Coface drops rating agency plans amid refocus

Credit insurer Coface has abandoned its plans to set up a European credit rating agency.

However, the insurer will continue to issue private ratings as part of its credit insurance business. These cannot be used for regulatory purposes.

The move is part of Coface’s plan to refocus on its core business of credit insurance. Coface’s other two business lines are factoring and services, which includes debt collection and provision of business information.

Other parts of the refocus plan include a gradual reduction in low-value-added services and, in the factoring business, focusing on those locations that are most profitable and offer a high level of synergies with the credit insurance business.

The plan was presented to Coface’s board on 15 February by new chief executive Jean-Marc Pillu.

Coface revealed its intention to set up a credit rating agency, competing with companies such as Standard & Poor’s, Moody’s and Fitch, in June. It filed for accreditation with the Committee of European Securities Regulators in July.

Coface made a net profit of €61 for the full year of 2010, compared with a loss of €163m 2009. Claims expenses dropped 42% to €602m from €1bn, and the loss ratio improved to 53% from 98%.

Credit insurance turnover was up 5% to €1.3bn from €1.2bn. Coface said it stepped up its support to policyholders in 2010 by increasing its overall exposure by 10% and its risk-weighted exposure by 22%.