Good day, and thank you for standing by. Welcome to the Coface SA Q1 2024 results presentation. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To restore your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Xavier Durand, CEO. Please go ahead, sir. Thank you very much, and welcome to all, and thank you for joining this first quarter 2024 earnings call. As you've seen from the headlines, we're happy to report a very good start to the year 2024, with first quarter net income up almost 12% at EUR 68.4 million. I think what you'll see during the presentation is that the results reflect three things. One, the environment, the economic environment in which we operate. Two, the strategy we're applying, which is very much in line with what we've described during our Power the Core strategy day. And three, very strong, I would say, execution from the business side. So if I go through the headline here, turnover at EUR 464 million in the first quarter, it's down 1.6%, and that's comprised of two different things. One, trade credit insurance premiums, which are down 3.3%, and that's really the result of a flat client activity. To be noted, it's flat after two quarters of successive decrease. Client retention, which is still very high, although a little bit down from records. Pricing, which is still negative, but better from the last two years, in line with the historic trends. And then, continued double-digit growth in our Business Information business with factoring itself down 6%. The loss ratio, as you can see, came in at a strong 35.8%, which is almost 5 points better than last year. The combined ratio stands at 63.1%. We'll go more into the details, but pretty much opening the year at a stable level from last year. We have continued strong reserve releases from prior years. The cost ratio is up 1.6 points, which is a clear consequence of lower revenues on the insurance side. But we continue to invest deliberately in the different elements which constitute our Power the Core plan. So that brings, as I said, the net income to above EUR 68 million. Return on Average Tangible Equity stands at almost 15%, 14.8. And again, this is really strong execution, I would say, in an environment, an economic environment which is slowing, and while we continue to make the investments we had committed to during the Power the Core plan. On page 5, we have given a little bit of a walk from the cost ratio of Q1 2023 to the cost ratio in which we reach in Q1 2024. And you can see a few things here, a better business mix, continued investments, and obviously, the impact of inflation on our business. So from the 29.4, you can see that our premiums are down 3%, which drives 1.3 points of increase in the cost ratio. We embed cost inflation from the prior year, so what's happening here is really pretty much the reverse of what's happened in the last couple of years when inflation was higher on the top line than it was on the cost line. TCI investments, which we're making consistently with our plan, which are compensated by better fees and other revenues from the insurance business. Continued investment in the Business Information space, which is more than compensated actually by additional revenues from the Business Information, bringing our total cost ratio for the first quarter to 31.7%. So I think the news here is a little bit of an inflation impact and also the fact that the Business Information continues to deliver for us on the cost side and on the revenue side. On page seven, we go into the usual slides. You can see turnover down -1.6%, as I've said. You can see that the other revenues are up 6.5%. Like I already mentioned, the business information sales up almost 22%. Third-party debt collection, which is a much smaller business, is still up 24% from a small base. We see more demand in the market and we bring more resources around this. As I mentioned, factoring is down by 6.3%. Just to remind you, factoring is a business we do in Germany and in Poland, which are parts of Europe which are more affected by the, I would say, slowdown in the economy. And then the other good news, I think, is the insurance fees confirm their recovery. They're up 7.3% at constant FX, which brings the ratio of insurance-related fees to the insurance revenue ratio to 13%, up from 11.8% at the last quarter. On page eight, you can see the split by region. Western Europe had a significant one-off last year from an accounting standpoint, so it says -5.8%, but if you took that one-off out, we would be at -1.5%. Northern Europe, which is the German, Germany and Northern Europe, is down 4.2%. Again, this is the part of the world that's been slowing down the fastest, particularly the industrial side. Central Europe is down again, being, I would say, squeezed in between Germany and the Russian space. Med and Africa, I would say that's the good news from the southern countries in Europe, pretty much consistent with the economy of 7.3%. One of the areas where actually client activity continues to be positive. North America, with a sharp slowdown in inflation reflected in the lower premiums by 6.7%. Asia, again, lower activity than prior, pretty much flat. Latin America, down as well due to very quickly slowing inflation on commodities, metals, but also, I would say some of the risk actions we've taken over the course of the last two quarters. So that's pretty much the geographic story. And then when we go into the next page, page 9, you can see the split by area, with the new production actually rebounding from the last couple of years, actually higher than 2022 and 2023. As demand is increasing in the markets in the face of I would say a rising risk environment. The retention rates remains very high at the level of 2021, but slightly lower than 2022 and 2023. We are still operating in a very competitive environment, and we also see the impact here of some of our risk mitigation plans that we've acted on in the last couple quarters. Pricing, still negative, but better than it was in 2022 and 2023, and it's, it's reverting to, I would say, the mean of, of the historic average for our industry. And then what we call the volume effect, which is really the, the growth of our clients' turnover, which has been brought back down to zero after, two very good years in, in 2022 and 2023, which were much higher at 4.4% and 2%. So, so that's really... You can see how the things are evolving here, an environment where, risk continues to grow, an environment where, demand is increasing, where pricing is getting a little bit better, but where activity, economic activity is more subdued. If we go to the next page on the risk side, you can see it was a very strong quarter at a loss ratio of 33%, for the first quarter. We can see the number of claims increasing since the middle of 2021, so we're almost three years in what we've called the normalization. The first quarter now has 8% fewer claims than in 2019, but with the total amount now pretty much in line with 2019. We see we continue to see the severity below historic average, but continuing to increase. There's really been no change in our reserving policy. The opening year loss ratio stands at 78.6, if you take out the discounting factor. That accounts for the fact that we're operating in a continued, volatile and uncertain environment. And, and then we had some significant reserve releases, in the first quarter linked to Latin America, and that's how we get to the 33%. On page 11, I'm actually gonna skip that page because we are comparing here the last three years', loss ratios for each one of the regions to the first quarter of 2024. This is a year-to-date page, so in the first quarter, it's a little bit less relevance, and I'd like to more comment on page 12, which is the last, five quarters. So we can see on this page that the four largest and more stable markets, Western Europe, Northern Europe, Central Europe, Med and Africa, are all pretty much continuing to be quite benign in terms of their loss ratios. Not a whole lot of movement there. On the three smaller but more volatile markets, North America, Latin America, and Asia Pacific, you can see again quite benign picture, except continued volatility in Latin America. Latin America had been hit last year with a significant losses. We actually these turned out to be fully recovered. We had a spike in Q3 due to increased frequencies in parts of Latin America, and again, had to book some reserves at the end of the year, which actually have been thrown back in the beginning of this year. So in the end, a pretty good story on the loss line. You'd see on page 13, the story on cost, which I've really actually described in quite a lot of detail already on the second page of this presentation. So pretty much it's just another way to look at costs, which are increasing to the tune of about 6%. And I've described how the cost ratio, sorry, has gone up by 1.6 points. When you look at the cost ratio before reinsurance, the walk is from 29.4 to 31.7. Again, here we see the impact of our lower premium growth. The fact that we continue to invest, that's 1.1 points additional of cost ratio. And the fact that the inflation that we embarked from the past is weighing for 1.3 points. At the same time, we see the impact of a better product mix with fees and Business Information accounting for 1.4 points of reduction of the cost ratio. That's pretty much the same story told in another way. With this, I am going to turn it over to Phalla to take us through the next parts of this presentation. ... Thanks, Xavier. So let's go to page 14 on the reinsurance side. As you can see, the premium cession rate is at 26.8. This is pretty stable compared to prior years. Claim cession rate at 21.1, which is down from the 27.4 in Q1 2023. Just for context here, in Q1 2023, of course, we have this very large claim in Latin America, and part of that was passed to the reinsurer through the excess of loss treaty. And in Q1 2024, so this year, we have, as Xavier said, some prior year positive developments that benefit the reinsurers as well. As a consequence of this, I think the reinsurance result is at EUR 30.5 million. I believe that our external reinsurers will really enjoy it. If we move to page 15, the net combined ratio stands at 63.1. I will start with the net cost ratio, moving from 25.7 - 27.3, which is up 1.6. You know that the gross, this, this of course, the reinsurers commission is contributing 4.7, as the gross cost ratio has increased by 2.3 percentage points. Net loss ratio moving down almost five points. Again, this is because in Q1 2023, we have these very large claims in Latin America, and in Q1 2024, a reserve release from prior years. If we move to page 16 on our financial portfolio, on the left-hand side, you can see that the mark-to-market of our investment portfolio stands at EUR 3.2 billion after the repayment of EUR 203 million of our, the first tranche of our Tier 2 debt at the end of March. The asset allocation has not changed much with a high level of liquid assets, 20%. Of course, we will repay almost two hundred million of dividend by the end of May. If we move to the right-hand side, so the net investment income is moving up from EUR 2.6 million to almost EUR 80 million this quarter. A couple of highlights here. In terms of recurring income, it's been, well, it's almost EUR 20 million this quarter with, of course, the accounting yield contribution that continues to increase. We're investing the new money at 3.9, so we still have quite a significant operating cash coming from the good performance of the business. In terms of unrealized and realized gain and loss, so we have taken unrealized loss related to our real estate investment fund for -EUR 6.5 million this quarter, and this is completely offset by realized loss and unrealized loss on other asset classes. FX -2.7 this quarter. This takes into account the hyperinflation that we have booked on Turkey for -EUR 4.5 million. In terms of IFE, so insurance finance expenses, stands at EUR 11.4 million. This is pretty similar, at a similar level that we have in Q4 2023. This is, if the interest rates will not change much, probably, more or less our run rate per quarter. Let's move to page 17. So our operating income is up almost 19% from EUR 9 million to EUR 107 million, and the net income up 12%, at EUR 68.4 million. If we move to page 18, return on average tangible equity, the IFRS ATE has not changed much, except, of course, the net income of the quarter. And return on average tangible equity, just the calculation, moving from 13.4 - 14.8. This is probably one of the highest under IFRS 17. That's pretty much it. So this quarter, we don't have the capital management, so I give the floor back to Xavier. Thanks, Phalla. So, as you've seen, it's a quarter of strong execution in a slowing economy with our actions very much in line with our strategy, Power the Core. I think it's quite an uneventful quarter in a way. We continue to invest in our business. We have, I think, very strong financial results. The Return on Average Tangible Equity at almost 15%, I think, is very strong. We see the fact that our diversification is starting to pay off. We see, you know, robust growth in our services business, Business Information and fees, and that's starting to compensate a little bit our the decline we had this quarter in TCI. The fact that BI, Business Information, sorry, is the growth of it more than finances the investments we're making, I think is encouraging. So we consider that that's a good start to the year. With that, actually a bit shorter presentation than usual, we're gonna turn it over to the participants for the questions. Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. ... Your first question comes from the line of Michael Huttner from Berenberg. Please go ahead. Good afternoon, good evening. Thanks so much for another set of lovely results. And I had well four questions, but they're all numbers, and I'm really sorry. They're just fairly boring, 'cause the results are so good. So on the repayment of debt, I know you don't discuss capital management now, but this EUR 203 million, is it correct to think that the impact on solvency would be roughly eight points negative? It's a question. The second is on the combined ratio, and you've probably shown it somewhere, but I haven't checked, what is the impact of the discounting? The third is on the reserve releases, that lovely ratio of 43%. Within that, or can you give us a feel for the element which might be a little bit exceptional, so that's the recovery on Latin America? And then my final question, these are really boring, I'm sorry, is tangible equities. I worked backwards from your lovely return equity of 14.8. Is the figure EUR 1.84 billion? Thank you. I think I'm going to let Phalla answer all of the... Yes, I take some of them. numerous questions, actually. Most of it. So the repayment- I think all of them. Of that, remember, Michael, in Q4, we already commented it. So in Q4, we had the three tranches of Tier 2 debt, and the comment that we had is that, you know, that there's a cap of allowance of Tier 2 debt counting as solvency to own funds. And we have already reached the cap, so the repayment of the EUR 230 million this quarter will not change much in our solvency ratio, because the haircut was already applied as of Q4 2023. Brilliant. The second question is related to the discounted effect. That if you go to page 10, actually, you have the two numbers. You have the undiscounted, which is at the opening at 78.6%, and 74%, which is discounted. Ah, good. Thank you. I leave you, you will do the math, I believe. Yes. The third question was related to the reserve release, right? Mm-hmm. Yes, please. On Latin America? Yeah. Well, we booked some reserve that on Argentina, if you will, collected in Q4 2023. And we booked it in the region where the risk has been underwritten, mainly Latin America, some part of that in Africa and part of that in Med. And actually, the customers continue to pay, so we have to release this reserve. Does it make sense? Yes, but, can you give me a feel for... If I think of it as a little bit one-off, a little bit, how big should I adjust for it, or? Uh, well- I tell you the figure I worked out, it was EUR 10 million. There's always something, there's always something going on. There's always something going on, Michael, as you know, in our business- Yeah somewhere along the line. Yeah, plus and minus. Okay. Okay, okay. But just to say the I worked out, and this is very, very back of the envelope, and this would help the canny investor. It's about EUR 10 million is the amount I would say. It's not to call it exceptional, as you say, is wrong, but it gives me a feel for the the numbers. No, because that's a plus and minus, so you have some release- Ah. and then you have some book up elsewhere, so you know. Ah, okay. Yes. Okay, cool. That's very helpful. And then, on the, tangible equity? Oh, yeah. It's just a matter of calculation. It just means that your... I will have the same question, don't worry. That your technical results improvement or increase is lesser than the increase of the equity. So, you know, you have. It's just a matter of calculation. Okay. Okay, great. I'll double-check that. Superb. Thank you so much. Thank you. We will now go to our next question. Your next question comes from the line of Benoit Valleaux from ODDO BHF. Please go ahead. Yes. Hi, good evening. Thank you for taking my question. A few questions on my side. Maybe the first one is regarding client retention, which is decreasing a little bit versus a peak level on which last year, and it's still a very stronger level. But nevertheless, you mentioned the fact that there's still a very competitive environment, but price increase are broadly similar to last year. And you mentioned also some risk mitigation action plan. So I don't know if you can elaborate a little bit on this action plan. I mean, does it concern some countries, some specific sector? Does it also partly explain the fact that premiums are decreasing in the U.S? You mentioned increase in inflation, but is it also due to some risk mitigation action plan? And overall, would you say that you've maintained your risk appetite at the same level than last year, or if you believe that you're opening or starting this year with maybe even a bit more conservative risk approach? And maybe linked to this, a second question regarding level of premium. So revenues are down a little bit versus Q1 last year, but Q1, Q2 was a very high comparison base. So is it still fair to assume that your revenues should likely increase on a full year base for this year compared to last year? And maybe third question regarding reserves, but more opening reserves on my side. You have opened with still a very high opening loss ratio. You mentioned some political, economic uncertainties. Is there anything to be mentioned on some countries, some emerging market or in some other countries, such as Israel or anything else maybe to be mentioned? And lastly, maybe regarding your investment portfolio, you still have 20% equity asset, as you mentioned, or cash in your portfolio. But regarding fixed income product, did you increase a little bit the duration of your portfolio or not? Thank you. Okay, I'm gonna let Phalla take the last one. Let me address some of the first questions here. On client retention, I mean, clearly, we have been improving for eight years in a row, and we reached a peak, I would say, last year, as you described. As I said, the market is competitive, so we have to fight for every and each account that we have in the portfolio. I would say we have not changed our risk appetite. We remain very disciplined through the cycle, and very consistent with the principles we've highlighted for now years or you know, tens of quarters for those who've been on those calls. We want to create value for the long term. We want to partner with long-term clients who understand the value of the service that we bring, et cetera, et cetera. So there's really not that much of a change. I mean, it continues to be, we call it street fight on an account-by-account basis, nevertheless. The risk mitigation plan that I'm talking about is our normal discipline of making sure that when we see risk increasing significantly in any part of the world, whether it's a sector, whether it's a country, whether it's an account for a whole wide variety of reasons, we're very clear and deliberate and very open on with our clients about how... and we come up with ways to manage that risk. So that's something that we do. In some cases, where the client's relationship cannot be profitable because we are just not in sync with the client, or if somebody else is offering something that we're just incapable or we don't wanna follow with, then we will see an impact on the clients. There's no particular focus on risk in the U.S that I need to or can or have to talk about. So the premium, I'd say, change in the U.S is mainly, as you highlight, we had strong quarters last year. The economy in the U.S. in real terms continued to do well, but in nominal terms, I would say we are off big time from the peak inflation that we've seen last year, particularly even more, I would say, when it comes to some of the spaces where we're stronger in, like, commodities and stuff like this. So that's really what you're seeing here. In terms of the revenues, yes, they are down. Yes, last year was a high point. We have a little bit of the reverse phenomenon that we've had the last couple years when the top-line revenue growth was fueled by, I would say, both the economy and the inflation numbers. So I'm not gonna make any comment as for the rest of the year, by the way. It's anybody's guess what inflation's gonna look like and what the economy's gonna look like, and we never make forward-looking statements on this. But you are right to say that last year was a high point, I guess, in terms of the growth of our revenues. In terms of the opening reserves, not much to say there. I mean, I think it's very consistent year on year, so we don't think the environment has actually gotten any easier from, on a risk side. You can see that over the last three years, I've been talking about this for three years, and still will, we have the what I call normalization going on. It's been slow, it's been progressive, but it's happening. I think in the key markets where we operate, the level of insolvencies is now at or higher than 2019 and continues to rise. So, really no reason for us to open at a significantly lower level. And then, Phalla, you want to talk about the investment portfolio? Yeah, I'll take the investment side. So and you, you're right, I think you can see the, the level of liquid assets, which is 20%. Of course, EUR 200 million will be repaid. In terms of durations, as you might know, the yield curve is still, I think, inverted, where you have short-term yield higher than long term. So this is why we're continuing to have this level of, of liquid assets. Of course, we will position ourselves and probably, extend a little bit duration if the yield curve is, is going back, normal, and quote, unquote, of course, normal being, having the long-term rate higher, higher than the short-term one. So for the time being, I think not yet, but, we probably will, depends on the interest rate curve, evolution. Okay. Thank you very much. Thank you. We will now go to the next question. Your next question comes from the line of Hadley Cohen from Deutsche Bank. Please go ahead. Hi. Thanks very much. Good evening, everyone. Michael and Benoit have actually asked most of my questions, but just a couple of follow-ups, please. Firstly, on the LatAm relief, Phalla, just a point of clarification. And Michael posited that the sort of one-off element was around EUR 10 million, but my inference from your comment was you seemed to suggest that it should be less than that. So I was just wondering if that was right. And linked to that, is this case now closed, or is there possible for further releases to potentially come through next quarter as well? And then my second question, and apologies if I've missed your comments earlier, Xavier. I'm just wondering if there was anything particularly untoward to mention in the Northern Europe loss ratio in the first quarter at 42.4%. I'm just wondering if there was anything one-off in there, if it's just a higher acceleration of normalization of claims activity or what have you? Thanks. I would take the first one. So the LatAm release, I think, yeah, it's, as I said, it's plus and minus. It should not be a big one-off release that you can see in Q1, so it's across, I think, the board. Should we expect more release? Maybe, but at very, I would say, lower level than it used to be, because I think a big chunk has been repaid already. Okay. Okay. Thank you. Sorry, and then on Northern Europe? Sorry, yeah, on Northern Europe, I don't think there's anything specific. I mean, we are seeing a rise. I mean, this is the part of the world which is slowing, clearly, and slowing probably faster than the rest of Europe and the rest of the world. The industrial base in Germany is more impacted, I would say. And also in the variable rate countries that are in the northern part of Europe, I think we've seen construction and other parts of the industry be a little bit more impacted. So nothing, I would say, specific, but a continued slow rise of the risk levels, yes. Understood. Thanks very much. Thank you. We'll now go to the next question. Your next question comes from Michael Huttner, Berenberg. Please go ahead. Thank you. Thanks for this second shot. I have three questions: reinsurance, cost ratio, and tax. On the reinsurance, if I understood correctly, but I may have misunderstood, you had a more positive contribution from commissions than before, is that right? In other words, the reinsurers like you. Does it imply they gave you a better deal at the renewals? So that's one question. The other question is on the cost ratio. So there's this lovely slide, and you clearly, it's clearly a topic, you know, which you look at carefully. Should I imply from the fact that you focus on it, and you know, you weigh up all the factors, et cetera, that we should get back to the previous levels of around 26% quite soon? And then the last one is just on the tax rate. I couldn't figure it out, and just wondered if we're at normal level. That's all. Thank you. I'll take the first two, 'cause you're tempting me with your reinsurance question there, Michael. I wish it were that way. You know, I can imagine reinsurers out of their fondness, just funneling more commissions. That's not the way business works. On the cost ratio, you're right to say that we are disciplined. The fact that the premiums are going down and the inflation, the cost inflation that we've embarked over the last couple of years is now with us for the future does not mean that we believe we should not continue to invest in the business. So, there's an element of this which is the cycle playing through. There's an element of this which is the, let's say, relentless productivity gains that we try to make every year, and there's part of this which is the investments that we wanna make in our business to make it better for the long term. So, I think you're not gonna see our efforts diminish to try to become productive, but you're also gonna see the impact of the environment. You're also gonna see that we continue to invest, because I think that's the right thing to do. There's always, there's always in our business a trade-off between cost and loss, for the reason that these two things, the more resources you put on risk mitigation, and on technology, and on knowledge, and on data, the better, I think, you can expect the outcome to be on the loss side. Also, as you know, the reinsurance plays a factor both on the cost and on the loss ratio. So these two things are not two independent units. I've said that for seven or eight years now that I've been with this business, but it remains true, particularly now in this phase of the cycle. But I'll just leave it there. I hope that answers the question, and I'm gonna turn it to Phalla for the tax rate. For the tax rate. Michael, you know, the tax rate is evolving between what? 24%-28%, you know, and, you know, still in the same... We're navigating within the same range, so there's nothing in particular to be highlighted. Brilliant. Thank you. That's helpful. And just on the reinsurance, and I'm sorry, I'm pushing a little bit. And, my guess is from your answers, that it costs a little, the reinsurance contracts, even though your results are outstanding, and the reinsurers are obviously not, it's a profitable exposure for them. They didn't actually reduce the commissions they're paying? No, you know that it's negotiated every year, so it's, you know, the treaty has been renewed and re-signed, so there's nothing to be negotiated. And of course, they're enjoying our loss ratio, which is why we have these contributions in terms of commissions from our reinsurers. Yeah, there's no interim negotiation during the year, Michael. These contracts are negotiated on an annual basis. I understand that. The reason I asked, I'm going on, I'm being silly. Q1 is the first time we see the kind of benefits or costs or whatever, or the negotiations you completed at the end of the year. That's why I was interested. That's all. But from your answers, they're making out quite well on the loss ratios, so the combined ratio is roughly stable. Is that how I would see it? Yeah. We mentioned last year that we renewed all the contracts at essentially- I agree ... the same conditions. Same conditions. Sorry, my memory. Thank you so much. Sorry about that. Thank you. Once again, if you'd like to ask a question, please press star one and one on your telephone keypad. There are currently no further questions. I will hand the call back. Thank you very much. I mean, let me just thank the participants. I mean, we realize this is a very busy time for announcements and companies announcing their first quarter. There's gonna be a number of things on our agenda. On the sixteenth of May, we have the general assembly. The dividend will be detached on the twenty-second of May, should be paid on the twenty-fourth. And then on the fifth of August, we will present our first half results for 2024. So I'm gonna pretty much leave it here. Thanks, everyone, and talk to you soon. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.