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.

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 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:

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 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.

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.

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 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.

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.).

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 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.

After a post-Covid rebound of 5.9% in 2021, the global economy slowed to 3.0% in 2022 (at market exchange rates). The trend can largely be explained by the slowdown in China resulting from its zero-Covid policy, given the country’s weight in the global economy. The slowdown can also be attributed to the surge in inflation, at 8.0% in 2022 compared with 4.3% in 2021. Commodity and intermediate prices soared while supply chains failed to return to normal.

Inflation also spiked following Russia’s invasion of Ukraine on February 24. The outbreak of hostilities was followed by extensive sanctions and counter-sanctions that impacted trade and financial exchanges with the two countries, along with Belarus. Russia and Ukraine play a major role in global trade in agricultural products, fertilisers, minerals and hydrocarbons.

Central banks in developed economies joined those in emerging economies having tightened their monetary policy in second-half 2021 to combat inflation and support their currencies against the dollar, the latter boosted by rising uncertainties. Governments once again intervened to mitigate the impact of galloping energy and food prices on households. As a result of this aid, and the savings accumulated during the pandemic, consumption proved resilient in the first half of the year. Companies also benefited from support measures to cope with rising production costs. But this did not prevent companies in energy-intensive sectors, such as glass, fertilisers, metallurgy, paper-cardboard, food or construction materials, from reducing or halting production at some plants as they were unable to pass on the increase in their costs. In this respect, a distinction must be made between regions with relatively cheap energy, such as the Middle East and North America, and the rest.

Despite the dip in certain commodity prices in the second half, global trade increased in value (1) by USD 32,000 billion, 13% higher than in 2021 and 27% higher than in 2019. Trade in goods came out at USD 25 trillion, up 10% and 32% respectively. At USD 7 trillion, trade in services increased 15% and 11% respectively. In volume terms (2), trade in goods rose by nearly 3% in 2022 compared with 2021, with strong momentum in the first half of the year giving way to a sharp slowdown in the second half. Trade in services, which also returned to its pre- Covid peak in the second quarter, slowed less sharply.

With growth of 2.6% in 2022 (after 5.3% in 2021), the economies of developed countries slowed as a whole. The trend began in the last few months of 2021, when all sectors were impacted by numerous shocks, including supply issues, an increase in energy, materials and food prices, workforce shortages, and a fresh wave of Covid-19 with the Omicron variant. However, the main cause of the trend is the outbreak of war in Ukraine at the end of February 2022, which exacerbated the rise in producer and consumer prices. With inflation impacting all products, and wages rising substantially in some countries, central banks have been forced to raise interest rates vigorously.

Growth in Western Europe came out at 2.6% in 2022 (after 4.5% in 2021). The figure would have been even lower if the autumn had not been mild, reducing the need for heating and easing pressure on energy prices. There were also considerable disparities in growth.

• ●Portugal, Spain, Austria and Greece (with growth of 6.5%, 5.5%, 4.8% and 4.5%, respectively) took full advantage of the strong rebound in tourism.
  • ●Spain and Portugal also benefited from a relatively lower energy price environment.
  • ●While Greece capitalised on its vital role in maritime transport.
• ●The Irish economy (11.1%) was buoyed by the strength of the pharmaceutical and IT industries, as well as the robust results of the European head offices of global groups attracted by the country’s tax benefits.
• ●The UK economy (4.4%) slowed throughout the year, going as far as stagnation. Consumption and investment were negatively impacted by high inflation and tighter credit.
• ●Meanwhile, the Netherlands (4.2%), Western Europe’s trade gateway, benefited from the higher value of trade.
• ●Belgium, Denmark, France, Italy, Norway and Sweden ranked in the middle with growth of between 2.5% and 3.5%.
  • ●The tourism industry offset industrial and energy issues in France and Italy, while Scandinavian countries benefited from their advantageous positioning in energy, electronics and pharmaceuticals.
• ●At the bottom of the rankings, Germany (1.8%) suffered from its dependency on mechanical and automotive exports to China.

Among other advanced economies:

• ●the US economy also slowed sharply, with growth of 1.9% in 2022, after 5.9% in 2021. Despite its weak trade links with Russia and Ukraine and its status as a net exporter of energy and other commodities, the US still suffered from the rise in global commodity prices. It also faced a decline in its labour force participation rate following Covid, which kept wages high. The Fed took aggressive action to deal with inflation by raising interest rates. The resulting increase in the cost of credit and the sharp drop in stock market values weighed on investment, particularly in the construction sector. Consumption held up better due to the savings accumulated during the pandemic;
• ●Canada, with growth of 3.5%, fared better than its neighbour owing to its higher share of commodity exports;

• ●the Australian economy (3.4%) held up relatively well despite a slowdown in domestic demand driven by inflation and monetary tightening;
• ●Israel (5.0%) benefited from its autonomous gas supply, the arrival of Russian and Ukrainian immigrants, its high-tech focus, and relatively limited inflation;
• ●Japan’s economy slowed to 1.1%, a weak performance but in line with its potential. The export sector suffered from China’s poor form, while its imports bill rose. In addition, consumers faced inflation exacerbated by the depreciation of the yen;
• ●South Korea (2.6%) was also negatively impacted by weaker external demand, particularly for its semiconductors.

Emerging and developing economies expanded by 3.6% in 2022 after 6.7% in 2021. However, there were wide disparities between regions and countries.

The Middle East and North Africa region is the only emerging or developing region that posted higher economic growth in 2022 than in 2021, with 5% after 4.4%.

• ●Unsurprisingly, oil- and gas-producing countries benefited from the high prices: Algeria (+4.5% after +3.5%), Saudi Arabia (+7% after +3.2%), United Arab Emirates (+6.0% after +3.8%), Iraq (+9% after +7.7%), Oman (+5.5% after +3%), and Qatar (+5.0% after +1.6%).
• ●Iran recorded modest growth (3.5%) for the third year in a row despite international sanctions.
• ●The Egyptian economy grew 6.5% (after only 3.3% due to the pandemic) over its 2021-2022 fiscal year thanks to the Suez Canal, natural gas and public investment. But activity slowed sharply in the second half of the year on high inflation, tighter credit and import restrictions.
• ●In contrast, growth dipped in Morocco (1.0% after 5.7%) owing to poor harvests caused by drought.
• ●Growth also declined in Tunisia (2.2% after 3.3%) on inflation and political and social difficulties.

With growth of 3.7% in 2022, after 7.2% in 2021, emerging Asia confirmed its resilience to external shocks:

• ●as the slowdown resulted from China’s poor health (3.0% after 8.1%) caused by its zero-Covid strategy and the tightening of regulations on real estate activity. However, the relative isolation of its food market and advantageous prices on Russian oil and gas helped contain inflation, while public investment in infrastructure boosted domestic demand;
• ●the Indian economy proved resilient (6.8% in 2022, after 8.3% in 2021) despite the impact of inflation (particularly food prices) and higher interest rates on domestic demand. The strength of its pharmaceutical exports and IT services contributed positively;
• ●growth in Indonesia rose from 3.7% in 2021 to 5.3% in 2022 on strong momentum in coal, nickel and palm oil exports. Its post-COVID reopening boosted tourism and domestic demand;
• ●growth in Malaysia (8.0% after 3%), Vietnam (7.9% after 2.6%) and the Philippines (7.1% after 5.7%) also picked up thanks to domestic demand, electronic exports and tourism. 
• ●In Thailand, the improvement (from 1.6% to 3.2%) was limited by the delayed and only partial return of tourists, despite the strength of electronics and automotive exports.

Latin American growth slowed from 7.1% in 2021 to 3.6% in 2022.

• ●Brazilian growth came out at 2.9% (after 5.0% in 2021). Domestic demand held up strongly despite tighter credit and high inflation, as social transfers, tax exemptions and employment growth played their part. Mineral and agricultural exports prospered.
• ●In Argentina, growth slowed throughout 2022 to 5.1% (after 10.3% in 2021). Consumption and investment collapsed due to skyrocketing inflation and restrictions on capital movements and imports, while strong agricultural exports were offset by energy prices.
• ●Colombian growth held up well (8.0% in 2022 after 10.7% in 2021), boosted by sales of coal, oil and gold, with consumer spending underpinned by strong employment and wages.
• ●In Peru, growth slowed throughout 2022 to just 2.5% over the year, after 13.6% in 2021. This can be attributed to the impact of strikes in copper mines (the price of which has fallen) and political chaos, which dampened investment. Meanwhile, consumption held up well thanks to fiscal support measures and a new scheme allowing savers to withdraw their money from pension funds.
• ●In Mexico, growth was down from 4.8% in 2021 to 2.6% in 2022, with domestic consumption, boosted by employment, with wages and expatriate remittances proving resilient.
• ●In Chile (2.7%), domestic demand was hit by inflation, tighter credit and rising unemployment as well as a decline in Chinese demand for copper.

Sub-Saharan Africa saw its growth slow slightly from 4.6% in 2021 to 3.5% in 2022.

• ●In Nigeria, growth varied little (down from 3.6% in 2021 to 3.2% in 2022) and remains relatively low relative to the country’s population growth. The country benefited only minimally from high oil prices as a result of operating constraints, while agriculture was impacted by insecurity and flooding.
• ●In South Africa, growth came in at 2.1% in 2022 after 4.9% in 2021. The impact of rolling blackouts and flooding in KwaZulu-Natal on mining was offset by strong domestic demand supported by social transfers. These were facilitated by an improvement in the fiscal position thanks to increased revenue from mineral exports.

• ●The recovery was confirmed in both Angola (3.2% in 2022 after 0.8% in 2021) due to the increase in oil revenues, and Mozambique (3.9% after 2.3%) thanks to coal, aluminium and electricity.
• ●In Kenya, activity held up well (5.3% in 2022 after 7.5% in 2021) thanks to the post-Covid rebound, despite the impact of imported inflation, which was exacerbated by the impact of drought on agriculture in the north.
• ●In Ethiopia, growth shrank from 6.5% in 2021 to 3.5% in 2022, with the war in Tigray, the suspension of international aid and drought continuing to have a negative impact.
• ●Growth remained strong in Tanzania (4.5% in 2022 after 4.9% in 2021), with tourism and gold mining continuing to expand and infrastructure construction maintaining momentum.
• ●In Ghana, growth fell from 5.4 to 3.6% due to runaway inflation and the corresponding increase in the cost of credit, despite the strong performance of oil, gold and cocoa.
• ●Finally, in Côte d’Ivoire, growth remained strong (5.0%), driven by agricultural exports, the agri-food industry and relatively controlled inflation thanks to government measures.

Central European economies slowed from 6.0% growth in 2021 to 4.1% in 2022.

• ●Poland followed this pattern (4.4% in 2022, after 6.8% in 2021). Excluding inflation, consumer spending continued to benefit from rising wages in a tight labour market and from the arrival of many Ukrainians. This partially offset the slowdown in exports.
• ●Hungarian growth held up well (5.2% after 7.1%), for the same reasons.
• ●In the Czech Republic, growth fell from 3.5% to 2.5% owing to sluggish consumption resulting from inflation and a sharp drop in exports as industry suffered from input shortages.
• ●Conversely, Romanian growth increased considerably, from 5.1% to 5.8%, thanks to strong momentum in private consumption boosted by substantial inflows of Ukrainians.
• ●Further to the east, Turkey saw its growth contract from 11.4% in 2021 to 5.5% in 2022. While consumer spending was hit by inflation, exports benefited from the rebound in tourism and the country’s role in offering an alternative to Asian products.
• ●Ukraine’s economy collapsed by 35% due to the war.
• ●While Russia managed to limit the decline to 3.5% thanks to oil and gas revenues. Regarding the gas sector, the positive price effect trumped the negative volume effect, while China and India provided an alternative to Europe for oil exports.
• ●Lastly, Kazakhstan, which was unable to fully benefit from its oil owing to a problem with a pipeline to the Caspian Sea, achieved growth of 3.3% in 2021, up from 2.6% in 2022.

On May 17, 2022, during the Combined General Meeting, Laetitia Leonard – Reuter and Laurent Musy have been elected as independent directors for a term of four years. These appointments follow the expiration of the terms of office of Olivier Zarrouati and Éric Hémar, respectively.

Thus, at the close of the General Meeting, the Board of Directors is composed of 10 members, 5 women and 5 men, the majority (6) of whom are independent directors.

On May 2, 2022, Hugh Burke has been appointed as the CEO of Coface Asia-Pacific region, effective on April 1, 2022. He joins the Group Executive Committee and reports to Xavier Durand, Coface CEO. He takes over from Bhupesh Gupta.

On September 8, 2022, Matthieu Garnier, Group Information Services Director, joined the Group Executive Committee and will continue to report to Thibault Surer, Group Strategy & Development Director. This decision is part of our strategy to develop information services, one of the major pillars of our Build to Lead plan.

Consolidated turnover amounted to €1,812.0 million, up 13.4% on 2021 at constant FX and perimeter. The net combined ratio stood at 64.9%, or 0.3 points above the level recorded in 2021 (64.6%). This breaks down into a 2.7-point increase in the loss ratio to 36.0% and a 2.5-point decline in the cost ratio to 28.8% compared with 2021. The Group ended the year with net income (Group share) up 26% at €283.1 million (vs. €223.8 million in 2021) and return on equity of 15.6%.

The target solvency ratio ranges between 155% and 175%. The solvency ratio is estimated at 200.53% at December 31, 2022 (1). Coface will propose the payment of a dividend (2) of €1.52 per share to shareholders, representing a payout ratio of 80%.

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

• ●in 2021: Coface Poland Insurance Services, Coface Romania Insurance Services, Coface Finance Israel and Coface Servicios Mexico;
• ●in 2022: Coface Norden Services (Denmark), Coface Sverige Services (Sweden), Coface Services Suisse, Coface Baltic Services (Lithuania) and Coface Servicios Argentina.

Information in this section is derived from the statement of cash flows in the consolidated financial statements and from Note 9 “Cash and cash equivalents” in the Company’s consolidated financial statements.

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

For the year ended December 31, 2022, the Group’s financing liabilities, totalling €534.3 million, are comprised of two subordinated loans.

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

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

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

Amounts due to banking sector companies, which correspond to drawdowns on the bilateral credit lines (see “Bilateral credit lines” below) set up with various banking partners of Coface Finanz and Coface Poland Factoring and the Group’s local banks, amounted to €743.2 million for the financial year ended on December 31, 2022.

Debt securities amounted to €1,794.9 million for the financial year ended on December 31, 2022, including:

• ●senior units issued by the VEGA securitisation fund under the Coface Finanz factoring receivables securitisation programme (see “Securitisation programme” below), in the amount of €1,180.5 million; and
• ●commercial paper issued by COFACE SA (see “Commercial paper programme” below) to finance the activity of Coface Finanz in the amount of €614.3 million.

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

• ●a securitisation programme to refinance its factoring receivables for a maximum amount of €1,200 million;
• ●a commercial paper programme for a maximum amount of €700 million; and
• ●bilateral credit lines for a maximum total amount of €1,676.6 million.

In 2022, the securitisation programme was increased to €1,200 million and renewed early in March; the senior one-year units were renewed in December. Coface Poland Factoring’s syndicated multi-currency loan was renewed early in the amount of €310 million. This loan has a two-year maturity with two options for a one-year extension, at the lenders’ discretion. In May, the option to extend the fourth year of the syndicated loan serving as a back-up to COFACE SA’s €700 million commercial paper programme was exercised.

At December 31, 2022, Coface Group’s debt linked to its factoring activities amounted to €2,538 million.

To refinance its factoring activities, in February 2012 the Group set up a securitisation programme for its factoring trade receivables, guaranteed by Compagnie française d’assurance pour le commerce extérieur. In March 2022, the securitisation programme was renewed early and its maximum amount was increased to €1,200 million. USD units were created (maximum amount equal to 25% of the total maximum amount of the transaction) following the inclusion of US clients and debtors in the transaction.

At December 31, 2022, €1,180.5 million had been used under this programme.

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

• ●payment default of Coface Finanz or of Compagnie française d’assurance pour le commerce extérieur for any sum due under the securitisation fund;
• ●the cross default of any Group entity pertaining to debt above €100 million;
• ●closure of the asset-backed commercial paper market for a consecutive period of 180 days;
• ●winding-up proceedings concerning Coface Finanz, Coface Poland Factoring, the Company or Compagnie française d’assurance pour le commerce extérieur;
• ●the discontinuance of or substantial change to the activities practised by Coface Finanz or by Compagnie française d’assurance pour le commerce extérieur;
• ●a downgrading of the financial rating of Compagnie française d’assurance pour le commerce extérieur to below BBB- for the main funding (maximum amount of €1,200 million) and to below A for additional funding (maximum amount of €100 million);
• ●non-compliance with one of the covenants linked to the quality of the portfolio of ceded factoring receivables.

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

The three covenants set by the securitisation programme include:

At December 31, 2022, the Group complied with all of these covenants.

The Group has a €700 million commercial paper issuance programme under which the Company frequently issues securities with due dates ranging generally between one and six months. At December 31, 2022, securities issued under the commercial paper programme totalled €614.3 million. The programme was rated P-2 by Moody’s and F1 by Fitch.

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

To refinance its factoring business, the Group also set up a number of bilateral credit lines and overdraft facilities, mainly through its subsidiaries, for a total maximum amount of €1,676.6 million:

• ●bilateral credit lines and overdraft facilities with local banks for a maximum of €592.7 million, of which €32.9 million had been drawn in Germany and €0.9 million in Poland at December 31, 2022
• ●bilateral credit lines concluded with banks:
  • ●six lines for a maximum total amount of €425 million for Coface Finanz (with maturities ranging between one and three years), of which €314 million had been drawn down as of December 31, 2022,
  • ●five lines (including a syndicated loan) for a maximum total amount of €658.9 million for Coface Poland Factoring (with maturities ranging between one and three years), of which €394 million had been drawn down as of December 31, 2022

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

In 2023, global economic growth is expected to slow to 1.9% from 2.9% in 2022. Emerging countries, with the exception of China, should be the main contributors to growth. The major advanced economies, excluding Japan and Australia, are expected to see their growth slow sharply to between -1% and +1%. This decline will be due in part to sluggish growth in Europe at the turn of 2022-2023, as well as in the United States starting in the second quarter of 2023.

The general context will continue to be dominated by the fallout from the war in Ukraine and, to a lesser extent, the impact of weather events. In economic terms, this will translate into price increases in food, energy, materials, industrial components and in certain services such as transport, restaurants and trade. In turn, inflation and the associated tightening of credit will continue to put pressure on global activity by weighing on demand (consumption, investment) and supply (industrial production and services).

Global inflation is expected to fall to 6% in 2023 after 8% in 2022. This decline will be largely due to a favourable base effect. Moreover, the inflation profile is not expected to be uniform over 2023, with – barring a marked fall in temperatures in Europe – a drop in the energy component until the summer. This phase will be followed by a recovery in the second half of the year, when China’s activity accelerates and its need for energy, particularly for liquefied natural gas, increases.

While Russian oil refused by Europe has been able to find alternative buyers in Asia (China and India in particular) thanks to the availability of oil ships, substitution should not be as easy for gas. Gas not being exported to Europe is in fact mainly located in the western part of Russia, the few pipelines to Asia are saturated, and few LNG tankers are accessible to Russia. The same problem could arise when the European embargo on refined petroleum products, particularly diesel, takes effect in February 2023.

For gas and diesel, Europe and China are likely to be in competition to buy the small quantities that are available. However, no significant additional production of these products is expected worldwide in 2023, at least not in sufficient quantities. The installation of floating storage and regasification units along northern European coasts will only enable the replacement of gas transported by pipeline with liquefied natural gas. A cessation of hostilities in Ukraine would not change the situation on the energy (and metals) market, as Europe could refuse to lift its sanctions or resume its purchases of products from Russia.

However, it could further ease pressure on agricultural markets and fertilizers by facilitating their production in Ukraine and their transport through the Black Sea. The availability of agricultural products will, however, continue to depend on weather conditions, which appear to be more favourable in terms of rainfall in the major producing regions. Finally, restricted by worsening public finances, governments could gradually reduce measures to protect consumers and businesses from price rises, thereby fuelling inflation. Similarly, low unemployment in advanced regions will encourage wage growth, sustaining inflationary dynamics yet failing to safeguard purchasing power.

This relatively more favourable inflationary dynamic should allow advanced economies’ central banks to curb their monetary tightening, or even stop raising interest rates. They can rightly consider that the return to previous levels of inflation would be too costly in social terms, since inflation has spread beyond the products first affected and has grown increasingly opaque, and due to the unavoidable rise in costs resulting from the securisation of supply chains. However, this easing in monetary policy will not prevent the 2022 rate hikes from impacting activity, given the 6-9 month lag generally observed in economies with developed financial systems.

It could have a significant impact on housing and office construction. Markets where housing prices have risen sharply, while household debt is high and home loan interest rates variable, such as North America, Northern Europe and Australia, are the most exposed. Office construction is likely to suffer the effects of widespread remote working. Emerging economies are also likely to ease their monetary policy, especially as they began to tighten policy before the advanced economies. In addition to the reasons already given, it should be added that the dollar’s rise (and the concomitant depreciation of emerging currencies), which is probably a more pressing concern for these countries than inflation, seems to have ended.

After the shock of the pandemic, higher energy prices and rising interest rates, many governments’ public and external debt is also likely to attract attention. In addition to those that have already defaulted, such as Sri Lanka and Ghana, and/or benefited from debt restructuring, a few countries (especially in Africa, Asia and America), facing rising food and energy bills, may encounter difficulties in servicing their debt. Fortunately, the injection of funds by their foreign partners and multilateral funded programmes will reduce the risk of default.

It will be important to distinguish between winners and losers from the new global economic conditions. In an environment of high commodity prices, it is important to differentiate between net exporters and importers of energy, minerals, metals and agricultural products. Some countries enjoy near-energy and/or agricultural independence, which protects them in part from the rise in global prices. Others will start or ramp up their production of raw materials. This will be the case for hydrocarbons and for the essential elements of renewable energies: the mining of the minerals needed for batteries (lithium, cobalt, nickel, manganese, etc.), the production of solar, wind and hydraulic energy, as well as green hydrogen. For these countries, it will be an opportunity to attract strong domestic or foreign investment.

Countries that rely on tourism should benefit as international tourism returns to normal as already observed in some countries. Finally, the disruption in supply chains during the Covid crisis and the desire to decrease dependency on China may be an opportunity for some countries (Turkey, Mexico, North Africa, Eastern Europe, South and South-East Asia) to gain new business.

The Chinese growth profile will have an impact on global inflation through its imports of energy and minerals, and on growth in many commodities-exporting countries as well as those that export capital goods and high-tech products. It is likely that China will manage to curb the Covid wave in the second half of the year and that its growth will then accelerate. Indeed, the worst affected are mostly older people, which allows others to ensure production and spend.

The authorities have opted to lift most restrictions on movement, which was not the case in Western countries. Activity is also expected to be boosted by the accommodative economic policy adopted in autumn 2022. The real estate sector, which accounts for a huge part of the economy, could nevertheless remain a burden. Indeed, even if the authorities have bailed out major developers, the very strict rules (“red lines”) adopted in December 2021 will continue to apply. Construction, for its part, should continue to benefit from public sector orders for social housing and infrastructure.

Apart from China, the G20 economies are split between those from the Asia-Pacific region, which will be resilient, and the rest, which will decline, although all but four (Italy, France, India and Japan) should see a fall in inflation. Moreover, the performances of economies exporting goods or services (including tourism) to China are still dependent on the country.

• ●South Korea (2.0% growth expected in 2023 after 2.6% in 2022), Japan (1.5% after 1.1%), India (5.9% after 6.8%) and Indonesia (5.1% after 5.3%) will benefit from domestic demand being supported by the authorities and from a post-Covid catch-up, while their exports will weaken.
• ●Australia (2.2% after 3.4%) will continue to profit from its coal and gas, while wage increases linked to labour market tensions will mitigate the impact of the credit crunch on consumption and housing.
• ●Saudi Arabia (4.0% after 7.0%) will benefit from its oil and a generous budget.
• ●Turkey (3.5% after 5.5%) will benefit from a strong performance in tourism, but will have to face a domestic demand dragged down by inflation and external demand impacted by the slowdown in Europe.
• ●South Africa (1.4% after 2.1%) will continue to suffer from electrical blackouts and tighter credit.
• ●Mexico (1.0% after 2.6%) will see domestic demand suffer from the cost of credit, but will be buoyed by an increase in public spending.
• ●Brazil (0.7% after 2.9%) will see increased social and infrastructure spending hit by rising rates, while excellent harvests will offset the decline in prices.
• ●In Argentina (-0.5% after 5.1%), soaring inflation, fiscal tightening, capital and import controls and drought will lead the economy into recession.
• ●In Germany (-0.2% after 1.8%), government support for businesses and consumers will marginally mitigate sluggish exports and consumption owing to inflation.
• ●France (0.3% after 2.5%) will see consumer spending undermined by inflation.
• ●While Italy (-0.6% after 3.4%) will also suffer from Germany’s poor form.
• ●Spain (1.0% after 4.7%) will be able to rely on its energy independence and tourism to alleviate weak consumer spending.
• ●In the United Kingdom (-1.0% after 4.4%), consumption, investment and construction will remain under pressure.
• ●In the United States (0.8% after 1.9%), the rise in interest rates is finally expected to have an impact on employment and wages, while the savings built up during the Covid crisis will run out. Contrary to public sector construction, housing construction will continue to suffer. Negative growth is possible in Q2/Q3.
• ●Finally, in Canada (1.1% after 3.5%), investment in energy will only marginally offset the impact of the slowdown in the United States.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Information can be found in Note 6 “building used in the business and other property, plant and equipment” of the Group’s consolidated financial statements.

CONSOLIDATED BALANCE SHEET 
& INCOME STATEMENT

SIGNIFICANT EVENTS  
& SCOPE OF CONSOLIDATION

notes AND APPENDICES 
CONSOLIDATED AND
PARENT COMPANY FINANCIAL STATEMENTS

These IFRS consolidated financial statements of the Coface Group as at December 31, 2022 are established in accordance with the International Financial Reporting Standards (IFRS) as published by the IASB and as adopted by the European Union (1). They are detailed in the note “Accounting principles”.

The balance sheet is presented with comparative financial information at December 31, 2021. The income statement is presented with comparative financial information at December 31, 2021.

These IFRS consolidated financial statements for the year ended December 31, 2022 were reviewed by the Coface Group’s Board of Directors on February 16, 2023.

On May 17, 2022, during the Combined General Meeting, Laetitia Léonard-Reuter and Laurent Musy were elected as independent directors for terms of four years. These appointments follow the expiration of the terms of office of Olivier Zarrouati and Éric Hémar, respectively.

Thus, at the close of the General Meeting, the Board of Directors was made up of 10 members – five women and five men – the majority (six) of whom are independent directors.

On May 2, 2022, Hugh Burke was appointed as the CEO of Coface Asia-Pacific, effective on April 1, 2022. He joins the Group Executive Committee and reports to Xavier Durand, Coface CEO. He takes over from Bhupesh Gupta.

On September 8, 2022, Matthieu Garnier, Group Information Services Director, joined the Group Executive Committee and will continue to report to Thibault Surer, Group Strategy & Development Director. This decision is part of our strategy to develop information services, one of the major pillars of our Build to Lead plan.

On January 6, 2022, Natixis announced the sale of its remaining interest in COFACE SA. This sale represented approximately 10.04% of COFACE SA’s share capital, or 15,078,095 shares. The sale was carried out through an ABB (accelerated book-building) at an average price of €11.55. Following this transaction, Natixis no longer holds any shares in COFACE SA.

On September 21, 2022, COFACE SA announced the results of the tender offer to repurchase €380 million in guaranteed subordinated notes bearing a fixed interest rate of 4.125%, maturing on March 27, 2024. The Company accepted the repurchase of a principal amount of €153.4 million of notes validly tendered at a fixed purchase price of 103.625%.

COFACE SA also announced the issuance on September 22, 2022 of €300 million in Tier 2 notes bearing a fixed interest rate of 6.000%, maturing on September 22, 2032.

This repurchase of subordinated debt followed by the issuance of new debt meant that COFACE was able to call its 2024 debt ahead of schedule and extend the maturity of the Group’s subordinated debt to 2032, thereby improving its financial strength and solvency.

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

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

No invoices are overdue.

For the year ended December 31, 2022

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

In compliance with the engagement entrusted to us by your Annual General Meeting, we have audited the accompanying consolidated financial statements of COFACE SA. for the year ended December 31, 2022. 

In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group as at December 31, 2022 and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

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

For the year ended December 31, 2022

To the Annual General Shareholders’ Meeting of COFACE SA.

In compliance with the engagement entrusted to us by your annual general meeting, we have audited the accompanying statutory financial statements of COFACE SA for the year ended December 31, 2022. 

In our opinion, the statutory financial statements give a true and fair view of the assets and liabilities and of the financial position of the COFACE SA as at December 31, 2022 and of the results of its operations for the year then ended in accordance with French accounting principles.

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

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

Despite a complex economic environment marked by the conflict in Ukraine, the energy crisis, inflation and the consequences of the Covid-19 pandemic, Coface Group has been able to maintain discipline in its risk management.

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

In 2022, a number of changes were made to the risk mapping to take into account the updated assessment of their effects on the Group as well as certain additional risks. The exposure to these different risks is described in more detail in Section 5.2 of this report. The non-operational risk assessment methodology was adapted to align with that used for operational risks so as to provide a uniform view of all risks. As a result, the assessment of the risk frequency and its residual impact (impact of each risk after taking into account risk mitigation techniques such as the implementation of controls, procedures, governance, systems or human resources) is carried out on a scale with four levels: high, significant, medium, low. The approach is completed by an expert analysis that can take into account any other relevant element in order to best assess these risks. A pro-forma 2021 risk assessment was performed according to this methodology to enable comparison.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The risk management function, including the internal control function:

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

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

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

The compliance function’s scope includes:

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

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

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

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

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

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

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

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

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

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

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

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

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

The Group does not expect the situation to return fully to normal in 2023 and its teams will continue to monitor the economic situation, which is deteriorating in emerging countries in particular, and the tense geopolitical situation, which could disrupt its business activity.

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

CSR STRATEGY INTEGRATED 
INTO THE BUILD TO LEAD STRATEGIC PLAN

INvestments: GH emission reduction 
reduction target of 30% (scope 1 & 2) 
equities and corporate bons by 2025

4,721 employees 
in 58 countries

88/100 
GENDER EQUALITY INDEX AT GROUP LEVEL

Completed a full carbon footprint assessment (base year: 2019) 
43,000 T Co2 Eq. emitted by operations (incl. scope 1, 2 & 3)

/Recognition from non-financial agencies

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

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

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

The following table summarises the main non-financial risks identified by Coface. The nature of these risks and the policies implemented to address them, as well as the main indicators monitored by Coface, are detailed in Chapter 6.The following table summarises the main non-financial risks identified by Coface. The nature of these risks and the policies implemented to address them, as well as the main indicators monitored by Coface, are detailed in Chapter 6.

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

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

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

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

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

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

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

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

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

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

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

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

To address the risk of a deterioration in client satisfaction, Coface has implemented a policy on the continuous improvement of service quality. This policy is based on operational programmes using techniques such as Lean Management, UX-UI and the Customer Journey. It is measured through a series of KPIs (including the Net Satisfaction Score, Net Promoter Score and Customer Experience Index) monitored on a monthly basis by the Service Quality Board, a cross-functional body responsible for managing service quality and client satisfaction.

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

To measure client satisfaction, the Group has chosen the Net Promoter Score (NPS) as a key indicator. Also known as the net recommendation rate, the NPS gives a voice to clients, calling on them to rate their likelihood of recommending the company on a scale of 0 to 10. This indicator is interesting because it indicates an attachment to the company and is forward-looking.

The NPS is measured as a monthly moving average over three consecutive months. It is based on a monthly survey with a rotating sample. Every month, around 10% of clients are surveyed, the monthly rotation serving to prevent excessive solicitation. Using this methodology, the Group was able to report an average response rate (number of questionnaires approved/number of emails sent) of 11.4% in 2022, consistent with the response rates generally observed for this type of survey. The sampling of each wave of the survey is balanced in terms of client countries, segments and distribution network so that the results can be correctly compared. However, the number of responses collected does not allow statistically reliable segmented analyses to be performed on a monthly basis. Any trends detected are therefore subject to qualitative additions, for example by calling “detractor” clients, which the Group has rolled out widely as part of its quality approach.

After falling at the beginning of the pandemic, Coface’s NPS indicator rose to a satisfactory level owing to the Group’s ability to adapt and had improved significantly by April 2021. In 2022, the Group’s average NPS remained at historically high levels. This trend should be put into perspective with the very high coverage rates (1) that the Group proposed over this period, themselves enabled by the extremely limited levels of insolvency in the economy resulting from price pressures and the instability corresponding to the conflict in Ukraine. It should be noted that this sustained support for clients in terms of risk acceptance is recognised even though inflationary pressures automatically increased the levels of coverage requested. At end-2022, the initial signs of a return to normal in insolvency levels make it possible to envisage a shift in trends in coverage ratios and NPS in the coming months.

Coface’s Human Resources teams, which were strengthened during the last two strategic plans, worked intensively in 2022 on the following social initiatives and trends:

• ●talent management and the need to boost Coface’s attractiveness and the retention of its high potentials. Competition on attracting talent has increased sharply since the health crisis. Attrition rates of key resources are on the rise, and candidates are more difficult to identify and attract. Coface can highlight a host of advantages in order to be perceived as an employer of choice with a culture, managerial practices and collaboration methods corresponding to the expectations of the talents its teams require;
• ●Coface’s efforts on diversity and inclusion, and in particular its stated ambition on gender equality, are part of this drive;
• ●the Group’s extensive work on corporate engagement and culture has produced results, with a level of engagement that has improved considerably, to today achieve robust benchmarks in financial services in several regions;
• ●considerable flexibility in working methods, with modernised offices and highly flexible remote-working arrangements, further enhances the attractiveness of Coface; and
• ●the development of international occupational mobility and cross-functional collaboration with multicultural teams also responds to one of the major expectations of the talents that Coface is looking for.

Particular attention was also paid in 2022 to wage issues in response to high inflation in most of the markets where Coface employs staff and is seeking new talents.

In addition to these fundamental social trends, the Human Resources teams contributed proactively to Coface’s ambitions on the sale of information. The HR teams recruited nearly 160 people around the world, doubling the workforce in one year, in a context of scarce resources on the market.

Lastly, the Group’s human resources were mobilised to improve their resource management tool with the introduction of a global system, “My HR Place”, which they can use to manage employee data more reliably, and the digitalisation of internal work processes.

Coface’s workforce structure continues to evolve, with trends reflecting the strategic orientations of the Build to Lead strategic plan. In particular, the headcount of the information sales business has increased considerably, with some 300 people dedicated to this business line at the end of the 2022 financial year. The Group has also recruited widely for its dedicated sales forces. Nearly 160 new people have joined Coface with responsibility for the sale of information. These recruitments naturally cover the replacement of people having left Coface, but the net increase remains significant.

The following data comes from the Group’s “My HR Place” tool, introduced in 2022 and available online for the various contributors to the database. The database is updated in real time and receives a steady flow of data from the HR teams in the countries. The information is consolidated on the last business day of the month, enabling the production of monthly scorecards.

This reporting includes the individual contract, activity, business and length-of-service data for each Group country, as well as information on the hierarchical links between the various positions.

An extraction of the tool also serves as a strategic tool for staff, as it makes it possible to manage recruitment actions and internal transfers within the context of a budget.

This report contains figures covering the entire Group to give a global view of the company. The indicators are then presented by region, reflecting the organisational model of the business. This scope can be compared with the same scope for 2020 and 2021.

At December 31, 2022, the Group as a whole employed 4,721 employees in 58 countries (a new site having been opened in New Zealand in 2022), compared with 4,538 at December 31, 2021. The following table shows the geographical breakdown of the Group’s workforce since December 31, 2020:

Coface workforce increased by 4.03% in 2022. This change can be attributed to an increase in the number of information sales staff and the growth of the central teams, particularly as part of the ramp-up of shared service centres.

The sale of information is at the root of the increase in the workforce in North America, Northern Europe and Central Europe. In Central Europe, the number of shared services staff also contributes to the increase in the region’s total.

The table below breaks down the Group’s workforce by type of activity since December 31, 2020:

In 2022, 1,700 employees were assigned to sales and marketing, 1,583 to support functions, 985 to information, litigation and debt collection, and 453 to risk underwriting.

The changes partly reflect a more detailed classification of the workforce, following the implementation of the new HR information system this year. For example, bonding, Single Risk and specialities were reclassified from “support” to “sales and marketing” (+122) and commercial underwriting from “support” to “underwriting”.

The following indicators are presented this year for the total Group scope and no longer for a selection of countries as in previous years.

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

For the Group as a whole, 97.6% of Coface employees work on permanent contracts.

Here too, the choice was made this year to present the age brackets for all regions and the Group. The breakdown by age for 2021 is provided for comparison purposes.

The high volume of recruitment from one year to the next significantly increases the proportion of employees by age group.

Several countries, with an average age of more than 45 years, are very long-standing locations for Coface (Germany, USA), where the resignation rate remains historically low. This age structure is no longer the case in France, where the teams have been substantially renewed in the last five years, particular for Group functions.

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

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

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

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

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

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

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

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

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

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

Coface introduced a CSR governance in 2022 mainly based on CSR champions in the various regions and a CSR committee including all the members of the Executive Committee. The Group CSR Manager now attends all Group Risk Committee meetings to ensure that ESG issues are properly taken into account at Coface. The role of champions is to communicate on the CSR strategy within their region and to collect ideas or questions from employees. Champions also organise awareness-raising initiatives and workshops in the regions in collaboration with the Communications Department and the Regional Management.

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

The Board of Directors is regularly informed and consulted on the CSR strategy and monitors the progress of initiatives launched in this area.

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

Pursuant to EU Regulation 2020/852 of June 18, 2020, known as the “Taxonomy Regulation”, COFACE SA is required, when closing its 2022 financial statements, to publish the information provided for in Article 8 of said regulation, supplemented by the Commission Delegated Regulation of July 6, 2021.

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

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

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

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

As of January 1, 2023 (based on fiscal 2022), Coface’s regulatory obligation concerns the publication of information on the eligibility of its activities for the European Taxonomy.

As of January 1, 2024, financial companies will have to publish information on the alignment of their activities with the European Taxonomy.

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

Coface teams understand that if the information is not available (as is the case for 2022), insurers must indicate “0” for this indicator. Accordingly, the real value of Coface concerning the Taxonomy’s eligible investment indicator in 2022 was zero.

The voluntary investment ratio published below is based on estimated data from the MSCI data provider. The ratio corresponds to the amounts of assets eligible (in market value) for the European Taxonomy regarding the first two climate objectives (climate change mitigation and adaptation) relative to the market value of the hedged assets.

As such, the proportion of assets eligible for the European Taxonomy for Coface’s investment portfolio is 21% of hedged assets, based on estimated data from the MSCI data provider transmitted by our asset manager Amundi.

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

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

Our asset manager's data provider is unable to determine the exposure to companies not subject to the NFRD. Therefore this information is undetermined "ND".

According to the European Commission's FAQ, financial companies must report on nuclear and fossil gas activities by completing templates 1, 4 and 5 of the Complementary Delegated Act on Gas and Nuclear Activities published in December 2022.

Given the late publication of the Complementary Delegated Act, Coface completed template 1 with a conservative and prudent approach.

As the required information is not available, Coface is unable to publish templates 4 and 5 for the 2022 financial year. The Group is working to be able to publish the required templates for the 2023 financial year.

Non-financial risks have been mapped in several steps:

1/ The first step consisted in identifying a fairly broad spectrum of non-financial issues that could affect the Group or the company in the broad sense through the Group’s activities. This initial risk inventory was prepared based on an in-house review of CSR issues and CSR data collected in previous fiscal years, internal consultations, particularly with the Risk Department, as well as an external benchmark, analysing in particular the non-financial disclosures of other players in the financial sector together with best practices in the management of non-financial risks. Discussions with investors, rating agencies, clients and employees also helped to enrich the list of these issues.

This phase resulted in the identification of a little over 20 risks in four areas:

• ●environmental risks (responsible company);
• ●social risks (responsible employer);
• ●risks related to our core business (responsible insurer); and
• ●governance risks.

2/ Each risk was then assessed using an approach consistent with that implemented by the Group Risk Department for all risk mapping. The completeness of ESG risks has been compared with those present in the company’s risk management tool (operational or strategic risks) to ensure that risks with an ESG aspect are identified and that the results of the assessments obtained for these risks in annual risk analysis campaigns are transposed. The other risks not assessed were quantified and prioritised using a method based on that used in the risk management tool. Each non-financial risk was analysed in depth based on two criteria:

• ●the level of intrinsic risk qualified as inherent risk: the assessment is carried out by cross-referencing the impact (the most unfavourable scenario of the financial impact, the client impact and the regulatory and legal impact) with an assessment of the risk occurrence frequency. An inherent risk matrix determines the level of inherent risks assessed on a scale of four levels: high, important, moderate and low;
• ●the level of control of this risk based on the effectiveness of Level 1 and 2 controls, internal and external audit results, documentation, governance and monitoring of key performance indicators, IT and staff.

3/ Based on the assessments, the Group prioritised ten non-financial risks, which were approved by the relevant departments. An initial prioritisation is carried out to define the level of residual risk resulting from the cross-referencing of the inherent risk with risk mitigation according to a risk matrix resulting in one of four assessment levels: High, Important, Moderate and Low. A second prioritisation is also carried out using the same residual risk scale taking into account the most important inherent impact, then the level of mitigation; consequently, the highest inherent risk will remain riskier.

All of the non-financial risks selected were then included in the Group’s overall risk map.

As with the other risks monitored by the Group, the non-financial risks selected will be reassessed every year ahead of the drafting of the Universal Registration Document. The Group’s policies to protect itself against them, and details of the actions and results, are presented throughout this document.

Three ESG indicators, each one representing a major category of non-financial (environmental, social and governance) risks, were then presented to the Risk Committee and integrated into Coface’s Risk Appetite. As such, these indicators are monitored quarterly by the Management Committee.

Year ended December 31, 2022

This is a free English translation of the report by one of the Statutory Auditors issued in French and is provided solely for the convenience of English-speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.

To the Shareholders’ Meeting,

In our capacity as Statutory Auditor of Coface SA (hereinafter the “Company”), appointed as independent third party (“third party”) and accredited by the French Accreditation Committee (Cofrac), under number 3-1886 (Cofrac Inspection Accreditation, scope available at www.cofrac.fr), we have conducted procedures to express a limited assurance conclusion on the historical information (observed or extrapolated) in the consolidated non-financial performance statement, prepared in accordance with the Company’s procedures (hereinafter the “Guidelines”), for the year ended December 31, 2022 (hereinafter the “Information” and the “Statement”, respectively), presented in the Group management report pursuant to the legal and regulatory provisions of Articles L. 225-102-1, R. 225-105 and R. 225-105-1 of the French Commercial Code (code de commerce).

Based on our procedures as described in the section “Nature and scope of procedures” and the evidence we have obtained, no material misstatements have come to our attention that cause us to believe that the non-financial performance statement does not comply with the applicable regulatory provisions and that the Information, taken as a whole, is not fairly presented in accordance with the Guidelines.

At the date of this Universal Registration Document, the Company’s share capital totalled €300,359,584.It is divided into 150,179,792 shares with a par value of €2 (two euros), fully subscribed and paid up, all of the same category.

In accordance with Article L.225-37-4, paragraph 3 of the French Commercial Code, the authorisations valid at December 31, 2022 are presented in the summary table below.They were granted by the General Shareholders’ Meeting to the Board of Directors in respect of capital increases pursuant to Articles L.225-129-1 and L.225-129-2 of the French Commercial Code.

The table below summarises the resolutions voted on during the Combined Shareholders’ Meeting of the Company dated May 17, 2022, as concerns capital increases.

The table below breaks down the change in the Company’s capital and voting rights over the last three years:

Pursuant to Article L.22-10-11 of the French Commercial Code, the Company notes the following points, which could have an effect in the event of a public offering:

• ●the Company’s capital structure as well as its known direct or indirect interests and all the corresponding information are described in Section 7.1;
• ●there is no statutory restriction on the exercise of voting rights, with the exception of the elimination of voting rights in respect of shares which exceed the portion that should have been reported, which may be requested by one or more shareholders holding an interest which is at least equal to 2% of the capital or voting rights, in the event of failure to report that the statutory threshold was exceeded;
• ●the Company is not aware of the existence of any shareholders’ agreements;
• ●there are no instruments entailing special control rights;
• ●the voting rights attached to the shares of the Company held by staff through the Company’s Coface Actionnariat mutual fund are exercised by an authorised representative designated by the fund’s Supervisory Board to represent it at the Shareholders’ Meeting;
• ●the rules on appointment and revocation of members of the Board of Directors are the legal and statutory rules described in Section 9.1.5;
• ●the Company’s Articles of Association are amended in compliance with legal and regulatory provisions;
• ●there is no significant agreement entered into by the Company that would be amended or terminated in the event of a change in the Company’s control.

No contract (other than those entered into in the normal course of business) has been signed by any entity of the Group that contains a significant obligation or commitment for the Group as a whole.

16 may 2023 
COMBINED SHAREHOLDERS' MEETING

€1.52 
DIVIDEND PROPOSAL

REMUNERATION STRUCTURE 
OF THE CEO - FINANCIAL YEAR 2023

The purpose of this report is to present the draft resolutions to be submitted by your Board of Directors to the Combined General Meeting of May 16, 2023.

It is specified that the presentation of Coface’s financial situation, activity and profits during the past financial year, as well as the different information required by the laws and regulations in force, can be found in the 2022 Universal Registration Document to which you are invited to refer (available on the Coface website: www.coface.com).

These resolutions are divided into two groups:

• ●the first eleven resolutions (the 1st to the 11th resolutions) fall within the remit of the Ordinary General Meeting;
• ●the following five resolutions (the 12th to the 16th resolutions) fall within the remit of the Extraordinary General Meeting.

(1st and 2nd resolutions) 

In the first two resolutions, it is proposed to the Ordinary General Meeting to approve the corporate financial statements (1st resolution), then the consolidated financial statements (2nd resolution) of COFACE SA for the 2022 financial year.

Comments on the corporate and consolidated financial statements of COFACE SA are detailed in the COFACE SA 2022 Universal Registration Document.

(3rd resolution)

The purpose of the third resolution is to allocate COFACE SA’s corporate profits and to pay dividends.

At December 31, 2022, the corporate financial statements of COFACE SA showed a net profit of €326,479,873. Given a zero retained earnings at December 31, 2022, and the fact that the legal reserve has a balance beyond legal requirements, the distributable profit amounts to €326,479,873.

It is suggested to distribute an amount of €226,576,784, which represents a dividend of €1.52 per share, which corresponds to a distribution rate of 80% of the consolidated net profits, in line with our capital management policy.

For individuals who are tax residents in France, this dividend will be automatically subject to the single flat-rate deduction provided for in Article 200 A of the French General Tax Code, unless the overall option for the progressive scale is chosen. In the event of an option for the progressive scale, this option would be entitled to the proportional reduction of 40% set out in Article 158(3) (2) of the French General Tax Code. The paying institution shall make the flat-rate levy at source (not effecting full discharge) provided for in Article 117 quater of the French General Tax Code, except for beneficiaries who are tax residents in France who have made a request for exemption under the conditions of Article 242c of the French General Tax Code.

All shareholders – and specially those domiciled or established outside France as regards the regulations applicable in the state of residence or establishment – are invited to contact their usual advisor so that he can determine, by means of a detailed analysis the tax consequences of this distribution.

In accordance with the legal provisions, we hereby inform you that the dividends distributed for the previous three financial years were as follows:

The dividend will be detached on May 22, 2023. The payment will take place on May 24, 2023.

(4th resolution)

By the fourth resolution, the Board of Directors proposes to your General Meeting to authorise it to purchase or procure the purchase of a number of Company shares not exceeding 10% of the total number of shares making up the share capital or 5% of the total number of shares comprising the share capital in the case of shares acquired by the Company for the purpose of their custody and payment or exchange in connection with a merger, demerger or contribution, it being specified that the acquisitions made by the Company may under no circumstances lead the Company to hold at any time whatsoever more than 10% of the shares making up its share capital.

Share purchases could be made in order to: a) ensure liquidity and stimulate the market for the Company’s securities through an investment service provider acting independently under a liquidity agreement in accordance with market practice admitted by the Autorité des marchés financiers on June 22, 2021, b) allocate shares to corporate officers and employees of the Company and other Group entities, in particular in connection with (i) the profit sharing of the Company, (ii) any stock option plan of the Company, pursuant to the provisions of Articles L.225-177 et seq. and L.22-10-56 et seq. of the French Commercial Code, or (iii) any savings plan in accordance with the provisions Articles L.3331-1 et seq. of the French Labour Code or (iv) any free allocation of shares under the provisions of Articles L.225-197-1 et seq. and L. 22-10-59 et seq. of the French Commercial Code, as well as to carry out all hedging transactions relating to these transactions, in accordance with the conditions laid down by the market authorities and at the times that the Board of Directors or the person acting on delegation from the Board of Directors shall deem appropriate, c) deliver Company shares upon the exercise of rights attached to securities giving entitlement, directly or indirectly, by redemption, conversion, exchange, presentation of a voucher or in any other manner for the allocation of Company shares within the framework of the regulations in force, as well as to carry out any hedging transactions relating to these transactions, under the conditions provided by the market authorities and at the times that the Board of Directors or the person acting on delegation of the Board of Directors shall deem appropriate, d) retain the shares of the Company and subsequently deliver them as a payment or exchange in the context of any external growth, merger, demerger or contribution transactions, e) cancel all or part of the shares thus purchased (in the context of the twelfth resolution of this General Meeting authorising the Board of Directors to reduce the share capital accordingly) or f) implement any market practice that may be admitted by the Autorité des marchés financiers and, more generally, carry out any operation in accordance with the regulations in force.

The maximum unit purchase price could not exceed, excluding fees, €16 per share. The Board of Directors may however, in the event of transactions involving the Company’s capital, including changes in the nominal value of the share, capital increase by incorporation of reserves followed by the creation and free allocation of shares, split or consolidation of securities, adjust the aforementioned maximum purchase price in order to take into account the impact of these transactions on the value of the Company’s share.

The acquisition, sale or transfer of such shares may be effected and paid by any means authorised by the regulations in force, on a regulated market, on a multilateral trading facility, with a systematic or over-the-counter internaliser, including through the acquisition or sale of blocks, by the use of options or other derivative financial instruments, or warrants or, more generally, securities granting entitlement to Company shares, at such times as the Board of Directors would deem appropriate.

It is specified that the Board of Directors may not, except with the prior authorisation of your General Meeting, make use of this authorisation as from the filing by a third party of a draft public offering covering the shares of the Company, until the end of the offer period.

In compliance with the legal and regulatory provisions in force, the Board of Directors, if your General Meeting authorises it, will have all powers, with the option of sub-delegation, in order to proceed with the allocations and, where applicable, the permitted reallocations of shares redeemed for one of the objectives of the programme for one or more of its other objectives, or their transfer, on the market or off the market.

The Board of Directors proposes that this authorisation, which would cancel and replace that granted by the eighth resolution of the General Meeting of May 17, 2022, be granted for a period of eighteen (18) months from your General Meeting.

To be noted: Arch Capital Group did not take part in the vote related to this resolution.

(5th resolution)

The special report of the Company’s Statutory Auditors on related-party agreements, referred to in Articles L.225-38 et seq. of the French Commercial Code, does not mention any new agreement, subject to the provisions of Article L.225-38, which would have been entered into during the financial year ended December 31, 2022. You are asked, under the fifth resolution, to take note of this and to approve the special report of the Statutory Auditors.

(6th, 7th and 8th resolutions)

Pursuant to the provisions of Article L.22-10-34 of the French Commercial Code, your meeting is called to vote on the following compensation for the financial year ended December 31, 2022:

• ●in the sixth resolution, on the information mentioned in Section I of Article L.22-10-9 of the French Commercial Code on the compensation of non-executive corporate officers, pursuant to Article L.22-10-34 I of the French Commercial Code;
• ●in the seventh resolution on the fixed, variable and exceptional items comprising the total compensation and benefits of any kind paid during the financial year ended December 31, 2022, or awarded in respect of the same financial year to Mr Bernardo Sanchez Incera, Chairman of the Board of Directors, pursuant to Article L.22-10-34 Section II of the French Commercial Code;
• ●in the eighth resolution, on the fixed, variable and exceptional items comprising the total compensation and benefits of any kind paid during the financial year ended December 31, 2022, or awarded in respect of the same financial year to Mr Xavier Durand, Chief Executive Officer, pursuant to Article L.22-10-34 Section II of the French Commercial Code.

All of these items are detailed in the corporate governance report of COFACE SA attached to the management report and included in Chapter 8 of the Company’s 2022 Universal Registration Document.

(9th, 10th and 11th resolutions)

You are requested in the ninth, tenth and eleventh resolutions to approve, pursuant to Article L.22-10-8 of the French Commercial Code, the compensation policy applicable to the members of the Board of Directors (ninth resolution), the Chairman of the Board of Directors (tenth resolution) and the Chief Executive Officer (eleventh resolution) for the 2023 financial year.

Policy details are described in COFACE SA’s corporate governance report attached to the management report and included in Chapter 8 of the Company’s 2022 Universal Registration Document.

For details of this draft, please refer to Section 8.1 “Draft report of the Board of Directors on the draft resolutions submitted to the Combined Shareholders’ Meeting” of this Universal Registration Document.

• ●Reports of the Board of Directors and of the Statutory Auditors on the Company’s operations during the financial year ended December 31, 2022.
• ●Approval of the financial statements for the financial year ended December 31, 2022.
• ●Approval of the consolidated financial statements for the financial year ended December 31, 2022.
• ●Allocation of profit or loss for the financial year ended December 31, 2022.
• ●Authorisation of the Board of Directors to trade in the shares of the Company.
• ●Approval of the special report of the Statutory Auditors on the regulated agreements and commitments referred to in Articles L.225-38 et seq. of the French Commercial Code.
• ●Approval of the information mentioned in Section I of Article L.22-10-9 of the French Commercial Code on the compensation of corporate officers, non-directors pursuant to Article L.22-10-34 Section I of the French Commercial Code.
• ●Approval of fixed, variable and exceptional items comprising the total compensation and benefits of any kind paid during the financial year ended December 31, 2022, or awarded in respect of the same financial year to Bernardo Sanchez Incera, Chairman of the Board of Directors, pursuant to Article L.22-10-34 Section II of the French Commercial Code.
• ●Approval of fixed, variable and exceptional items comprising the total compensation and benefits of any kind paid during the financial year ended December 31, 2022, or awarded in respect of the same financial year to Xavier Durand, Chief Executive Officer, pursuant to Article L.22-10-34 Section II of the French Commercial Code.
• ●Approval of the compensation policy applicable to the members of the Board of Directors, pursuant to Article L.22-10-8 of the French Commercial Code.
• ●Approval of the compensation policy applicable to the Chairman of the Board of Directors, pursuant to Article L.22-10-8 of the French Commercial Code.
• ●Approval of the compensation policy applicable to the Chief Executive Officer, pursuant to Article L.22-10-8 of the French Commercial Code.

• ●Authorisation to the Board of Directors to reduce the share capital of the Company by cancellation of shares held in its own right.
• ●Delegation of authority to the Board of Directors to increase the share capital with cancellation of the preferential subscription right by issuing Company shares reserved for members of a company savings plan.
• ●Delegation of authority to the Board of Directors to increase the share capital by issuing shares with cancellation of the preferential subscription right in favour of a specific category of beneficiaries.
• ●Authorisation to the Board of Directors to allocate free of charge existing or to be issued shares to certain employees and corporate officers of the Company and related companies.
• ●Powers for formalities.

To the Annual General Meeting of COFACE SA,

In our capacity as statutory auditors of your company, we hereby present to you our report on regulated agreements.

It is our responsibility to report to you, on the basis of the information provided to us, the characteristics, the main terms and conditions and the reasons justifying the interest for the Company, of the agreements brought to our attention or which we may have identified in the course of our audit. We are not required to comment as to whether they are beneficial or appropriate or to ascertain the existence of other agreements. It is your responsibility, in accordance with Article R.225-31 of the French Commercial Code (code de commerce), to evaluate the advantages of entering into these agreements prior to their approval.

It is moreover our responsibility to report to you, where applicable, the information required by Article R.225-31 of the French Commercial Code (code de commerce) relating to the performance, during the past financial year, of the agreements already approved by the Shareholders’ Meeting.

We performed those procedures that we considered necessary to comply with the professional guidance issued by the French National Auditing Body (Compagnie nationale des commissaires aux comptes) relating to this mission. These procedures consisted in verifying that the information provided to us was consistent with the reference documents it came from.

We hereby inform you that we have not been advised of any agreements authorized and entered into during the last financial year that should be submitted to the approval of the General Shareholders’ Meeting in accordance with Articles R.322-7 of the French Code of Insurance (code des assurances) and L. 225-38 of the French Commercial Code (code de commerce). 

Annual General Shareholders’ Meeting of May 16th, 2023 Resolution 12th

To the Annual General Meeting of COFACE SA,

In our capacity as Statutory Auditors of your company and in execution of the mission provided for in Article L. 22-10-62 of the French Commercial Code in the event of a reduction in capital by cancelling shares purchased, we have prepared this report intended to inform you of our assessment of the terms and conditions for the proposed capital reduction. 

Your Board of Directors proposes that you delegate to it, for a period of 26 months from the date of this Meeting, all powers to cancel, within the limit of 10% of the share capital per 24-month period, the shares purchased for the implementation of an authorisation to purchase its own shares by your company in accordance with the provisions of the aforementioned article.

We performed those procedures that we considered necessary to comply with the professional guidance issued by the French National Auditing Body (Compagnie nationale des commissaires aux comptes) relating to this mission. These procedures are designed to examine whether the terms and conditions for the proposed capital reduction, which is not likely to undermine the equality of shareholders, are legitimate. 

We have no matters to report regarding the terms and conditions for the proposed capital reduction.

Annual General Shareholders’ Meeting of May 16th, 2023 – resolution 13th

To the Annual General Meeting of COFACE SA,

In our capacity as Statutory Auditors of your company and in execution of the mission provided for in Articles L.225-135 et seq. of the French Commercial Code, we hereby present our report on the proposal to delegate the Board of Directors the authority to approve a capital increase by issuing ordinary shares without preferential subscription rights, reserved for current employees, former employees and eligible corporate officers, of the Company and/or companies related to the Company within the meaning of the provisions of Article L.225-180 of the French Commercial Code and Article L.3344-1 of the French Labour Code, members of a company savings plan, for a maximum amount of €3,200,000, an operation on which you are called upon to vote. 

Your Board of Directors hereby informs you that this nominal amount will be charged against the maximum limit set for capital increases in the 2nd paragraph of the 18th resolution (€115,000,000) of the General Shareholders’ Meeting of May, 17th 2022 and that the maximum limit for this delegation will be the same as that of the 14th resolution of this General Meeting. 

This capital increase is subject to your approval in accordance with the provisions of Articles L.225-129-6 of the French Commercial Code and L.3332-18 et seq. of the French Labour Code. 

On the basis of its report, your Board of Directors proposes that you delegate it the authority, for a period of twenty-six months from this General Meeting, to approve a capital increase and to waive your preferential subscription rights to the ordinary shares to be issued. Where appropriate, the Board will be responsible for setting the final terms and conditions of this transaction. 

The Board of Directors is responsible for preparing a report in accordance with Articles R.225-113 and R.225-114 of the French Commercial Code. Our role is to express an opinion on the fairness of the quantified information taken from the financial statements, on the proposal to cancel the preferential subscription right and on certain other information concerning the issue that is provided in this report.

We performed those procedures that we considered necessary to comply with the professional guidance issued by the French National Auditing Body (Compagnie nationale des commissaires aux comptes) relating to this mission. These procedures consisted in verifying the content of the Board of Directors’ report on this transaction and the methods for determining the price of shares to be issued.

Subject to the subsequent review of the terms and conditions of the capital increase decided, we have no matters to report on the methods for determining the issue price of the ordinary shares to be issued as outlined in the Board of Directors’ report.

As the final terms and conditions under which the capital increase would be carried out are not yet determined, we express no opinion on these nor, consequently, on the proposal to waive the preferential subscription right made to you.

In accordance with Article R.225-116 of the French Commercial Code, we will prepare an additional report, where applicable, when this delegation is used by your Board of Directors.

Annual General Shareholders’ Meeting of May 16th, 2023 – resolution 14th

To the Annual General Meeting of COFACE SA, 

In our capacity as Statutory Auditors of your company and in execution of the mission provided for in Articles L.225-135 et seq.of the French Commercial Code, we hereby present our report on the proposal to delegate to the Board of Directors the authority to approve a capital increase by issuing ordinary shares without preferential subscription rights, for a maximum amount of €3,200,000, an operation on which you are called upon to vote.

Your Board of Directors hereby informs you that this nominal amount will be charged against the maximum limit set for capital increases in the 2nd paragraph of the 18th resolution (€115,000,000) of the General Shareholders’ Meeting of May, 17th 2022 and that the maximum limit for this delegation will be the same as  the 13th resolution of this General meeting.

This issue shall be reserved for:

• employees and/or corporate officers of the Company and/or companies related to the Company within the meaning of the provisions of Article L.225-180 of the French Commercial Code and Article L.3344-1 of the French Labour Code and having their registered office outside France;
• one or more mutual funds or other entity under French or foreign law, regardless of whether or not they have legal personality, subscribing on behalf of persons referred to in paragraph (i) above;
• one or more financial establishments mandated by the Company to propose to those persons referred to in paragraph (i) above, a savings or shareholding scheme comparable to those proposed to the Company’s employees in France.

On the basis of its report, your Board of Directors proposes that you delegate it the authority, for a period of eighteen months, to approve a capital increase and to waive your preferential subscription rights to the ordinary shares to be issued. Where appropriate, the Board will be responsible for setting the final terms and conditions of this transaction. 

The Board of Directors is responsible for preparing a report in accordance with Articles R.225-113 and R.225-114 of the French Commercial Code. Our role is to express an opinion on the fairness of the quantified information taken from the financial statements, on the proposal to cancel the preferential subscription right and on certain other information concerning the issue that is provided in this report.

We performed those procedures that we considered necessary to comply with the professional guidance issued by the French National Auditing Body (Compagnie nationale des commissaires aux comptes) relating to this mission. These procedures consisted in verifying the content of the Board of Directors’ report on this transaction and the methods for determining the price of shares to be issued.

Subject to the subsequent review of the terms and conditions of the capital increase decided, we have no matters to report on the methods for determining the issue price of the ordinary shares to be issued as outlined in the Board of Directors’ report.

As the final terms and conditions under which the capital increase would be carried out are not yet determined, we express no opinion on these nor, consequently, on the proposal to waive the preferential subscription right made to you.

In accordance with Article R.225-116 of the French Commercial Code, we will prepare an additional report, where applicable, when this delegation is used by your Board of Directors.

Annual General Shareholders’ Meeting of May 16th, 2023 – resolution 15th

To the Annual General Meeting of COFACE SA,

In our capacity as statutory auditors of your company and in execution of the mission provided for in Article L.225-197-1 of the French Commercial Code (code de commerce), we hereby present to you our report on the plan to authorise the award of bonus shares, whether existing or to be issued, to employees and corporate officers of the Company and companies related to the Company as defined in Article L.225-197-2 of the French Commercial Code (code de commerce), an operation on which you are called upon to vote.

The total number of bonus shares awarded under this authorisation may not exceed 1% of the number of shares comprising the Company’s share capital at the date of the Board of Directors’ decision to grant them, and the cumulative nominal amount of any capital increases that may result from this authorisation will be deducted from the overall maximum limit provided for in paragraph 2 of the eighteenth resolution of the Shareholders’ Meeting of May 17, 2022 or, where applicable, on the amount of any overall limit provided for by a similar resolution that may replace said resolution during the period during which this authorisation applies. The total number of bonus shares awarded by virtue of this authorisation to the Company’s Executive Directors may not represent more than 20% of the bonus shares awarded under this authorisation.

The final award of the shares may be subject, in part or in whole, to the achievement of performance conditions set by the Board of Directors, being specified that the final allocation of bonus shares awarded to the Company’s Executive Directors will be subject to the achievement of performance conditions set by the Board of Directors.

On the basis of its report, your Board of Directors proposes that you authorise it, for a period of thirty-eight months from this General Meeting to award bonus shares, whether existing or to be issued.

The Board of Directors is responsible for preparing a report on this transaction that it wishes to carry out. Our role is to report, if applicable, our observations on the information provided to you with regard to the intended transaction. 

We performed those procedures that we considered necessary to comply with the professional guidance issued by the French National Auditing Body (Compagnie nationale des commissaires aux comptes) relating to this mission. The procedures consisted in particular in verifying that the terms and conditions of the transaction and information in the Board of Directors’ report comply with the provisions of the law.

We have no matters to report on the information provided in the Board of Directors’ report on the intended transaction to authorise the award of bonus shares.