AM Best


A.M. Best Assigns Credit Ratings to Coface North America Insurance Company


CONTACTS:

Jessica Botelho , CA
Financial Analyst
+44 20 7397 0310
jessica.botelho@ambest.com

Samiksha Gupta
Financial Analyst
+1 908 439 2200, ext. 5658
samiksha.gupta@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

LONDON - OCTOBER 16, 2018 11:37 AM (EDT)
A.M. Best has assigned a Financial Strength Rating of A (Excellent) and a Long-Term Issuer Credit Rating of “a” to Coface North America Insurance Company (CNAIC) (USA). CNAIC is a subsidiary of Coface S.A. (Coface), the non-operating holding company of the Coface group. The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Coface’s balance sheet strength, which A.M. Best categorises as very strong, as well as its adequate operating performance, favourable business profile and appropriate enterprise risk management. The ratings factor in CNAIC’s strategic importance to Coface, as the group’s sole vehicle to access the large North American market.

Coface’s balance sheet strength is underpinned by its risk-adjusted capitalisation being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), strong and recurrent internal capital generation from its core markets, and robust reinsurance program. The balance sheet strength assessment also considers the relatively elevated risk stemming from the group’s investment portfolio, which has material holdings in lower-rated investments and significant operating leverage associated with its factoring business.

Coface has had relatively stable consolidated operating performance throughout the cycle since the 2007-08 financial crisis. An aggressive growth strategy in emerging markets, in pursuit of increased market share, resulted in heightened losses and adversely affected 2016 technical results. However, a subsequent change in top management and the introduction of a new three-year strategic plan, titled “Fit to Win”, have started to see a return to loss ratios at pre-2016 levels. Headwinds for prospective profitability include the uncertainty around the sustainability of trade credit results given the high level of competition, together with the pressure that years of relatively low claims experience has placed on rates, and terms and conditions.

Coface benefits from its market leading position within the global credit insurance sector, which has high barriers to entry. Although the group is largely a mono-line insurer, it has good diversification by geography and business sector. Furthermore, Coface has a growing portion of revenues generated from fee-based services and its factoring business in Poland and Germany. As part of the group’s “Fit to Win” strategy, there is a focus on operational efficiencies and value creation rather than pure business growth. A.M. Best will continue to monitor the group’s ability to execute its strategic plan over the short-to-medium term.

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry.


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AMB# Company Name
012657 Coface North America Insurance Company
033986 Coface SA