Coface SA: Review of the credit insurance sector by Moody's
The rating agency Moody's confirmed Coface’s Insurance Financial Strength (IFS) A2 rating on 27 March 2020. The outlook for this rating has been changed to negative.
As part of its credit insurance sector review, the agency estimates that the progression of the coronavirus epidemic, and the measures taken by governments to slow its spread, represent a scenario of severe stress for credit insurers.
The confirmation of Coface’s A2 rating reflects Moody's confidence in the resilience of credit-insurers thanks to their ability to revise short-term risks, and their financial stability. It also underlines the mechanisms implemented by many governments to support SMEs, which could reduce the cost for credit insurers.
As a reminder, at the end of 2019, Coface benefited from a solvency ratio of 190%, higher than its target area of 155% -175%. Furthermore, and very early in the crisis, Coface significantly reduced the risk of its investment portfolio, which is currently made up of 22% liquidity compared to around 7% at the end of 2019. The fall in the financial markets has therefore not caused a reduction in solvency greater than the sensitivities communicated by the group.
In this uncertain period, Coface is working more closely than ever with its customers, and is taking multiple preventive actions on its risk portfolio.
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