Good day, and thank you for standing by. Welcome to COFACE SA nine months 2026 results presentation. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question-and-answer session. To ask a question during the session, you need to press star, one on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw a question, please press star, one, and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Xavier Durand, CEO. Please go ahead.
Thank you very much. Good evening, everyone, and thank you for logging in. We're happy to report our Q3 results for 2026, which I would qualify as another good quarter for COFACE in an increasingly uncertain environment. You can see from the headline, sorry, we reported EUR 155 million of net profit for the first nine months, almost EUR 48 million for Q3. I mean, some of the same stories that we've been going through now quarter- after- quarter, with a few twists. Revenue is up 1.7% at constant FX and perimeter. There is a rebound in the insurance revenue, which grew by 2.5% in Q3 at constant FX. We'll go through the details, but you'll see client activity a little bit better, client retention close to record highs. Pricing, while still negative, is a little bit better than it was in the prior years.
You see continued double-digit growth in our Business Information line, organic above 11%, and with the acquisition of Cedar Rose last year, we're above 15%. Debt Collection strong at 28%. And the rebound of factoring actually this year, which is up 7.3% for the year and above 14% for the quarter. Total revenue growth for Q3 is at 5.4% with all the activities contributing. So that's, I think, a pretty good quarter from a growth standpoint. The loss ratio, as you see from the first nine months, at 37.7%, is improved by almost 2 points. The net combined ratio for the first nine months stands at 72.4%, so continued very strong performance. We haven't changed our reserving or our methodologies.
The net cost ratio is increased by 2.4 points, and we'll go through the details here as we continue to invest with determination in line with the strategy that we set up for Power the Core. I mentioned the net profit. The ROATE for the first nine months stands at 10.7%. We have a new board member in John Gaines, who is head of actuarials for Arch Capital's mortgage insurance business, replaces Yves Charbonneau in the same capacity. The one thing is we wanted to stress that we're in an environment where higher commodity prices and higher interest rates, which is something relatively recent, are going to continue to put pressure on the solvency of corporates. We are at a record level. We've mentioned this several times since 2019, and we are seeing a flow of larger cases coming from larger companies being hit by this kind of environment.
In a higher interest rate world, and I am going to move to page five, we wanted to mention a few things. First of all, how our strategy is little by little transforming COFACE. You can see it here on the left-hand side that the share of services and revenue from factoring continues to increase year after year by about one point every year. We went from 22 to today, from 8% to about almost 12% of insurance revenues. Also, we will talk about this, but German factoring is well-positioned. We see less liquidity in the European market, and there is more demand for our factoring business, allowing us to accelerate the growth and actually to cross-sell products, because we do sell both factoring and credit insurance at the same time in the German markets and other markets related to it.
I think what we have been doing over the last few years positions us pretty well to take advantage of some of those situations. There are three things I wanted to say about higher interest rates on the right-hand side. Concern in the market about exposure to France, and as you know, the election is coming up and the sovereign situation there. Just want to stress that France, while we are headquartered in France and we are originally a French company, we are a French company, our percentage of revenues derived from France is 14%. It is about 10% of our total exposures. In terms of our investment portfolio, the French sovereign bonds are about 5% of our total. We do have exposure, but it is pretty well diversified in terms of geographies and industries. We have seen a sharp increase in large cases for credit insurance.
I think there is no particular sector or geography. It is just, I think, the combined pressure of higher energy and commodities and higher interest rates. As you know that we have always had a pretty consistently conservative stance on risk, and we are focused on risk, so we are aware of the situation, but I think it is clearly another phase in the cycle. In terms of our investment portfolio, as the yields and the spreads have been growing, this translates into a lower valuation for our investment portfolio, a higher cost of IFE, and Florent will take you through this, with a temporary impact on the solvency, which is right in line with the simulations that we showed at mid-year. So when we detailed our solvency position.
Nothing new on that front, but as you can expect, with a portfolio of three to four-year maturity, there is some impact. On page seven, more detail on the growth. So 1.7%, as I said. Insurance revenue up almost one point for the full year, but 2.5% in Q3. Clearly, we started seeing an acceleration in Q2, and now we are seeing it confirmed in Q3. Other revenues up 10%, and it is really all the different business lines contributing here, with BI at 11% and 15% with the acquisition.
As I said, strong Debt Collection at 28%. Factoring, almost 15% in Q3. So there is really demand out there. Another point I just want to stress is that our insurance fees that we collect along inside our insurance contracts have held up pretty well at +1.2%. You see the fees to premiums ratio on the left-hand side at 12.6%, which, if we compare that to the industry standards, is actually a very good number.
I think the business continues to develop an ecosystem that allows us to justify those levels of fees because of the service that we provide to the clients. On page eight, we describe the growth by region, and I think what you are seeing here is actually a pretty good description of the world economy. Western Europe, which includes France, is subdued and slightly negative. We do not see much client activity here. Good growth in specialties. Northern Europe, which includes Germany, is doing much better, and we have already started to see that in Q2, and it is confirmed in Q3. I mean, this is where factoring actually is located for us. We see strong growth in factoring, strong growth in services, better client activity, and some of that is obviously driven by the government outlays in infrastructure and other things. Central Europe, very flat, remains a low-growth economy.
Better numbers in MED and Africa, both because Southern Europe is actually pretty resilient and also because the Middle East, paradoxically, has actually been a pretty good growth area for us. North America, underneath the numbers, we are seeing some pretty good commercial momentum. Asia Pacific, that is a big region. That is 55% of global GDP growth, and we are seeing underlying the numbers, forget the accounting here, but we are seeing underlying some good growth levels in that part of the world. And a slowdown in Latin America in client activity. Strong new business, but a slowdown in activity, and I think a lot of what we read about that part of the world explains the situation. You go into page nine, and I think what you see here is a strong level of new production. We are at a record over the last few years.
We have actually accelerated in Q3, and the year-to-date new production is at a record level. We see continued demand for our products. It also is the payback of the efforts that we have led to continue to develop our distribution over the years, so consistent with our growth strategy and Power the Core. The retention rate stands close to its historical levels and to the record of the business. Pricing is still negative, but you can see that is slightly better than what we have had in the prior years. I would say the market is still very competitive and so far has been quite aggressive, but we are seeing a slightly improved ability to price. In terms of activity, it is better than the last few years.
Not anything spectacular, but I think you probably have in those numbers a little bit of the inflation that is coming back in the European market in particular, but in other parts of the world as well. I would say a pretty good growth quarter when you look at Q3 in general. We go to page 10 on the losses, and you can see the headline here, really stable, I think is the way to describe it. I would say claims activity is back to historical levels. We are more or less at the same number of claims that we had in the first nine months of 2019. Amounts are higher, but there has been quite a bit of inflation since then. I think what is new here is more severity.
I mean, we've had a particularly benign, I would say, summer, and things have been picking up a little bit since then. I don't think that is really surprising given the environment that we are in. You see at the bottom right that we haven't changed our methodology. We opened the new vintage at 79.2%, undiscounted. We continue to see significant throwbacks from prior vintages, and we haven't changed anything in terms of the way we think about the business. So, I would say from a Q3 perspective, it stands as another strong quarter for COFACE. If we go to page 11, you can see the description of the different years and the nine-month year-to-date 2026. There is really not that much to talk about because everything is actually very stable. If you go to page 12, which is the quarterly view, again, I mean, a lot of stability here.
Nothing material on the four more stable markets at the bottom. On the top, the only place that continues to be volatile, that is not news because it has been like this for 10 years, it is Latin America. We keep oscillating up and down based on some large claims. As you know, this is a place where we are the smallest, obviously, and also where we have large European contracts that derive fairly significant limits for large contracts globally. So, nothing here that is to be surprised about. On page 13, you can see that our costs, Q3 2025 over Q3 2026, are up 5.3 points. We've been seeing that number evolve over the last couple years progressively, but also it used to grow more than the premiums.
Actually, this quarter, you see on the top right-hand side of the chart, we see that inflation in premium and inflation in costs are almost the same, so we're back almost to a neutral position here. What differs is that we continue to invest in the business, so we've got an increase of 2.4 points that is driven by the investments we make. About 1 point of that is distribution in insurance, and 1.4 points is investment in our services business. We get one point of that back through the increase in turnover of the services business, which drives the cost ratio from 35.4%- 36.8%. So we continue to invest in the business. I think it is focused on distribution, it is focused on digital, on data, on technology, on connectivity.
It helps us develop the skills and the tools to run the business well, both on the insurance side, obviously, but also to offer a broader set of products to our clients across the different product sets. That is pretty much what I have to say about cost, and I'm going to turn it over to Phalla to take us through the second part of the presentation.
Good evening, everyone. I am on page 14 on the reinsurance side. If you look at the reinsurance results, -EUR 74 million, this is better than last year. If we look inside this number, the premium cessions rate is very stable, and we have a slightly higher claims cession rate. This is due to the fact that we had some facultatives with a higher cessions rate that we have been passing on to the reinsurers, especially in Q2, actually, while in Q3 only, I think we are back to normal. Nothing else to be added. I think we still have a high level of commissions that we used to have, but for now, probably two or three years, and we are enjoying it.
This leads us to page 15, net combined ratio at 72.4% compared to the 71.9%, which is a slight increase, but not that much year-over-year, with the increase coming from the net cost ratio, as Xavier explained, related to the investment we have made. If we look at the bottom side, which is the net combined ratio by quarter, really nothing to be added here. I think we are increasing from 73%- 74.6%, and coming from the net cost ratio, but nothing major to be highlighted. Moving to page 16, so the financial portfolio, the mark-to-market at EUR 3.17 billion, we were at EUR 3.19 billion at the end of Q2. Here, of course, you look at the asset allocation, we are still very high in terms of asset classes related to the cash and monetary funds and liquid assets at 15%.
We have divested a little bit our investment in real estate funds, I think moving from 3%- 2%. Of course, we have an impact, the mark-to-market on impact coming from the interest rate increase related to our fixed income assets. In fact, this amount, I think we amounted EUR 71 million, and of course, it is unrealized losses that we booked in OCI, so in equity. On the right-hand side, which is the investment income, if you look at the recurring income, we are moving from 77.7%- 79%, so accounting yield is still increasing slightly. We are now invested new money at 4%. Of course, we are taking the full advantage of the increased interest rate.
If we look at the FX, something that the line that we always comment every quarter now, the FX effect of - 6.7%, out of which - 11% is coming from the hyperinflation in Turkey. We are used to it now. We have some unrealized FX gains, 4.3%, that is offsetting the - 11.7% of FX unrealized loss on the IFE line. Nothing to be added. Of course, the IFE, the discounted effect on the liability side is increasing because of the interest rate increase. But again, this is timing, as we already explained. I think over two years' time, it will go back to normal. This leads us to page 17, net income at EUR 155 million. Look at the operating income is down 7%. I think it was down 9% at the end of Q2, and the net income is down 11.8%.
I think it was down 30% at the end of Q2. Book value per share at EUR 14.3. Today, we are trading at EUR 15.7. Still above the value per share. Page 18, return on average tangible equity. Equity is moving from EUR 2.2 billion- EUR 2.1 billion. Of course, we paid our dividend. We have a net income for the period, and here you can see the mark-to-market impact related to interest rate increase, -EUR 71 million. Again, I just want to highlight that we are in a buy and hold strategy, which means that at the end of the day, in two or three years' time, this will recover the same way that we have recovered our negative mark-to-market impact at the end of 2022 when we have this huge interest rate increase. It is not new, but it is recovering over time.
Return on average tangible equity moving from 11.4% - 10.7%. This reflects the net income decrease from last year. Xavier?
Look, in terms of this is a pretty short presentation. There is actually not that much news. Just in terms of the takeaways, another good quarter for COFACE, I would say, in a tougher environment. I mean, when you look at the environment, we have been describing this now for years. Every year you see the list of potential risks getting longer, and none of the prior risks being resolved. Whether it is trade wars, whether it is geopolitical events, whether it is commodity prices going up, whether it is interest rates and spreads, and political instability, et cetera, et cetera. The world continues to be uncertain. I think in that environment, we see Q3 as one where we had actually a pretty good growth number at 5.4% growth, with a non-insurance up 16%. The strategy, we think, is working.
We probably will have we are on track to reach an all-time high in terms of new business, and retention remains pretty strong. The combined ratio for the first nine months at 72.4% is actually better still than our through-the-cycle targets. Clearly, the interest rate situation has changed over the last few months. I think it is, given that we are exposed to so many companies, millions of companies around the world, it is clear that it is going to put some pressure on the more fragile corporates. We are seeing, after a very benign summer, an increase in the number of large claims. The share of the non-risk-bearing revenues that we get is increasing. It is not a dramatic increase, but it is a steady and continuous increase year after year. We are obviously very well diversified from a geography or industry standpoint company.
So I would say, so far, we've been demonstrating some pretty good resilience. We are focused on risk and managing preventive actions. We continue to invest, so we're not stepping down, because I think that's critical for the future, in data and technology, because that's still evolving very quickly. I mean, you're all aware of what's going on in the AI space, et cetera. And I think some of these tools are going to be very helpful for us in the future, and we want to continue to be part of that game. So, that's where we are. We're happy now to take questions from the audience.
Thank you so much. Dear participants, as a reminder, if you wish to ask a question, please press star, one one on your telephone and wait for your name to be announced. To withdraw a question, please press star, one, and one again. Please stand by. We'll compile the Q&A roster. This will take a few moments. Now we're going to take our first question. And it comes from the line of Michael Huttner from Berenberg. Your line is open. Please ask your question.
Fantastic. Thank you so much, and well done for solid results to start everything. I had three. The growth, I was particularly interested in Asia. If I do just the quarterly growth, it looks like 14%. And I just wondered if you could talk a bit about that, whether it's sustainable, basically. The second is on data centers. So, one of my colleagues showed me the CDS chart for CoreWeave, I think it's called. So it's not bips, it's percentages. The CDS went up from 850 or 8.5% to close to 12% over the past quarter. And I just wondered how you're positioned relative to data centers, which is both growth, but obviously risk as well. Then the final question is on the investment in Business Information. You're clearly doing fantastically well in Europe.
I mean, I saw a number, I don't know if it's right, of 15%, but it's not coming through elsewhere. And I just wondered when we'll turn the corner. Thank you.
Okay. I don't have handy the answer on Asia growth. Do you have it?
Yeah, I think it's that. That's the Asia growth, but this is you have FX impact. What is true on Asia is, you spotted. If you look at the Q2, it was negative year-on-year, and Q3, we moved positive. So it's a big swing. You're right. Even it's only 2%.
But I mean, yeah.
It's a year-to-date at 2.5%, but at Q2 it was - 3%, so you have
But then there's some exchange of contracts last year, one-offs of things like this.
Yeah, there was a one-off last year, but it was in Q1 and Q2.
Okay. Yeah. Okay.
The swing is within Q3. You're totally right.
I mean, forget the quarterly swings, but I think what I am describing is true is that we are seeing, I mean, Asia is a growth area for the world. It is 55% of global growth, and there is demand, and we are investing in that part of the world. I think it makes sense for us to be there. In terms of data centers, I mean, it is hard not to be involved in AI financing these days, but we are thoughtful about the way we do it. I think we are involved not in the data centers only, but I think the AI trade has a lot of implications for other sectors, those who provide infrastructure, those who provide telecoms, those who provide energy, those who provide construction, et cetera, et cetera.
I think the main exposure for us is through the whole ecosystem than it more than it is to individual data centers per se. I mean, we do have some, but I do not think that is the bulk of what we do. In terms of BI, I mean, what we have started to do is a pretty ambitious program, which is to build BI throughout the world, right?
Clearly, we are better known and more mature, and we have a better brand, and we have more people, et cetera, and more clients in Western Europe than we do in the rest of the world. But I think there is some really interesting stuff happening in other parts of the world, and also that the global value proposition that we can bring to the market is something very unique, because there is very few companies that are able actually to do this.
I think BI in itself serves two or three different purposes. One is, it is a new product, and in itself, it is an interesting value proposition for the market and makes our brand much more relevant. It broadens considerably the scope of what we are able to offer and the number of companies we are able to trade with. It is more and more something that we are able to cross-sell into our existing client base or jointly sell as a new product to new clients.
It helps us fund the data centers and data lab and the knowledge base and the tech base of the company, and stay on top of AI and things like this, which are making a significant contribution to the insurance business. Then, of course, it is a business that by itself is a P&L, and we are continuing to invest in it because I think as we have gone from not that much to something like a run rate of EUR 100 million, we are seeing that we need to continue to invest in this business. And I think we can basically decide how much, but it requires continued investment. But I think that is for the better for the company.
Thank you.
Thank you. Now we are going to take our next question. The question comes line of Benoît Valleaux from Oddo BHF. Your line is open. Please ask your question.
Yes, good evening. Thank you for taking my question. The first one, maybe it is far away, but I think it has to be raised. We got this article a few weeks ago saying that CNP might have envisaged to acquire COFACE. I assume that maybe you do not want to comment more specifically on CNP, but maybe this is a good opportunity to, I would say, to make an update on your view on the benefit of COFACE of being independent and maybe listed versus, I do not know, to be acquired by Arch or another insurance company. You can just maybe reiterate what you already said in the past, but sorry, another view could be quite interesting. The second question is related to reinsurance.
We are just early November, but I assume that you do not plan to change the structure of your reinsurance program, but do you have already at this stage a view regarding pricing for next year? Maybe the third question, if you can zoom a little bit from Q3, in your strategic plan, you have this undiscounted combined ratio target through a cycle of 78%. Would you say that you are to date, you are broadly at a level which correspond to an average of what you could assume through a cycle? I mean, just to have a view, another term to compare your current profitability versus what you assume in your plan through a cycle, just to understand the quality of the figure. Thank you.
I mean, the last question is difficult because it's very hard to call the bottom of a cycle anytime, right? What we know is that we had an extraordinary event with COVID, that after that we had an extraordinary event, which is the amount of money that went at a very cheap level to all the companies. Since then, we've had years and years of normalization where we have now more insolvencies, something like 40% more insolvencies than we had in 2019. Clearly, we're not in the good part of the cycle, but it's anybody's guess to where that goes from here. I think we've been performing pretty well. I think I'm not going to comment on the overall performance versus what we expected. I think we have to live through the whole cycle here.
In terms of acquisitions, I'll let Phalla comment on the reinsurance. Obviously, we're not going to make any comment on any particular possibility or rumor out there. What I can say is COFACE has been performing pretty well, operating the way it is. We have the backing of the investor community. We have strong shareholders who are on the board and are fully in line with the strategy of the company. I think what we obviously differs from what others may have in large groups. Obviously, the balance sheet is smaller. Obviously, our cost of capital is probably a little bit higher. But also, we retain strategic flexibility and probably agility in the way we operate. That's what I can tell you. But I think the proof there is in the pudding, as they say.
I think our performance so far has been pretty good when you compare it to that of the industry, although it's harder and harder to compare because obviously there are fewer and fewer that report numbers that we can compare to.
Yeah, I'll take the one on reinsurance. Of course, it's not signed, so until it's signed, I will not disclose anything. However, it is not in our view to drastically change the structure. It would be probably tactically some changes, but not significant. Given the fact that we're seeing a soft market and capacity is still there, notwithstanding from the reinsurers, we don't expect any issues to renew in the good conditions that we had in the past years.
Okay. Thank you. May I just ask just a follow-up question? After that, I will give the floor to my colleagues. Regarding France, do you see any specific trend in terms of claim frequencies, any sign of deterioration?
I mean, as I said, we are seeing, first of all, a record level of insolvencies around the world in most major economies. That's the first one. The second thing is we are seeing larger bankruptcies happen. I think we were surprised to see it was pretty benign through the summer, but I think the interest rate situation is going to bite into companies' balance sheets. When you combine that with higher cost of materials, there are companies that are going to be hit. I mean, I don't have anything specific on France at this stage. It's probably still very early, and God knows where the situation goes from here.
I think, in general, I would say my comment would be more on the overall global economy, because when you have interest rates that rise as fast as they have in so many places at the same time, there's bound to be some kind of an impact. I think it would be fair to expect that.
Okay. Thank you very much.
Thank you. Dear participants, as a quick reminder, if you would like to ask a question, please press star one one . Now we are going to take our next question. The question comes from Pierre Chédeville from CIC. Your line is open. Please ask your question.
Yes, good evening. I would like to come back on cost, because when we look at the evolution of revenues, 5.4%, and cost, 7.7%, we have what we call a negative jaws effect. We can see that your cost ratio is a little bit higher, and it is balanced by a better loss ratio. My question is, of course, we understand that you are investing, et cetera, et cetera. It is one important point of your equity story. But I was wondering if, according to the context, what is your leeway to decelerate this investment in case of a higher loss ratio due to the situation, the tougher situation that you have explained? In particular, in terms of align a little bit better the rise in your revenues and in your cost in case of a strong deterioration or little deterioration of your loss ratio. Second question is-
Well, I mean, yeah, okay.
Yeah.
Go ahead, please.
Second question is, when do you feel that AI could significantly improve your cost ratio? Do you have any time horizon there, or is it too early to have some view on that? Last question is just a clarification, because you mentioned that you have significant bigger claims since summer, and at the same time, your loss ratio is still quite low in the period. I was wondering what is balancing these bigger claims to the fact that your loss ratio remains very good? Thank you.
Okay. On the cost ratio, there's always some leeway, as we said. We want to continue to invest because some of the things that we're doing are strategic for the long term, whether it's investing in distribution or building up our data capabilities or developing our service capabilities in terms of BI, or Debt Collection for that matter, and this is growing. There's always some leeway to do this, but we haven't wanted to slow that down because I think it would be a pity to push it off when we're actually seeing this thing working and that there's a clear need and a clear opportunity expressed by the clients. Now, we can always do things. I mean, it's clear. I don't think we have felt that it was the right thing to do at this point, given the performance and the loss, as you mentioned.
I also want to say that the benefits, and I've said this, I think, several times, the benefits also pertain to the insurance business. Because when we are able to get better quality data and we are able to develop better scores, these get put to work not just for BI but also for TCI, because that's where they actually originate, and that translates into the overall performance of the business. So we're balancing these two things, and obviously, we'll play it as things develop. In terms of AI, I think it's early. AI is a great tool, but there's so many more things we don't know than things we know about AI. We know it works great when it comes to manipulating huge sets of data and extracting knowledge out of them. So that's been proven, and that's what I was mentioning about scores.
I mean, it works great for scores. That's pretty clear. When it comes to operational product or putting it to work in the operations area, it requires re-engineering of processes, it requires changes in organizations, it requires retraining of people, and obviously, a culture change. So that's much longer to take hold. It also has to be balanced with the risk that we take in terms of putting to work some agents that are machines, basically, and you need to control them, so the governance around that, and also the cost, because the AI charging models are still things in development, and there's some element of cost there. So, I think that will take more time. We want to stay abreast of what's going on.
We want to be able to put it in place as it develops, but we also are thoughtful about not getting too much ahead that it backfires in terms of either security or the cost element, or the sustainability element. I think we're still a ways from that being the final stage or being able to predict exactly where it goes. Then in terms of claims, I do not know, Phalla, if you want to mention that.
Yeah, I think what we're seeing in the numbers at the end of Q3, of course, when we mentioned some larger claims coming through in September, this is what we mentioned, what we think and what we're seeing currently. But as of Q3 numbers, you can see you have some prior year positive developments that we have accounted for in Q3, even if we have opened the vintage at a very high level at 79%. So 79% is because we're seeing some large claims coming through, and then the throwback, so the prior year positive developments at -EUR 42 million is one, it's pretty high reserve release. That's coming from the methodology that we have, and we haven't changed the methodology.
Thank you.
I think what's noticeable is the change, right? I mean, the change in interest rates levels, the change from something that was quite benign, I would say, up to now, to something that's starting to look a little bit different. I think we just want to mention that, and I think the environment is remaining very uncertain at this stage.
Thank you.
Thank you. Now we are going to take our final question for today. The question comes from Michael Huttner from Berenberg. Your line is open. Please ask your question.
Fantastic. I have got lots. Sorry about that. You mentioned momentum in North America, but the numbers look near flat, so I just wondered if you could help us there. Then, hang on, I need to find my crib sheet, which is not good. Then, not good. The other is on the treasury. I could not quite understand why high interest rates are negative. I thought liabilities were discounted as well, but I just wondered. I know it is a really stupid question, but maybe you can help. On the other point, which I was a little bit puzzled by, hang on, here we are. Could you remind us the reinsurance limits for losses? From memory, it is somewhere around EUR 50 million, but my memory is so weak, it is not good. If you could explain very briefly the mechanism on the IFE, what does normal mean?
If we are at EUR 39 million now, what would be a normal level for in two years? Those are all my questions. Thank you.
I will take the North America question, and I will leave the other three for Phalla. When we look at signing a new contract, say we sign it today, the revenue from that contract is going to be flowing in the next 12 months, not today. The fact that you have new business, which is doing pretty well, will only translate in the future, and we start booking those revenues at, I would say, what we call the minimum premium, and then there is activity that shows up based on the reality of what the client experiences in their turnover. There is always some timing effect, and then there is always some accounting and exchange rate and all of these other things that plays in. I think that is what you are seeing here. I am just describing on one hand the commercial momentum that we have.
On the other hand, you have the accounting rendering of that in terms of and there is many, many ingredients that go into this. Maybe I pass it on to Phalla to think about interest rates.
Yeah. I will put on the IFRS side. You are right. I think the reserving, the liability itself, discounted at a higher rate, so the amount of the stock is lower. But in terms of impact on the P&L, which is the IFRS part of the reserving side, is increasing. There is no I will put it this way. On EUR 39 million at the end of year-to-date, at the end of the third quarter, out of which EUR 11 million is coming from the FX. If we look at the normalized year, I would say without the FX impact, we are talking about something around EUR 40 million. So, it is pretty stable over time, and you have ± 10% is probably the range, excluding, of course, the FX impact.
So, it is EUR 39 million, including EUR 11 million of FX, but excluding would be EUR 30 million. It gives you the annual range of EUR 40 million that you used to see and you used to have. Does it make sense?
Oh, okay. Okay, I understand. Yeah. I had one more, sorry. I jotted it down. This was, you started investing, I guess, after 2024 with your business plan in new distribution, and now we are seeing the benefits of this, so strong new business growth or record new business growth, net new business growth. Given you know the pattern of the investing much better, obviously much better than I would ever do, can you give us a feeling for how much more there is to come?
Oh, we never make any forward-looking statements, you know?
Well, it is not exactly a forward-looking statement because I am really asking you what the pattern of investment has been, and I can work it out if you like.
I mean, just to, what are we doing? We are hiring people, right? It takes some time to hire somebody, for them to come, for them to get trained, and for them to get productive, and this is a multi-year effort. Typically, it takes three years for somebody to come in and start being really. Then there are some of them will succeed, and some of them will fail, and then we will have to replace them. So, it is a whole program here that we have been leading in this space.
Dean, the pace of investment has gone up, right? I mean, if I look at the cost ratio and everything. I suppose, of course, I want to know what you can see of the future, but you can actually answer it giving us the data you've already got and published.
I think we've said it all. I mean, I just don't know what to add, quite frankly.
Well, I don't know how to say it, but if you invested EUR 10 million in year one and EUR 20 million in year two and EUR 30 million in year three, that would give me a feel for how much more there is potentially to come. Those numbers I don't have, you see.
Yeah, I mean, I don't think we disclose those numbers. I mean, also for obvious competitive reasons. There's been an effort since we launched Power the Core, I would say, in 2024, to recruit more people, and it didn't come all on the first year, but we had the ambition of doing a significant amount in the first two years of the plan.
Okay.
You had two other questions, I think. One had to do with interest rates, and one had to do with reinsurance limits for losses. I don't know if you want to
Oh, it's the EUR 60 million of excess, the first tranche of excess. Is EUR 60 million the first tranche of the first part of the excess?
EUR 60 million. Mm-hmm.
Interest rates, I didn't understand the
Interest rate.
Oh, you just did?
Yeah.
Okay. All right.
No, no, it was on solvency. You said interest rates are negative, high interest rates for solvency.
Oh, yeah.
But if you discount liabilities, then there should be very little impact. That is why I did not understand.
The impact of interest rates on the solvency is obviously on the solvency own funds, right?
Because you have the negative mark-to-market on your fixed income portfolio. This is shown, actually, if you go to half year, you always have the stress test on the solvency related to interest rate increase. If you look at the half-year disclosure, if you shock the solvency by 100 basis points on interest rate increase, I think it is a decrease of solvency by almost 6 points or 7 points.
Yeah, 7 points.
points.
Okay.
And we think that we are almost there.
Almost there. Okay.
Make sense?
Cool. Yeah, makes perfect sense. Thank you so much. Sorry, I've been Well, I like asking questions. Thank you.
No, that's fine. I mean, the answer was in the document. We do simulations for this, so that's perfect.
Fantastic. Thank you very much.
Thank you. Dear speakers, there are no further questions for today. I would now like to hand the conference over to your speaker, Xavier Durand, for any closing remarks.
All right. Well, look, what time is it? We're way on time. Thanks all for your questions and your interest in the company. I think the next time we speak is in February for the full-year report on COFACE. Thank you again, and we look forward to speaking with you in three months' time, actually, three or four. Thanks, everyone.
Thank you.
This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.