensation rules intended for regulated categories of employees:

• ●the variable compensation package therefore 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.

In accordance with Article L.22-10-8 of the French Commercial Code, the Board of Directors, based on a proposal by the Appointments, Compensation and CSR Committee, establishes a compensation policy for corporate officers. This document describes the principles of the policy, which is in line with the Company’s corporate interests, falls within its commercial strategy and contributes to its long-term viability.

It describes all the components of fixed and variable compensation and explains the decision-making process followed to determine, review and implement it.

It is presented in a clear and understandable way as part of the corporate governance report and is the subject of a draft resolution submitted for approval by the Shareholders’ Meeting each year and each time a significant change is made.

The compensation policy for corporate officers defines the principles, structure and governance rules applicable to the compensation paid to the Chief Executive Officer and the directors.

The Board of Directors sets the various components of the Chief Executive Officer’s compensation at the start of each financial year, based on a proposal by the Appointments, Compensation and CSR Committee. The Appointments, Compensation and CSR Committee proposes the compensation policy for the Chief Executive Officer in compliance with the rules laid down by the Solvency II Directive and the recommendations of the AFEP-MEDEF Code.

It thereby ensures that the principles of balance, external competitiveness, consistency and internal equity are observed in determining the components of compensation. It ensures a correlation between the responsibilities exercised, the results achieved and the level of compensation over a performance year.

It also ensures that compensation practices contribute to effective risk management within the Company and in particular:

• ●strict compliance with the laws and regulations applicable to insurance companies;
• ●the prevention of conflicts of interest and the management of risk-taking within the limits of the Company’s risk tolerance;
• ●consistency with the Company’s strategy, interests and long-term results;
• ●consideration of social and environmental issues.

The Chief Executive Officer’s compensation is subject to a comparative analysis of the market each year by a compensation consultancy firm in order to ensure it is competitive within the market and that the structure offers the right balance of fixed, variable, short-term and long-term components. The results of this analysis are reported to the Appointments, Compensation and CSR Committee as part of the annual review of the Chief Executive Officer’s compensation.

The objectives, practices and governance in terms of compensation are clearly established and communicated and the components of the Chief Executive Officer’s compensation are presented transparently in the corporate governance report subject to approval by the Shareholders’ Meeting.

The compensation of the Chief Executive Officer comprises:

• ●fixed compensation: the fixed annual compensation was adjusted to €750,000 gross when the Chief Executive Officer’s term of office was renewed in 2020 in order to take into account his responsibilities, performance and market practices (see detailed explanation in the fairness ratio section below);
• ●annual variable compensation: the bonus is assessed on the basis of performance for a given year. The target is set at 100% of the base salary. It comprises 60% financial objectives and 40% strategic and managerial objectives. The maximum achievement rate for variable compensation is 200% (150% for financial objectives and 50% for strategic and managerial objectives);
• ●long-term variable compensation: fixed in the form of free performance shares. The delivery of the shares is contingent upon presence and performance conditions and they have a vesting period of three years. The shares awarded to the Chief Executive Officer may not represent more than 20% of the total number of shares awarded for the financial year and is limited to 125% of his base salary. The Chief Executive Officer’s free share award is subject to the same conditions as all beneficiaries; however, the Chief Executive Officer must retain 30% of the shares awarded until expiry of his term of office. These Long-Term Incentive Plan (LTIP) schemes are intended to ensure that the interests of the Chief Executive Officer are aligned with those of the shareholders over the long term;
• ●benefits in kind: the Chief Executive Officer is entitled to a company vehicle and the payment of 62.5% of the contributions payable to the social security regime for company managers and corporate officers.

He is entitled to the Group healthcare and protection schemes in place for all employees. In 2022, the Board of Directors decided to put in place a supplementary retirement scheme for members of the Executive Committee, including the Chief Executive Officer (see paragraph 2.3.1 above). A medical assessment is proposed to the Chief Executive Officer and members of the Executive Committee every two years.

Note:

• ●the variable compensation package includes the annual variable compensation (“bonus”) and the long term variable compensation (Long-Term Incentive Plan) in the form of free performance shares;
• ●the payment of 30% of the annual variable compensation (“bonus”) is deferred and paid as follows: 50% in N+2 and 50% in N+3. Deferred compensation is not paid if a loss is observed on the date of payment or in case of dismissal for gross negligence or serious misconduct;
• ●deferred compensation, including the deferred bonus portion and the free shares awarded under the Long-Term Incentive Plan, accounts for more than 60% of the overall variable compensation;
• ●all risk hedging transactions are prohibited.

The compensation of the Chief Executive Officer may be summarised as follows:

The Group’s policy is not to award compensation to management representatives who perform the duties of directors in Group companies. The Chairman of the Board of Directors receives compensation of €180,000 for his corporate office within COFACE SA.

The compensation policy for corporate officers has been adapted to the usual practices of listed companies and guarantees the independence of directors.

The components of directors’ compensation are presented clearly and transparently in the corporate governance report and are subject to approval by the Shareholders’ Meeting.

The overall annual budget allocated to directors’ compensation in 2022 totalled €450,000 (excluding the compensation of the Chairman of the Board of Directors). It is divided between the Board of Directors, the Audit and Accounts Committee, the Risk Committee and the Appointments, Compensation and CSR Committee.

 The rules on the distribution of directors’ fees are as follows:

In compliance with the regulations, the tables below present a summary of compensation and stock options and shares awarded during the fiscal years ended December 31, 2021 and December 31, 2022 to Bernardo Sanchez Incera, Chairman of the Board of Directors since February 10, 2021, and Xavier Durand, Chief Executive Officer.

Nicolas Namias, Chairman of the Board of Directors from September 9, 2020 to February 10, 2021, received no form of compensation or benefit. The compensation paid by Natixis to Nicolas Namias for his duties as Chief Executive Officer of Natixis is described in the Natixis Universal Registration Document and on the website: www.natixis.com

In compliance with the regulations, the tables present the breakdown of fixed and variable compensation and other benefits granted during the fiscal years ended December 31, 2021 and 2022 to Bernardo Sanchez Incera, Chairman of the Board of Directors since February 10, 2021.

Nicolas Namias, Chairman of the Board of Directors from September 9, 2020 to February 10, 2021, received no form of compensation or benefit. The compensation paid by Natixis to Nicolas Namias for his duties as Chief Executive Officer of Natixis is described in the Natixis Universal Registration Document and on the website: www.natixis.com

In accordance with the terms of Article L.22-10-9 of the French Commercial Code, the Company provides here the ratio between the level of compensation of the Chief Executive Officer to the average and median full-time equivalent compensation of the Company’s employees.

This analysis was conducted taking into account the “Guidelines on compensation multiples” issued by the AFEP (the French Association of Private Enterprises) on September 27, 2019 and updated in February 2021. The scope used for the analysis is the France scope (all employees established in France and continuously present during the reference year), which is the Chief Executive Officer’s market and is the most relevant for this comparison. It takes into account the gross components of compensation paid or awarded for financial year N (fixed pay, variable compensation paid during financial year N for year N-1, deferred variable portion paid during financial year N for previous financial years, free shares awarded for financial year N valued at IFRS fair value, and benefits in kind).

It concerns only the Chief Executive Officer, as the Chairman of the Board of Directors receives only an annual flat-rate compensation set at €180,000 for his term of office.

• ●Financial year 2018: first full year of Xavier Durand’s compensation, including a performance bonus for 2017 (152.01% achievement of the objectives set over the period) and the first deferred variable compensation amount paid in respect of the 2016 bonus.
• ●Financial year 2019: Xavier Durand’s compensation includes a performance bonus for 2018 (157.83% achievement of the objectives set over the period), comparable to 2017, and the second deferred variable compensation amount paid in respect of the 2016 bonus and the first for the 2017 bonus; the ratios are relatively stable between 2018 and 2019.
• ●Financial year 2020: Xavier Durand’s compensation includes a performance bonus for 2019 (151.43% achievement of the objectives set over the period), comparable to 2017 and 2018, the second deferred variable compensation amount paid in respect of the 2017 bonus and the first for the 2018 bonus. In addition, Xavier Durand’s fixed compensation was revised from €575,000 to €750,000 on his reappointment in 2020, in order to take into account:
  • ●individual performance: Xavier Durand outperformed his objectives for the previous three financial years;
  • ●market practice: Xavier Durand’s fixed compensation was voluntarily set below the market median at the time he took office in 2016 (17% below the market median (3) in base salary and 21% below overall in 2019) and was not reviewed in his first four years in office, in accordance with the company’s policy and the recommendations of the AFEP-MEDEF Code. This review allowed the Xavier Durand’s compensation to be positioned at a competitive level, slightly above the market median.

The fairness ratio therefore changed over the period but remains well below the benchmarks made up of SBF 120 companies.

• ●Financial year 2021: the compensation paid or awarded to Xavier Durand in 2021 mainly includes:
  • ●gross annual compensation set at €750,000 on the renewal of his term of office in 2020, maintained for 2021,
  • ●the cash portion of the bonus due in respect of 2020, with 72.11% of targets for the period met, down significantly compared to previous years,
  • ●the second instalment of deferred variable compensation paid in respect of the 2018 bonus and the first in respect of the 2019 bonus, the amounts of which were stable compared to the previous financial year,
  • ●the amount awarded under the 2021 LTIP, or 75,000 shares valued at €533,850 (IFRS value). This amount was less than in the 2020 LTIP, which was valued at €717,900 (IFRS value) for the same number of shares.

The table below shows the compensation received by members of the Company’s Board of Directors for the financial year ended December 31, 2021 as well as compensation payable to them for the financial year ended December 31, 2022. For the sake of transparency, the Directors representing Natixis who resigned on February 10, 2021 are also included in the table below.

None – no stock options or warrants were awarded to executive directors during the financial year ended December 31, 2022.

None – no stock options or warrants were exercised by an executive corporate officer during the financial year ended December 31, 2022.

The conditions for the free share allocation are described in Section 2.3.4. The table below provides a description of the free performance shares awarded to Xavier Durand under the 2022 Long-Term Incentive Plan.

As the performance condition was met in full, all of the shares awarded to Xavier Durand under the 2019 LTIP, i.e., 75,000 shares, were definitively vested on February 14, 2022 and delivered on February 16, 2022. As agreed under the Plan’s regulations, Xavier Durand must retain 30% of the shares acquired under the 2019 LTIP until the end of his corporate term of office or of any other role that he might hold within Coface, which corresponds to 22,500 shares under this Plan.

None, no stock options or warrants were awarded during the financial years ended December 31, 2022, 2021, 2020, 2019 and 2018.

No plan to award stock options or warrants is pending at the date of this Universal Registration Document.

No stock options or warrants were awarded during the financial years ended December 31, 2022, 2021, 2020, 2019 and 2018 to the top ten employees who are not corporate officers.

No plan to award stock options or warrants is pending at the date of this Universal Registration Document.

372,268 performance shares were awarded under the 2019 LTIP, out of the 434,055 available shares representing the total package allocated to this plan by the Board of Directors. 70,000 performance shares were awarded to the Chief Executive Officer for a value of €564,445 on the award date (IFRS fair value of €463,260). The remaining 302,268 performance shares were awarded to members of the Executive Committee, to the regulated category of employees and to a number of other employees, with a view to their retention. In addition, in certain countries where the award of free shares was too complicated or impossible, a “phantom shares” solution was implemented for some beneficiaries (28,520 phantom shares). As the performance condition was fully met, all of the shares awarded under this plan were delivered in February 2022, subject to the beneficiaries’ continued presence in the company at the vesting date, representing 357,388 free shares and 27,280 phantom shares.

312,200 performance shares were awarded under the 2020 LTIP, out of the 347,841 available shares representing the total package allocated to this plan by the Board of Directors. 75,000 performance shares were awarded to the Chief Executive Officer for a value of €862,463 on the award date (IFRS fair value of €717,900). The remaining 237,200 performance shares were awarded to members of the Executive Committee, to the Solvency II “regulated” category of employees and to a number of other employees, with a view to their retention. In addition, in certain countries where the award of free shares was too complicated or impossible, a “phantom shares” solution was implemented for some beneficiaries (28,109 phantom shares). As the performance condition was fully met, all of the shares awarded under this plan were delivered in February 2023, subject to beneficiaries’ continued presence on the vesting date, i.e. 299,391 free shares and 26,409 phantom shares.

408,403 performance shares were awarded under the 2021 LTIP, out of the 467,754 available shares representing the total package allocated to this plan by the Board of Directors. 75,000 performance shares were awarded to the Chief Executive Officer for a value of €641,363 on the award date (IFRS fair value of €533,850). The remaining 333,403 performance shares were awarded to members of the Executive Committee, to regulated categories of employees and to a number of other employees, with a view to their retention. In addition, in certain countries where the award of free shares was too complicated or impossible, a “phantom shares” solution was implemented for some beneficiaries (46,700 phantom shares).

320,849 performance shares were awarded under the 2022 LTIP, out of the 425,966 available shares representing the total package allocated to this plan by the Board of Directors. 75,000 performance shares were awarded to the Chief Executive Officer for a value of €880,350 on the award date (IFRS fair value of €737,500). The remaining 245,849 performance shares were awarded to members of the Executive Committee, to the Solvency II “regulated” population and to a number of other employees, with a view to their retention. In addition, in certain countries where the award of free shares was too complicated or impossible, a “phantom shares” solution was implemented for some beneficiaries (84,256 phantom shares) – see Section 7.2.3 “Own shares and the acquisition of treasury shares by the Company”.

None.