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

LONDON–(BUSINESS WIRE)–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. Visit
www.ambest.com
for more information
.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Jessica Botelho, CA
Financial
Analyst

+44 20 7397 0310
jessica.botelho@ambest.com
or
Samiksha
Gupta

Financial Analyst
+1 908 439 2200, ext.
5658

samiksha.gupta@ambest.com
or
Christopher
Sharkey

Manager, Public Relations
+1 908 439
2200, ext. 5159

christopher.sharkey@ambest.com
or
Jim
Peavy

Director, Public Relations
+1 908 439
2200, ext. 5644

james.peavy@ambest.com

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