Euler Hermes Q financial results. Analysts conference call 9 November 2009

Transcription

1 Euler Hermes Q financial results Analysts conference call 9 November 2009

2 Contents 1 Economic environment 2 Euler Hermes actions and achievements 3 Q consolidated results 4 YTD September 2009 Consolidated Results 2

3 Contents 1 Economic environment 2 Euler Hermes actions and achievements 3 Q consolidated results 4 YTD September 2009 Consolidated Results 3

4 Economic environment Recession has been easing during Q3 The rebound has started during summer but the global industrial production is still much lower than one year ago Industrial production growth (yoy %) Still negative but less negative industrial recession everywhere in the world during summer 2009 USA EMU WORLD EMERGING COUNTRIES EMU facing the worst industrial recession Sources: COE Rexecode, 4

5 Economic environment A slow and fragile recovery next year Due to weak domestic demand, the world economy would grow by only 2% next year GDP Growth 5% 4% 3% The global recession will be followed by a very fragile and slow recovery in 2010 (2%) 2% 1% 0% -1% 4,5% 1,9% 2,1% 2,9% 4,1% 3,7% 4,3% 4,2% 2,0% 2,0% Expected USA GDP growth of around -2.9% in 2009 before a small recovery in 2010 (+1.5%) -2% -3% -4% -5% WORLD USA Eurozone -2,4% Expected EMU GDP growth to stay under USA GDP growth both in 2009 (-4.0%) and 2010 (0.5%). EMU and USA make up 80% of Euler Hermes playground Sources: IHS Global Insight, Euler Hermes calculation and forecasts published end of September 2009 in the EH Economic outlook 2009 #4 (GDP 2007 weighting at current exchange rates) 5

6 Economic environment The deepest trade recession since 50 years After the collapse, the world trade is just beginning to stabilize mid-2009 at a low level; OECD trade has decreased even deeper than world trade Trade Growth 15% 10% 5% 0% -5% -10% -15% -20% World OECD The sharpest fall expected since WWII in world trade of goods and services. At least -12% for full year 2009 (after +2.6% in 2008 and a yearly average of almost 7% between 2003 and 2007) Sources: IHS Global Insight, Euler Hermes calculation and forecasts published end of September 2009 in the EH Economic outlook 2009 #4 (GDP 2007 weighting at current exchange rates) 6

7 Economic environment Business insolvencies on a historical rise trend EH Global Insolvency Index up by +27% in 2008 (after +4% in 2007). The rebound should be 35% in 2009 and still rising in 2010 Global Insolvency Index Sources: IHS Global Insight, Euler Hermes calculation and forecasts, Index 100 = 1997, GDP 2007 weighting at current exchange rates Note: the EH Global Insolvency Index countries account for 85% of world GDP 7

8 Contents 1 Economic environment 2 Euler Hermes actions and achievements 3 Q consolidated results 4 YTD September 2009 Consolidated Results 8

9 Euler Hermes actions and achievements Risk Action Plan still on the way Severity Review of all largest exposure regardless of the buyer s Severity grade: SCAP3 Crisis Committee Reduction by 84% of the most sensitive large exposure (grade 7 with exposure > 20MM) since 1 Jan 2009 Frequency Net exposure reduction by Severity 17% since 1 Jan 2009 Strengthening of automatic gradings and automatic approval processes Risk Action Plan Country Risk Severity Major exposure reductions on large countries rated C&D: Hungary, Romania, Russia,Turkey, Argentina, Ukraine, Baltic states 9

10 Euler Hermes actions and achievements Portfolio by risk grade In Bn September 2009 June 2009 December 2008 Grade Exposure % Exposure % Exposure % Grade % % % Grade % % % Grade % % % Grade % % % Grade % % % Grade % % % Grade % % % Grade % % % Grade % % % Grade % % 26 0% Total EH Exposure From 1 Jan 09 and 30 Sep 09 Net reduction of total exposure: 110 bn (-17%) Net reduction of exposure in grades 6 to 10: 35 bn (-29%) Stable weighted average grade at

11 Euler Hermes actions and achievements Weekly Claims trends of Large BUs (nb/covered amount) Evolution of number of claims (Thousands) Evolution of the covered amount (EUR thousands) 5,0 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0, Number of files received Moy. mobile sur 6 per. (number of files received) Covered amount Moy. mobile sur 6 per. (Covered amount) 2009 ytd /2008 ytd Q3 2009/Q Q3 2009/Q nb 7.6% -35.2% -18.8% amount 32.5% -50.7% -20.3% average amount 19.6% -25.3% -5.0% 11

12 Euler Hermes actions and achievements Global overview of portfolio value evolution (Sep 09) Global overview of portfolio value evolution in K E U R New Business Lost Premiums Rate variation Organic variation Volume variation Other variations Total Variations Actual Actual Actual Budget

13 Euler Hermes actions and achievements Overview of commercial recession action plan in Sep rate increase EUR M % % % % % % % Accumulated Actual YTD in M % % in Sep % 6.67% 4.98% 4.08% jan feb mar apr may jun jul aug sep oct nov dec Monthly Forecasted achievement in % taking into account the renewal structure of the portfolio Monthly Actual achievement in M 13

14 Contents 1 Economic environment 2 Euler Hermes actions and achievements 3 Q consolidated results 4 YTD September 2009 Consolidated Results 14

15 Q consolidated results Q Key figures 2009 EUR M Q3 (Only) 2009 Q (Only) 2008 Variation in amount Variation in % In % Turnover % Technical result % Net financial income (excluding financing costs) % Operating income % Of which realised gains and losses % Net of realised gains and losses % Net consolidated result % AZ Net combined ratio 109.9% 102.1% Euler Hermes Net combined ratio (including Service margin) 103.5% 93.0% Euler Hermes Net loss ratio 77.1% 70.8% Euler Hermes Net cost ratio 26.3% 22.2% 15

16 Q consolidated results Q Turnover evolution per geographic area EUR M Q (1) Q (2) Variance (1)/(2) Q (3) Variance (1)/(3) Germany % % France % % Italy % % United Kingdom % % USA % % Belgium % % Netherlands % % Scandinavia % % Poland % % Sub-Total Large BU's % % - of which euro zone % % Sub-Total New markets % % Euler Hermes % % (1) Credit-Insurance turnover with geographical reclassification (2) Credit-Insurance turnover with geographical reclassification pro forma (3) Credit-Insurance turnover with geographical reclassification pro forma at constant exchange rate 16

17 Q consolidated results Quarter by quarter group turnover evolution in million Euros Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q Earned Premium Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q Other Fees Collection Service Fees Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 17

18 Contents 1 Economic environment 2 Euler Hermes actions and achievements 3 Q consolidated results 4 YTD September 2009 Consolidated Results 18

19 YTD September 2009 Consolidated Results YTD September 2009 key figures EUR M End of Sept 2009 End 2008 of Sept 2008 Variation in amount Variation in % In % Turnover % Technical result % Net financial income (excluding financing costs) % Operating income Of which realised gains and losses Net of realised gains and losses % % % Net consolidated result AZ Net combined ratio Euler Hermes Net combined ratio (including Service margin) Euler Hermes Net loss ratio Euler Hermes Net cost ratio % 114.7% 93.4% 107.4% 86.1% 85.0% 66.1% 22.4% 19.9% 19

20 YTD September 2009 Consolidated Results 2009 YTD Turnover evolution EUR M -1.6% -0.4% ,9 Of which impact $: impact : others: Q Published Neutralization of currency and perimeter impact and excluding accounting adjustements Q Turnover after change of perimeters Premium Growth Other Revenue Growth Q

21 YTD September 2009 Consolidated Results 2009 YTD Turnover evolution EUR M End of Sept 2009 End 2008 of Sept 2008 Variation in amount Variation in % In % Premium % Other Revenues % Total Credit insurance turnover % Earned premiums by activity EUR M End of Sept 2009 End 2008 of Sept 2008 Variation In % Credit Insurance % Bonding % Fidelity % Retail % Earned premiums % 21

22 YTD September 2009 Consolidated Results 2009 YTD Earned Premium evolution per geographic area EUR thousands End of Sept 2009 End End of 2008 Sept of Sept Variation In % France % United Kingdom % US % Italy % Germany % Other Large BU's % Total large BU's % International Development Centers % Total Gross Earned Premiums % * At constant exchange rate and perimeter and excluding accounting adjustments 22

23 YTD September 2009 Consolidated Results 2009 YTD key figures Profit & Loss (part 1) EUR thousands End of Sept 2009 End End of 2008 Sept of Sept Variation In % Net earned premium % Net claims cost % Net technical & non-technical expenses % Operating income from insurance activities % Combined ratio from insurance activities ALLIANZ FORMAT 114.7% 93.4% Service revenues % Service expenses % Operating profit from service activities % Total Technical Result % Full technical combined ratio including service activities EH/ALLIANZ France FORMAT 107.4% 86.1% Of which Loss Ratio 85.0% 66.1% Cost Ratio 22.4% 19.9% 23

24 YTD September 2009 Consolidated Results 2009 YTD Net earned premium evolution EUR thousands End of Sept 2009 End of Sept 2008 Variation % Gross earned premiums % Ceded premiums % Net earned premiums % Cession rate -33.1% -23.5% Cession rate without XoL premium -30.6% -21.9% (assumed XOL=1,6% retention in 2008) (assumed XOL=2,5% retention in 2009) 24

25 YTD September 2009 Consolidated Results 2009 YTD Net claims costs evolution EUR thousands End of Sept 2009 End End of 2008 Sept of Sept Variation In % Gross claims costs current attachment years % Ceded claims costs current attachment years % Net claim costs current attachment years % Cession rate current attachment years 29% 20% Gross claims costs previous attachment years % Ceded claims costs previous attachment years % Net claims costs previous attachment years % Cession rate previous attachment year 154% 24% Claims costs % Gross Claims ratio current attachment year -79.4% -66.6% Gross Claims ratio attachment previous year 1.3% 3.8% Gross Claims ratio -78.2% -62.8% Net Claims ratio current attachment year -84.0% -70.0% Net Claims ratio attachment previous year -1.0% 3.8% Net Claims ratio -85.0% -66.1% 25

26 YTD September 2009 Consolidated Results EH Group net loss ratio quarter by quarter evolution Loss ratio current year Run off Loss ratio 140.0% 130.3% 120.0% 112.9% 100.0% 80.0% 60.0% 58.8% 48.5% 57.1% 43.4% 56.8% 50.3% 62.3% 59.6% 65.2% 62.9% 66.4% 64.6% 78.1% 70.8% 84.6% 83.8% 87.5% 93.3% 79.2% 77.1% 40.0% 20.0% 5.8% 0.0% -20.0% -10.3% -13.7% -6.5% -2.6% -2.3% -1.8% -7.3% -17.4% -0.8% -2.1% -40.0% Q Q Q Q Q Q Q Q Q Q Q

27 YTD September 2009 Consolidated Results 2009 YTD Gross loss ratio per operating entity - 1 Q3 (Only) 2008 Q4 (Only) 2008 Q1 (Only) % Q2 (Only) 2009 Q3 (Only) % 108% 100% 85% 84% 87% 89% 85% 75% 77% 72% 69% 65% 66% 68% 73% 77% 76% 72% 65% 66% 66% 67% 69% 66% 50% 56% 52% 25% 0% EH SFAC EH UK EH SIAC EH ACI EH Germany Operational figures from commercial credit insurance activity only. 27

28 YTD September 2009 Consolidated Results 2009 YTD Gross loss ratio per operating entity - 2 Q3 (Only) 2008 Q4 (Only) 2008 Q1 (Only) % Q2 (Only) 2009 Q3 (Only) % 125% 118% 100% 106% 105% 107% 103% 96% 91% 87% 88% 75% 58% 63% 66% 70% 68% 62% 78% 61% 68% 50% 47% 25% 0% EH Netherlands EH Belgium EH Scandinavia EH Poland Operational figures from commercial credit insurance activity only. 28

29 YTD September 2009 Consolidated Results 2009 YTD Gross Expenses Evolution EUR thousands End of Sept 2009 End End of 2008 Sept of Sept Variation In % Contract acquisition expenses % Administration expenses % Service expenses & Other ordinary incomes and charges % Total recurrent expenses % Total non recurrent expenses % Total gross expenses % of which non technical expenses % Total gross Technical expenses Gross technical expense ratio 25.1% 23.5% Net technical expense ratio 22.4% 19.9% * 2009 Pro forma to show the same allocation as in

30 YTD September 2009 Consolidated Results 2009 YTD Net Expenses Evolution EUR thousands End of Sept 2009 End End of 2008 Sept of Sept Variation In % Total gross technical expenses % Service fees % Expenses net of fees % Gross earned premium % Reinsurance commission % Ceded premiums % Net technical expenses % Net premium % Gross technical expense ratio 25.1% 23.5% Net technical expense ratio 22.4% 19.9% 30

31 YTD September 2009 Consolidated Results 2009 YTD Net Financial income evolution EUR thousands End of Sept 2009 End End of 2008 Sept of Sept Variation In % Income from investment property % Income from securities-bonds % Income from securities-equities % Income from securities % Other financial income % Investments income % Investment expenses (7 076) (7 454) -5.1% Net Fx result (7 555) (3 167) 138.5% Net gains and losses on sales of investments less impairment and amortisation % Net financial income (excluding financing expense) % 31

32 YTD September 2009 Consolidated Results 2009 YTD Net Financial Portfolio evolution EUR thousands Amortized cost Revaluation reserve Net carrying amount Fair value Unrealized gains and losses Amortized cost Revaluation reserve Net carrying amount Fair value Unrealized gains and losses - Equities: Bonds: Loans and other investments Total Financial investments Building third party use Cash Total

33 YTD September 2009 Consolidated Results 2009 YTD Key figures Profit & Loss (part 2) EUR thousands End of Sept 2009 End End of 2008 Sept of Sept Variation In % Technical result % Financial income net of expenses % Ordinary operating income % Other non ordinary income and expense n/a Financing expenses % Income from companies accounted for by equity method % Corporation tax % Minority interest % Consolidated net income % Tax rate -89.7% -35.7% 33

34 Thank you for your attention.

35 Appendices

36 Appendices YTD Sept 09 result vs YTD Sept 08 result Notes Premiums written Premiums refunded (45 355) (58 483) Change in unearned premiums (36 582) (72 220) Earned premiums Premium-related revenues Turnover Investment income Investment management charges (7 076) (7 454) Net gain (loss) on sales of investments less impairment and depreciation writebacks Change in fair value of investments recognised at fair value through profit or loss (767) Change in investment impairment provisions (1 313) (9 543) Net change in foreign currency (7 554) (3 167) Net investment income Insurance services expense ( ) ( ) Outwards reinsurance income ( ) ( ) Outwards reinsurance expense Net outwards reinsurance income or expense 9 (21 120) (41 079) Contract acquisition expense ( ) ( ) Administration expense ( ) ( ) Other ordinary operating income and expense ( ) ( ) ORDINARY OPERATING INCOME Other non ordinary operating income and expense (7 618) - OPERATING INCOME Financing expense (7 669) (11 677) Income from companies accounted for by the equity method Corporation tax (31 348) (86 763) CONSOLIDATED NET INCOME o/w NET INCOME, GROUP SHARE Minority interests

37 Appendices Balance sheet - Assets (in thousands) Notes September 30, 2009 December 31, 2008 Goodwill Other intangible assets Intangible assets Investment property Financial investments Derivatives Investments- insurance businesses Investments accounted for by the equity method Share of assignees and reinsurers in the technical reserves and financial liabilities Operating property and other property and equipment Acquisition costs capitalised Deferred tax assets Inwards insurance and reinsurance receivables Outwards reinsurance receivables Corporation tax receivables Other receivables Other assets Cash TOTAL ASSETS

38 Appendices Balance sheet - Liabilities Capital stock Additional paid-in capital Reserves Net income, group share Revaluation reserve Translation reserve (66 690) (73 191) Shareholders' equity, group share Minority interests Total shareholders' equity Provisions for risks and charges Bank borrowings Other borrowings Borrowings Gross non-life technical reserves Liabilities related to contracts Deferred tax liabilities Inwards insurance and reinsurance liabilities Outwards reinsurance liabilities Corporation tax payables Other payables Other liabilities TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

39 Appendices September 2009 YTD Claims evolution: Technical Reserves (in thousands) December 31, 2008 Allowance net of writebacks Foreign exchange differences Other changes September 30, 2009 Reserve for unearned premiums Reserve for claims Reserve for no-claims bonuses and refunds (10 864) Gross technical reserves Reserve for unearned premiums Reserve for claims Reserve for no-claims bonuses and refunds (375) Reinsurers' share of technical reserves Net technical reserves

40 Appendices September 2009 YTD Claims evolution (in thousands) September 30, 2009 December 31, 2008 Gross Reinsurance Net Gross Reinsurance Net Claims reserves gross of recoveries ( ) ( ) Current period ( ) ( ) Prior periods ( ) ( ) Recoveries to be received ( ) ( ) ( ) ( ) Current period ( ) (76 091) ( ) (97 755) Prior periods ( ) ( ) ( ) (86 367) Claims reserves ( ) ( ) (in thousands) September 30, 2009 December 31, 2008 Gross Reinsurance Net Gross Reinsurance Net Reserves for unearned premiums (89 056) (47 853) Claims reserves ( ) ( ) of which, reserves for known claims ( ) ( ) of which, reserves for late claims ( ) of which, reserves for claims handling expenses (7 643) (12 620) of which, other technical reserves (2 352) - (2 352) 899 (44) 855 of which, recoveries to be received ( ) ( ) ( ) ( ) No-claims bonuses and rebates (18 601) (16 939) Technical reserves ( ) ( )