Ladies and gentlemen, welcome to the conference call for the presentation of Coface results for the period ending March 31st, 2021. At this time, all participants are in listen only mode. Later, we will come to the question and answer session. As a reminder, this conference call is being recorded. Your host for today's conference will be Mr. Xavier Durand, Chief Executive Officer, and Carine Pichon, Chief Financial Officer. I would like to turn the call over to Xavier Durand. Sir, you may begin.
Thank you very much, and let me welcome everybody on this call. Thank you, first of all, for joining. We're happy to report our Q1 2021 numbers. As you've probably seen in the announcements, it was by all means a very strong quarter. Actually so strong that we had to pre-announce the earnings a few days ago. You see the headline number. We're reporting EUR 56.4 million of net profit for Q1. I think if you look at all the metrics in the quarter, you'll see that they're actually quite strong. The growth comes in at 4.2%, all things equal, with Trade Credit Insurance growing underlying this at 6.1%, all things comparable to last year. We continue to have pretty good execution through the business with retention of clients at close to our records.
We benefit from the pricing impact of the actions we've taken last year with pricing up to 2.9%. Our business information line continues to grow, where I just remind you, we had 11% growth last year, and we're seeing 9% actually in Q1 2021 with good underlying momentum. Factoring and debt collections are down. For debt collections, I think it's pretty clear why. In terms of factoring, we're still not seeing a whole lot of demand in terms of the working capital financing needs from companies, and we expect that to pick up as the recovery takes hold. I think that clearly the big news here is on the loss ratio, which is down 32.6 points versus Q1 2020, coming in at a record low of 24.5%.
That brings our net combined ratio at 52.8%. If we exclude the government schemes that we've put in place, if you remember, the net combined ratio would be at 61.1%. The gross loss ratio at 29.5% is 25, almost 26 points better than last year. It's probably the lowest level of claims that we've seen worldwide historically. I think also noteworthy is the fact that our net cost ratio is down 1.5 points to 28.3%. We continue to be very disciplined on cost, obviously we're growing cost less than our premiums. Also, I think noteworthy in these numbers is the fact that the government schemes that we put in place last year and which are running through the middle of this year actually, are costing us EUR 15 million pre-tax this quarter. Just to highlight the performance of the business. Net income EUR 56.4.
It's four times, actually more than four times what it was last year. It's up 55% from the first quarter of 2019. That brings the return on average tangible equity at 12%. Clearly, we carry more capital than probably we would have liked, given the fact that we haven't distributed any of that or as much of that as we would like last year. We still have the dividend of EUR 0.55 a share year marked for 2020. Finally, you might have seen this also in the press, Fitch has confirmed our AA- rating and changed our long-term outlook from negative to stable. With all of this short-term stuff going on, we continue to focus on our execution. We continue to invest in our Build to Lead strategy. We haven't changed course.
We've just appointed a new Chief Operating Officer, somebody that's going to help us drive service quality and digitization and accelerate and enhance these initiatives. We've been on that journey now for five years, and there's still a lot more we want to do in that space. That's kind of the highlight. I'm going to talk a little bit on page five about the environment. On the top left-hand side of the chart, you see the global economic numbers, and clearly, 2020 was the biggest recession we've seen since World War II at -3.6. We're expecting a strong rebound this year at 5.1. You can see actually that this rebound has started. You see on the right-hand side, our exposures with a peak at the end of 2019, a reduction first half of 2020.
Then since the beginning of this year, we've actually started to grow our exposures again. They're up 2.7% in the first quarter, reflecting first that the economy is starting to pick up again, second, that the level of competition in the market is increasing and demand from our clients remains high in an overall pretty low claims environment, as you've seen. There's also some inflation in some of the assets that we help protect, and I'm thinking of the whole commodity space and then particularly metals. If you look to the bottom left of the chart, you see the number of risk management actions that we've taken historically has peaked in the second quarter of last year. Since then, it's remained quite high, but at this point in the first quarter, we're back to where we were pre-crisis level.
The economy is rebounding, it's rebounding in different ways in different parts of the world. You're all aware that China has pretty much been unaffected by this crisis and is already much at a higher GDP point than it was in 2019. The U.S. will reach back where we were in 2019, I would say right now or before the summer. We expect Europe to take more time to recover. When you look at sectors, it's the same thing. Clearly, agro and pharma have been doing extremely well during the crisis. Electronics, chemistry, construction were hit, but then have rebounded very strongly. Of course, when you go to areas like airlines, hotels, cruise, and entertainment, it's a very different picture, and I think it's going to last for a little while more. We're in the phase where we have a sanitary crisis.
As you're aware, it's raging in some markets, Latin America, India. It is getting under more control, I would say, in the developed world where vaccinations are progressing nicely. You're all aware of the virus variants that are out there, and I don't think this is going to be resolved just overnight. It will improve, and as it improves, we do expect the governments to withdraw the incredible amount of support they've provided to economies around the world, which explain to a large extent the low level of claims that we see. As they withdraw that support, clearly, I think we will see a return of insolvencies around the world to levels that are more consistent with history. That's the thing that we're going to have to manage through. If I go to page seven, talk a little bit more about the growth.
You're used to seeing these pages. This is my 21st presentation, I think, May 20th. We haven't changed the format for reasons of consistency. You see growth at 4.2%, underlying Trade Credit Insurance at 6%. Other revenues all in at -1.6%. As I've explained before, we are seeing a cyclical decline in factoring, although it's kind of ebbing now, and lower debt collections. Information is seeing good momentum at +9%. Clearly, fees are down from last year on lower volumes of business in general and lower trading by our clients. More interesting, if I go on page eight, you see the breakdown by region, with Western Europe starting to pick up with obviously positive effects of the pricing actions we took last year, stabilization of the activity, and some growth in the business at 5.5%.
Northern Europe is still down, but that's mainly driven by an accounting method difference between Western Europe and Northern Europe linked to the way the contracts are structured. I do expect Northern Europe to pick up and to get in line over time as it had last year, and the other way around with the Western Europe. Central Europe is kind of flat, slightly positive at 1%, which is the part of the world which has been less impacted by the crisis, as you're all aware. Very strong industrial base and strong link to Germany. Mediterranean & Africa is back up at 6%, a historic kind of growth trend for this part of the world for us. North America is slightly up at 2.2%. Asia Pacific doing extremely well with good momentum here at 16% growth.
Latin America driven by pricing and the global contracts we have up at 12.5%. We can see that the story here is of a progressive rebound and continuing to do well in the markets which have been less affected. You go to page nine and you see the operational metrics. Your new production at EUR 40 million is better than 2018 and 2019, not quite as high as 2020. I think we're seeing a bit less demand, obviously, at this stage of the crisis than last year, and also more competition. Retention rates close to our record at close to 94%. The pricing is probably the best we've had in 15 years at this stage, benefiting from the actions we took last year at 2.5%.
Volume effect or activity, which is the growth of the underlying business that we insure from our clients, is at 0.2%, so slightly positive. I do expect that to pick up as the recovery takes hold. Going to page 10, quite extraordinary numbers here, I have to say, with losses which we thought were already low in Q4 '20 at 34.9% coming down to 29.5%. Two things here. We haven't seen any large loss, and I have to give credit to our team for having avoided any large file actually this quarter. The result of all the actions that they've been leading.
There were a few out there in the market, but we absolutely had none of them. In terms of frequency, however, we are seeing low frequency that's driven by the economic support that the governments have put in place in many regions around the world. We haven't changed our reserving policy. We're keeping our opening year at a pretty good number of 76% here, anticipating that delinquencies and insolvencies are going to go on the rise again. A fairly conservative stance here. We are seeing strong recoveries from prior years, which explain the 49% you see on the bottom right-hand side of the chart here, bringing this record low level of accounting loss for the quarter. Page 11 describes the full year loss ratio by region.
I'm probably going to skip that page and move to the next page, which gives you the quarterly sequence. As we're in the first quarter of the year, it's more appropriate. You see at the bottom, the four large and more stable economies where we operate, typically more stable than the rest of the markets, and you see how the losses are very low at 32% in Western Europe, below 20% in Germany, 27% Central Europe with a consistent decline since the second quarter. Same thing in MENA and Africa at 38%, which is one of the best performances we've ever seen. The more volatile markets up as usual. North America, after a spike in Q2, is now operating at 35%. Asia barely has any loss at all with a 1% loss. Latin America is at 22%.
This is the most volatile market that we historically have been involved with. It goes up and down quite a bit. The teams have done a really good job managing this. As you can see, we've been now at the 20% range, 20%-30% range for a couple of quarters in a row. That's for losses. Going to costs, they've grown by 0.7% year-over-year. We are still benefiting from the fact that we have constraints linked to COVID. I would say, obviously, that as we were impacted by COVID in 2020, there's also been fewer bonuses and payouts to the staff. All that's reflected in these numbers.
Nevertheless, they are lower than the growth in our premiums, which explain the operating leverage benefits we get of 1.1% versus last year, bringing our cost ratio to 31.2%, as you can see on the bottom right-hand side of the chart. All metrics working in the right direction here. With this, I am going to turn it over to Carine to take us through the next pages of this presentation like we usually do.
Thanks, Xavier, good evening, everyone. As usual, looking now at slide number 14, reinsurance results. Reinsurance results reflect low loss activity. You know that the cost of reinsurance is higher when you have lower claims. That's what happened. On top of that, we start to see the impact of the government schemes we have signed last year, mainly in Europe. The cost of these schemes during the very low level of loss ratio represented for this first quarter 2021, a net impact of EUR 15 million. A negative pre-tax impact of EUR 15 million, which is including in the cost of reinsurance you see on the bottom of the chart at around EUR 47 million.
To remind you that these schemes will last up to the end of June 2021, with the exception of the top-up schemes, which will continue up to the end of the year. Looking with these good results in terms of loss ratio and cost ratio, no surprise at slide 15. While you may see that quarter per quarter combined ratio has decreased to reach a record one at 52.8%, we see only a net cost ratio improved from 29.7% in Q1 2020 to 28.3%. A benefit, a decrease of cost ratio by 1.4 points, and clearly also a very low loss ratio at 24.5% with a significant recovery coming from the past and very low level of losses already commented. The slide after, page 16, just to give you what will have been this combined ratio without government schemes. We are used to publishing slides.
The updated figures are on the right, where you have the Q1 2021 with and without scheme. Without scheme, net combined ratio would have continued to be a very good one at 51.1%. Clearly also a decrease in quarter-over-quarter. I would say the underlying trend is there. Very low loss ratio and very good cost ratio, too. Page 17 is the financial portfolio. No change in terms of allocation. If you remember well, we told you that we were constantly redeploying liquidity. Last year, in Q1 into 2020, we decided to increase liquidity because we didn't know exactly what could be the effect of the crisis. Now, looking at the low level of claims, we have decided to redeploy that liquidity. Despite that, our yield is lower. No surprise. It's 0.28% for this quarter. Last year, it was 0.34%.
We have a decline in continuing the level of interest, but we continue to clearly reduce excess of liquidity. Slide 18 is now the split or the worth, let's say it like that, between current operating income at EUR 80 million. Very high to EUR 56.4 million of net income. We haven't had any extraordinary or restructuring income or expenses. Tax rate has dropped. It was last year, 50%, it is 25% this quarter, mainly because we have a good distribution of our results through our countries. We don't have, I will say, losses that we can't use a deferred tax asset, or even we can use some past losses to offset some profit we have had with a very good tax rate at 25%. Page 19, to continue on another way of looking at our performance.
Record historical return on average tangible equity, 12%. We were at a little less than five last year. Main improvement is the technical results, improvement on combined ratio, because between financial results and tax and other, it's quite stable and so no huge impact. In equity, we still have an equity which is even stronger than before, mainly because, without any surprise, we have the net income of this quarter. On top of that, you see that the move that you may have seen in the market on interest have finally had a very small impact on our financial portfolio. The revaluation reserve only decreasing by EUR 6.2 million. Not a huge amount. Very record historical return on equity and a very high equity yield too. Now I let Xavier for key takeaways on outlook.
As we said, this is a record quarter by all means for Coface. Within extraordinary circumstances, good operating performance, nothing new on that front from, I think, the story we've been telling you guys for now the last 12 months. Still low level of bankruptcy across all regions as the governments continue to support the activity. I think the question it will be now, how do they withdraw that support as we get through the next phase of the COVID crisis? We continue to rely on our culture to support our clients. We've started actually with our exposures up 2.7% first quarter. Very important for us to be there for our clients when things rebound. We actually are giving the governments EUR 15 million during this quarter for the schemes that are still ongoing until the end of June.
We do expect the number of bankruptcies to increase as the support to the economy is withdrawn. We are investing for the future. We're moving ahead on our strategic agenda. We do expect that the growth in the economy will support our business as well as factoring at a later stage, however, given how the cycle works here. We're continuing to invest in information services, which we see as an interesting business, and we see momentum in there. That's basically the story. I'm happy now to, as usual, turn it to a Q&A session and leave the floor open.
Ladies and gentlemen, if you have a question, you have to press zero one on your telephone keypad. It's zero and one on your telephone keypad. First question from David Bauma from Exane BNP Paribas. Please go ahead.
Thank you. Good evening, everyone. I have two questions, please. The first one on reserves, on reserving and the prior year releases. There is a very high level in Q1. How much of that is coming from the 2020 reserve buffers you may have built? Can you give us any color on how we should think about the rest of the year and if there is any mechanical effect from the government schemes, especially in the second half of 2021 on that P&L item? My second question is around pricing, and I know it is difficult to give a global picture of the pricing trends, but plus three seems pretty strong in much of the profitability indicators we are seeing. Can you explain a bit the dynamics in the pricing environment? I think you also mentioned some competition. Touching a bit on those two topics would be very interesting.
Lastly, around services. You talked quite a bit about that in the presentation today. Where do you stand in your growth aspirations for services versus the plan you presented last year? You're saying you're quite confident on the top line there. What sort of growth should we expect going forward? Thank you.
Well, I'll take them in the reverse order and I'll leave the first question to Carine, so I'll give her a little bit of time to think through it. I do think, just on that one, the government schemes we find are in 2020. The governments will get to share into the recoveries for 2020. They don't get to share into the recoveries for the stuff that's prior to this, right? On pricing, well, the way this industry works, it's a competitive industry. It's heavily intermediated. I guess last year when we saw the crisis come, and as you know, this is a unique type of crisis we've never gone through. I guess the whole industry started tightening up on limits and on price. Clearly, we are now in a very different environment where there's very limited insolvency, as you know.
Mechanically, there's more pressure from clients, from brokers, and the competitive space is actually completely changed from last year. Yes, I guess that's the dynamics. In terms of services, I don't think we've changed anything from anything we've told you guys when we launched Build to Lead. We said that services were about 12% of our business at the time. We did expect that part of the business to grow over time and hence to grow faster than the rest of the business. I think that's what's happening here for now in the information space. I guess as I explained, factoring is a business which will start growing when companies start picking up activity again and when the amount of liquidity that's out there is going to get reduced. In terms of debt collections, well, that's pretty simple.
When there's limited collections, there's limited debt collection markets and fees. I think nothing new here from anything we've said before. I'm just highlighting, I think, as we move forward, that we're continuing to do what we said we would do and giving you a little bit of the color on how things are playing out quarter by quarter. Carine, you want to talk about the reserving?
Yes. Thank you, Xavier. On reserving, I would say most of the recovery, which is quite usual, is still coming from underwriting year, I would say 2019 and part of 2020, but 2020 is not finalized. You know that we can continue to receive some claims relating to this underwriting year. I would say that the significant improvement compared with previous years in terms of volume is really linked to 2019 and then small 2020. For 2020, we will see for the quarter per quarter if we will have the same level of recovery. It will really depend on the level of claims. We have the same reserve methodology, but it's clear that it's quite unusual to have it like that this level of loss is so low. I think the recovery are mainly coming from this really unusual level of loss claims.
I think you also have a question of government scheme. Government scheme, in fact, it's true. If you remind, where we said last year that there is a kind of breakeven in average. It depends on the countries, around 65%-70% of loss ratio. The lower the claims are, the more the margin we are transferring to the states. We have started to do it on Q1, it will continue. My guess is at least for the next three or four quarters, we'll continue to, while recovering the loss if the situation is not changing, to give it back to the states. We keep a part, but we give it back as soon as we can.
Thank you.
Thank you. Next question from Benoît Pétrarque from Kepler Cheuvreux. Please go ahead.
Yes, good evening from my side. A couple of questions. Just to come back on the previous one on the 2020 reserving. If you have not taken much write-backs on 2020 yet, and the level of bankruptcy has been quite low, obviously. Can we expect write-backs basically on the reserve in 2020 in the coming quarters? Is that still something we should expect? I understand now that most of the write-backs taken in Q1 were related to 2019. If you can clarify that would be very cool. The second one is on the expectation that the number of bankruptcies will increase. From a very low level, it's quite obvious actually. Could you give us a bit of direction in terms of what you expect? Are you talking a level back to pre-crisis level or above pre-crisis potentially?
Could you just help us to quantify this likely increase of number of bankruptcies in the latter part of 2021? The third one is on the schemes, and I was wondering if you expect the schemes to end fully end of June, or you are still in discussion with the state to get support towards the second part of 2021. Just the final one will be on the yield. We see a bit of a yield pickup now on the market. Can we expect some positive in the coming quarters? Probably not next, but towards the end of the year, some positive effect on that on investment income. Thank you very much.
Well, again, I'll take them in the reverse order. In terms of yield, yes. If the yields go up, we benefit. As you're aware, our assets are more in the three-year range. It will take time before we see anything material in our portfolio. Talking here under the control of Carine. It's her area. In terms of state schemes, actually, you might have seen an announcement by the German government that they will not continue the state scheme, and it will stop in June. We do not actually wish to continue these schemes. The discussions aren't technically finalized with other governments, but at least we have one that's clarified, and that's Germany. There's a few schemes that have already been discussed, but these are top-up programs, which, quite frankly, we don't mind doing.
We've been agreeing to doing a few of these, but they're very almost no consequence for us. We're happy to support there, but we would like to not continue these schemes, but the discussions are not closed. These things tend to be last minute. In terms of the number of bankruptcies, it's very hard to forecast what's going to happen month by month or quarter by quarter. Quite frankly, if anybody had told us last year in March that we would be where we are today, it would've defied logic, I guess, in terms of the way the economy's been playing out.
What I can tell you, though, is that this industry is competitive, and whatever the claims are, at some point, if the claims are too low, either competition comes in and gives more limits or clients come in and ask for price rebates or something happens because it's not a place where you run an insurance industry with a level of claims of 24%. Naturally, things revert to the mean, and you know this industry kind of operates with a 50% kind of loss ratio, plus or minus. I'm not quoting Coface numbers here, but as a frame of mind to think about this industry, you can look back into the historic combined ratios of this industry, and you're not close to where we are today. One way or another, I think you will see the loss ratio normalize itself.
The question will be at what rhythm, and is there going to be a peak followed by another adjustment, or is it going to be a more linear kind of thing? This is to be seen. With this, I'm going to turn it over to Carine on the reserving. Clearly, Carine, you want to talk about this?
Exactly. I think you also make an introduction. It will really depend on the level of bankruptcy. It's clear that if these levels are still low for the next six months, we will have some relief on 2020. I mean, really, we don't know at that stage. On the contrary, if situation is going to be deteriorating, we will have a higher loss ratio in 2021. It's a mix between both. Really, we don't give any forward-looking statement on that. We continue to the same policy, and really it will depend on the level of loss for this year. That pretty well, we don't know. I mean, that was the whole thing. We don't know exactly when the situation will deteriorate.
What's very unique here is that you have the hand of the government, which plays a big part in how bankruptcies materialize or not, and at what rhythm.
Yeah. Perfect. Thank you very much for that.
Thank you. Next question from Benoit Valleaux from ODDO BHF. Please go ahead.
Good evening. Two question on my side. Maybe first question is regarding to the competitive environment. You are mentioning there are still some competition, including on new production. Would you say that you are still gaining some market share in current this year as it was the case last year? The second question, just to come back, another follow-up on the previous question regarding bankruptcies. Have you seen any sign of deterioration up to now in April or any early sign, I don't know, any increase in the delay of payment or anything like this, which may suggest a start of deterioration or if it's not the case? Maybe sub-question is relative to solvency. I know that you don't disclose solvency at end March. Nevertheless, you have reported a record level of reserve with a very low level of claims in Q1.
At the opposite, you also seen some increase in your exposure year to date. What could we expect on your solvency as in June at this stage? Would you say that your solvency margin, excluding government schemes, will increase or not, really due to the increase in your exposure? Maybe a very last short question, what would be, from your point of view, your normalized tax rate right now? Because as you mentioned, it has been very low in Q1, and you have your insurance captive in Switzerland, you have maybe your mix of business. What is your normalized tax rate? What you expect for this? Thank you.
Okay. On the tax rate, I will let Carine speak. You know that our tax rate has been quite volatile over the years because of the geography of where the loss is coming and of the geography of the premiums. Since there is not a perfect match there, it has been volatile. I will let Carine answer this one. In terms of our solvency, you know we ended the year pretty strong last year, helped what is more by the government. The government part of the support, if the government schemes go away as we wish, will start reducing, and we will get back to our, let's say, normal self-standing solvency level. As the economy picks up, two things play. One is that as we increase the exposures, that drives automatically more requirements for capital. I just remind you that we have driven down our exposures last year.
At the same time, if delinquencies are low, that drives down the level of capital requirements. At this stage, we don't publish in Q1, we don't publish detailed solvency levels, but I would expect our solvency to remain strong. In terms of what we see recently, as you know, when something happens in the market, there's a lag time for our clients to make a declaration and then for us to see the claims. All I can tell you is, what we look at is what's going on in the market, what can we see from, let's say, court activities or things like this. At this stage, we're starting to see some court activity, not so much for clients that we serve, but for the smaller companies.
I think you can actually read that in the papers and see that the very small companies are starting to get back into the courts. It would seem reasonable to think that progressively, it will start touching bigger and bigger companies as the economy picks up and the government support is withdrawn. That's to be seen. I forget what your first question was. Sorry, I didn't write it down.
I don't know if you should say that you're gaining market share still in Q1. It was the case for January, or not really?
Well, I can't calculate market share until I know what the market looks like. All I can tell you is we're continuing. The market numbers are reported on an annual basis, and it's very different market by market. I guess there's going to be a variety of situations here, but all I can tell you is we continue to execute at Coface. We're not giving up on any of the principles that we've highlighted to you guys. We are here to try to create value for the long term. When we see an opportunity, we fight. We're fighting. We're not going to sit still and wait for things to develop. We will continue to hunt and be on the offense for good business.
However, if it's not business we think is good over the cycle, over the long term, we're not going to go for it. We're staying true to all the statements I have made and the commitments I've made to the investor community over the last four or five years. Carine, you want to talk about tax rate?
Yeah. I think you tell what is the most important, that the tax rate will depend on the spread of results for all our geographies. I will say that as long as it's well spread, you have the kind of results you see. It can change from one quarter to the other one, but let's say it's around that. If you have a huge shift, then you may have an increase, particularly if you have gross losses in a country where we do not see how we can fully use them from an accounting point of view. It will depend on the evolution of the results in all our geographies.
Okay. Thank you.
Thank you. Next question from Thomas Fossard from HSBC. Please go ahead.
Oh, yes. Good evening, everyone. The first question will be back to you, the pricing environment. Could you remind us if the 2.9% price increase is gross or net of rebates? Looking at the account, I can see that the nominal amount of rebates is going up quarter on quarter. I was wondering if, given the low combined ratio or loss ratios that actually you're reporting since Q3, I was wondering if we should expect, I would say, more higher momentum in rebates to clients in the coming quarter. The second question would be related to solvency, and as you said, Xavier, actually, you're carrying excess capital, or you're carrying more capital than you would have expected. For once, Coface is out of this crisis in a very strong balance sheet and solvency position for a change.
What do you intend to do of this position of grants in terms of balance sheet? Should we expect Coface to be more active? I know that you talked about some project in the past. I was wondering if you could say something about it. One of the last question will be on the solvency. We went through a crisis, another crisis, that another stress test. This one was quite different. I was wondering if actually the way the loss ratio have behaved in this crisis, should we expect long-term implication on the internal capital model? Is that going to change some of the parameters? Actually, this will provide some benefits to you on a longer term basis? Thank you.
Well, you're right to point out that this is a crisis like no other that we've seen. By the way, it's not over, in the sense that in 2008, the crisis originated from the financial sector. I think there was a lot of moral hazard hesitation from the governments to bail out those who created the problem and to throw money at the culprit. That's not the case here. We have a health crisis. It's for a good cause. I think there's also learnings from the Lehman crisis, and the governments have understood that whatever it takes is cheaper than anything else. To your point, it's not reflected in the past models, right? In the past histories, because it never happened. The way internal models work, they gather years and years of data, and they try to predict the future based on the past.
As you know, it's a little bit like going home looking in the rearview mirror. It's better than being completely blind, but it's not a good tool to predict the future necessarily. The benefit of this crisis will somehow percolate over the years progressively into our knowledge base. I have to say also that it requires us to improve the tools or change the tools or refine the tools that we have. We're doing a lot of work in this space to improve or to tune our forecasting tools to the nature of what we're seeing here. In terms of solvency, yes, we do have excess capital versus what we ideally want to have as per our solvency scale. What we will do with it, I'm going to say again, very consistent with what I told everybody.
Last year, we could not distribute dividends, and we did not want to given the stress in the system. I think it played out pretty well for us because we withdrew the dividend before we were asked to or required to. We were able to do a stock buyback, the first ones, and maybe the only ones in the space, in the market, actually, in France. This year, if you look at where we are, I've said that we are open to core growth. We're open to M&A if things are there that we could buy at a good price and under good conditions, which, as you know, in our industry, is few and far between. We're open also to send capital back to shareholders because we don't have a vocation to hold excess capital forever.
These remain all possibilities but this is a decision that belongs to the board, not to myself. In terms of pricing, and here, Carine, tell me if I'm wrong, the pricing numbers are gross of the rebates. The rebates happen at the end.
Yeah, it's without rebates.
The rebates happen at the end of the year. The rebates are more like profit-sharing schemes, if you will. If there's low losses, the clients have some kind of a mechanism by which they can benefit. If the losses are high, it goes the other way around, right?
Exactly.
Okay, thank you. We don't have any more question for the moment. Ladies and gentlemen, if you have a question, please press 01 on your telephone keypad. It's zero and one on your telephone keypad. We have a new question from Thomas Fossard from HSBC. Please go ahead.
Sorry. I just wanted to go back to the bankruptcy expectations. Looking at your barometer publication, you're talking about a concept I've never heard about, which is the hidden bankruptcies, and you're quoting pretty high number. I was wondering if this was something that we should pay attention to, and if this was signaling a kind of catch up to a more normal level that you were expecting. The last question would be back on the 2019 underwriting year. Carine, sorry about that, I did not quite understood why to your view 2019 is so strong, so good. As if everything was prior to COVID. Not sure what is driving this. Thank you.
Thomas, to your point, our economists are comparing, if you will, what our models tell us about the balance sheets of the company and what we should see as an output in terms of insolvencies to the reality. On one hand, we look at what the market does, and on the other hand, we look at what our models tell us is in the balance sheets of these companies, taking into account all of the support and all the stuff that they've received from the government. There's a discrepancy here. The only way you can explain this is by saying, well, there's been a discouragement of companies to come forward with their problems. There's been excess money given to them, or excess facilities versus the normal. In the end, this will normalize. The question is not whether it will normalize.
The question is how fast and when, and how. To that, I don't think we have an answer. I think that's what we're saying in our analysis here, and that our economists and our actuaries are spending quite a bit of time looking at this stuff and making sure we get it right. Carine, you want to answer the other question on 2019?
Yeah. Maybe I need to be more clear. Thank you for the question, Thomas. What I was saying is that, the question from David, I think was why do we have a so huge level of release compared with previous year? What I was saying is that we are more coming from the year, let's say 2019, N -1 compared with previous quarters. Mainly because, just have in mind, 2019, it's what we have underwrote at that time, we can receive claims up to Q2 2020 and Q3 2020. What we have seen is that we don't have claims relating to that. That's the reason why we have had some additional release on this underwriting year, which was not totally the case before. Even if 2019 was higher, part of it was post-COVID too.
The most of it was claimed that have been received in Q2, Q3 of last year. They are also benefiting from the very good level of loss ratio, a lot of low claims. I hope it helps, Thomas.
Any other question?
We don't have any more question for the moment, ladies and gentlemen.
Follow-up?
Sorry.
I was going to say, it's 18:55 P.M., so we're right on the hour. We don't need to torture everybody. If there are no other questions, you guys, by the way, you know how to get to Thomas at our investor relations. It's not a hard quarter, I guess. I just want to thank everybody for being here tonight. Obviously, we'll be happy to speak again. It's going to be July, when we release our first half numbers for 2021.
Thank you. Ladies and gentlemen, I guess this concludes this conference call. Thank you for your participation. You may now disconnect your lines.
Thank you.