COFACE SA (COFA) Earnings Call Transcript & Summary

Good morning, everyone. I'm Thomas Jacquet, Head of Investor Relation at Coface, and I'm more than happy to welcome you today for this presentation of our new strategic plan, Build to Lead. Let's start with a housekeeping remark. This session is webcasted, so people on the web will have the opportunity to ask questions. However, we will give the priority to questions from the room. We will have 2 Q&A sessions today, one at the end of the morning and one at the end of the day. I will ask you to keep the questions on the numbers for the session of the afternoon. I'm happy to welcome today Don Watson and Janice Englesbe from Arch. They will be happy to take your questions, if any, on our announcement this morning. So let's have a look at the agenda. We wanted to give you today an opportunity to hear about the people at work, driving our transformation and really achieving the plan, Build to Lead, in the coming years. So in the morning, Xavier will introduce the strategy and the vision. We will then look at the economic environment, and I'm telling you it's not rosy. Julien Marcilly will show us how economic research helps Coface to outperform in this environment. We will then have a presentation on client service and operations. And we will have one on culture, which is more than a buzzword for us. After a well-deserved lunch, we will look at growth opportunities for the coming years. And last but not least, Carine Pichon, our CFO, will share the financial targets and will talk about the numbers. But let's start with the vision. Xavier, the floor is yours.

Good morning. Welcome to this session. Very happy to share this moment with you. I guess there's a lot going on in the world, a lot going on in the economy, a lot going on in our shareholding as well. And again, we'll have a chance to exchange on all of this. We're here to talk about our new plan, Build to Lead, which is really a continuation of our journey. You know that for the last 4 years, Coface has been on a journey to become fit to be able to win in the market. So the words are important here, and we've engineered a deep cultural transformation of the business, literally left no area untouched. The goal was to be able to improve our infrastructure, create a unique culture and prove that we were able to compete effectively in a marketplace which, as you know, is becoming more and more difficult. And I think we've achieved this. I'll take you through more of those details of the plan. So the new plan really builds on those achievements. The word is chosen because it also means that we intend to continue along a journey of investing in our business for the long term, creating value. As you know, we're not a company that just seeks growth for growth -- for growth's sake, but we're here to invest to create value in the long term with one ambition, which is to lead. And what I mean by leading is not being the biggest in this industry, but being seen as the trade credit insurer of reference. We want people, when they think about trade credit insurance, to think Coface. When they think about expertise, about knowledge, about insights, about agility, about the ability to manage in a complicated and unpredictable world, we want Coface to be on top of their mind. And that's what I mean by leading. So on this journey that we've led over the last 4 years, which has been actually very exciting and very rewarding in many ways, we have acquired a number of deep beliefs. And I just want to share these with you because I think they drive the substance of the plan that we're presenting to you today. The first one is that we operate in a business which is a service business. I mean if you put yourselves in the shoes of a client, deciding to subscribe to one of our products, it's actually a quite important decision. You're going to be spending a lot of time with our people. You're going to be putting your credit decisions in the hands of experts. You're going to have to connect your systems. You're going to have to commit quite a bit of money. And more importantly, you're starting on a relationship that will last decades. On average, the large companies with whom we work are companies that stay with us for 20 years or more. And so service is at the essence of everything we do. We believe we're in a profitable business, a business that is resilient through the cycle and a business which has high barriers to entry, and I'll talk a little bit more about this going forward. The second deep belief is that the transformation we have engineered over the course of the last 4 years is working. We think we have the right strategy. I think we're delivering, and I'll share some of that. And so there's no reason for us to change this. I mean it's an effective way, we believe, to compete in the marketplace. And we intend to just broaden and deepen the efforts that we have taken on over the past years. But we're not through with this transformation. There's much more to do. We have initiated some pretty important changes in the company. I think this is just a point in this journey, and there's more to do. Well, this actually -- we will be sharing a lot of that throughout the day with you. We do not -- we're not naive about the environment. We expect the environment to get tougher. We think there's going to be a global slowdown, more volatility, events are harder to predict, which creates challenges but also opportunities because, as you know, we are insurers, and our business is to protect others from these events. We believe that in order to compete effectively in the future over the long term, we need to continue to build our skills, what's core to what we do, our ability to have deeper, better knowledge about risk and to be able to underwrite well, but also our scale in order to be able to do this effectively cheaply. And finally, agility, if you remember, has been the keyword of our prior plan, Fit to Win. We wanted to become the most agile credit insurer in the industry. There was a reason for this. We understood at the time that events that are popping up in the global economy are more and more unpredictable. So you can make all the plans you want. Sometimes you'll get lucky, sometimes you won't because they will or will not happen. What matters is your ability to react effectively and quickly to those events that will present themselves in the course of running your business. We have been very deliberate over the past few years about investing for the long term, and we intend to continue to do this going forward, hence the word build. And we intend to run the company in a way that balances these investments that are necessary for the long term with the need to perform in the short term. And that's the fine line that we're walking, like many other businesses around the world. But we are determined both to deliver in the short term and also to continue to deliberately invest in what we believe is going to be key to our long-term performance in going forward. So just a word about the industry in which we operate. This industry has been growing historically. Before 2010, the growth rate was more like 2x GDP. Since then, it has slowed down to about 1x GDP. But we believe that overall, over the long haul, this is a growing industry. We also believe there is much more potential. As you know, we cover, as an industry, 6% to 7% of all receivables in the world, which leaves, in theory, a lot to be captured. Of course, it's not easy because those receivables are either in markets that are not used to using credit insurance, in market segments like SMEs that are not easy to capture because of the distribution and the product challenges, or in certain countries which are not easy to operate in because underwriting credit, as you know, in some markets is difficult. Nevertheless, we believe there is continued potential for growth going forward. I would also, as I said, stress the importance of the barriers to entry in this business. In order to underwrite like we do, we underwrite credit risk in 200 different countries around the world. We have data that spans decades about how these markets react to shocks in different industries and different situations, very hard to recreate the trove of data and wealth of knowledge that we have. In order to operate effectively today, you need to be able to have this global reach. And so the underlying infrastructure that we manage is incredibly complex. We have information sources, over 100 of them, to which we're interfaced on a digital side. We maintain a regulatory and legal setup, which means licenses in 70 different countries and licenses in 50 different United States. As you know, the U.S. is not always the simplest place to operate in. And we maintained through the cycle, throughout the different events, a strong balance sheet. And while there's a strong level of capital in the world, proving that you can maintain a strong balance sheet through these events, it's not easy to do. So a lot of things, I think, that speak to the beauty of this industry. Our Fit to Win plan has been a success, and it's been, actually, on a personal front, an accelerating journey to be able to lead this company through so much change in so little time. You can see the performance of the business improving dramatically from 2016 when we were challenged -- when I joined, we were challenged with risk events, particularly in Asia, North America, commodities markets. And since then, we had set a target for ourselves of reaching a 9% ROE, 8% are operational, 1% through capital management. We've actually achieved that number, came in thereabout. What was built in the plan at the time was the assumption that interest rates would increase over time, which, as you know, hasn't happened. And we've all but loss hope that this will ever happen actually at this stage. And so we had about a 1% ROE headwind from the assumptions that we had thought about in building this plan. We had set a target of saving EUR 30 million of cost internally for 2018. We beat that target by about 30%. And when you look at what we've achieved in 2019, that's EUR 48 million. That's close to 10% of the internal cost base of the company. As you remember, we lost the public guarantees business from the French State in 2016. That was about EUR 30 million of cost that suddenly we had to deal with. But we've been very deliberate, and that's an important point, I think, in not just taking those EUR 48 million to the P&L, but actually of reinvesting that money in areas that we believe were critical to build a strong company, whether it is risk management, technology, process improvement or growth initiatives to improve our position in the future. So again, an effort that we've led over the last 4 years to continue to build a strong business, a resilient business, and we intend to continue going forward. Our solvency at the end of '15, actually, was 145%, and we've brought it back up to 190%. Now 18 points of that is linked to the approval by the French regulator of our internal model. Huge effort, 3 years of work by 80 of our colleagues, millions of investments, a lot of knowledge acquired on the underlying risk and how it evolves. But clearly, a much stronger balance sheet at this stage. Combined ratio, we had set ourselves an 83% target, and I think we've consistently now beat that number over the course of 2018 and 2019. As you know, we've been deliberate about investing costs in the areas which we think are critical to be able to manage risk well. I think the trade-off here is pretty obvious, and we will continue to do so going forward. And then from a revenue standpoint, Coface was challenged in 2016. We were losing share, we had been losing share for the better part of 10 years regularly in the large mature markets, which was where credit insurance started. So as we entered 2016, in addition to this, the growth that we had generated in emerging markets had been actually carrying more risk than was anticipated. So we had to adjust our risk appetite and reduce our growth ambitions in emerging markets, leading to a shrinkage actually of our business in 2016 and 2017. The challenge was, on a new baseline, on a new tighter risk appetite, would we be able to grow? And I think we've been able to prove this in 2018 and even more in 2019. Over the period, we have now grown our sales by about 9%. But maybe the most important chart is on the bottom right-hand side of the page. You can see in green the increase in number of claims that Coface has had over the years. And you can see it's a steady, regular increase in the number of claims, reflecting also the fact that the economic environment is getting tougher. The blue line shows the accounting loss ratio of Coface over the years, and you see that it spiked in '15 and '16, and then something happened because we have seen a decrease in our loss ratio despite the fact that the overall level of delinquencies is increasing. And I think that's certainly one of the consequences of the tightening and the improvements that we made in our core infrastructure. It means that the severity of the cases that we see are less. And it means our ability to control events around the world that have showed up is better than it was before. Underneath these numbers, though, is a deep transformation of the business. And I'll just start maybe by describing a few of the things that have changed. The box in the middle talks about time to decision. So if you're a client and you're asking us how much limit, how much risk will you allow me to take on any company in the world, we have a database of 70 different -- 70 million companies, it would have taken us 3 years ago 3.6 days on average to provide an answer. Today, we are at less than a day. It's about 0.9 days. So we've divided by 4 the time it takes to make a credit decision. That's a huge improvement in service. The share of automated decisions that we make has grown from 44% to 66%. This is quite a significant achievement because it takes a lot of time, money and effort to make sure that you have these systems that are able to do this reliably. And that frees up a lot of time for underwriters or expert to think more about what they're doing, to communicate a lot more with clients and to be able to better explain and rationalize and tailor the measures that we're taking in reaction to market events, leading to much better quality of service. And I think the demonstration of this improved quality of service that you see on the top right-hand chart is the improvement in client retention, which we've driven from 88% to a record for the business at this stage of 92%, really helping us retain value as time passes. We've also worked hard on the infrastructure, the number of systems, 550 was very high, much higher than we would like it to be. We've started to simplify our organization in IT, reducing the number of systems by 85, that's about 17%, despite the fact that in the meantime, we acquired a couple of businesses, increasing again the number of systems. So we're always working our way down. And then we have improved our ability to respond quickly to client inquiries. It used to take us 14 days to provide a quote to a client. We're down to 9. It's better. It's not where I'd like it to be. We would like to be able to do this within the week, i.e., less than 5 days because I think that's really what clients are expecting. I ask you for a quote, and I want to know by the end of the week if you're -- what it's going to be like. So that's our ambition in the new plan. And then if you peel the onion one level deeper, you find that we've actually touched every area of the business. We've worked hard to simplify the structure, to create some hubs where countries were too small, to deploy shared service centers where we could, to mutualize processes where we have more redundancy, more expertise, more ability to be seamless for clients. We've offshored activities that we believe could be done more effectively by others. And we've set up some functions that did not exist in the company, such as Lean, a transformation office, to lead some of these major infrastructure change projects. We've worked hard on standardizing our processes, scaling our back office and better connecting with the outside world, whether it's information providers or our own brokers or clients through digital tools. So we invested quite a bit of money in developing these digital tools. I think today, for brokers, we have one of the best tools in the market, if not the best tool in the market. And it took us quite a bit of time and money to develop these systems. We have started to rationalize a complex legacy infrastructure, but not just this, but to also invest in systems that we can share amongst many countries, gives us scale, gives us better control over quality, a lot simpler to do. And then more importantly, probably, we have built a new culture for the company, upgraded the teams, a lot of people, a lot of new faces around coming from all sorts of different horizons, keeping the core of the expertise and the knowledge that was in Coface that's been there for a very long time. But this culture is not just talk. It's something we live. It's something by which we measure people. It's something that determines how we promote people. And finally, I would say our brand as an employer has considerably improved. I have to tell you, it would have been hard 4 years ago to attract some talent. Today, CVs are coming in, and we feel a lot better because we see great quality candidates inquiring about opportunities at Coface. Now we know we operate in a tougher world. Actually, we called this out on the call in 2018, saying we think that we've reached the top of the cycle in 2017. And we think the world economy is going to slow down from there, and it's happened. And you can see the chart. The blue line here represents global growth. It's been coming down. We expect 2020 to be even slower. And this chart was done before we knew of the coronavirus, and that story is still developing as we speak. We do not expect the world to crash, but we do think that for the longer term, we should be facing a slower economy on average. This is reflected in the activity, the underlying activity of our clients. So you know we publish these numbers every quarter. Part of our turnover is conditioned by the turnover of our own clients because we bill them on -- as a percentage of their turnover. And we've seen, after a peak in 2018, we've seen quarter after quarter after quarter the activity of our clients come down, correlated with the slowdown in the global economy. I mean, clearly, going forward, we do not expect this to get any better. I mean I think we all know that some industrial sectors are challenged, whether it's Germany, whether it's China now with the coronavirus or other things. So this is a headwind. If you look at how the global economy is performing, I think the way I look at it is the following. The global financial crisis in 2008 was one that was driven by excess debt. So in our great wisdom, we resolved that issue by adding more debt. And we made that painless by lowering interest rates. But we haven't solved the debt problem. You can see on the right-hand side of the chart, the 2 curves that are correlated: one is the decrease, but we flipped it over, the decrease in interest rates; and the other one is the increase of the number of zombie companies. A zombie is a company that is there because they have too much debt, which they will never be able to reimburse. They only survived because the interest rates are low. So we know the number of zombies actually is increasing. The global economy is slowing, but the trends in technology shifts are not abating, whether it's going from retailing to e-tailing, from fossil energy to renewable energy, from 4G to 5G, you name it. All these deep changes in society and technology are impacting the traditional players. So we have to watch that space. And this is -- we see continued issues with traditional players there. The pie is not growing as fast, which means that we curl more around who's going to get which piece. And you've seen the rise in trade tensions around the world. We measured that in '18 and '19. The number of trade protectionist measures has grown by 40% versus the prior years. And it's not all applied to China and the U.S. Actually, only 1/4 of these measures are tied to China and the U.S. Every other country, many -- some pretty large countries have actually added to this noise, whether it's Brazil or India or others. So there's more unpredictable events that are affecting trade and different sectors at any point in time. Also because the pie is not growing as fast, there's more tensions within countries. We've seen social events or social upliftings in many countries. This one here has not been exempt. We've had some pretty interesting demonstrations. But think of what happened last year, Chile, Ecuador, Lebanon, Algeria, Hong Kong, Iran, I'm missing a few, I mean very unpredictable but pretty significant events locally. So the world is more unpredictable. I think we haven't seen yet the full extent of global warming. We're just starting to feel it, but the governments are going to take significant policy measures that are going to [ affect ] the industry. So there's a lot of volatility. There's a lot of risk. There's less growth. You're going to say, these are challenges. I will say, yes, but it's also opportunities for people like us because our job is to help others manage through these events. And I just want to take an example here, which we've all lived through, which is Brexit. So you know the Brexit story started developing in '15. And season 1 was all about, are they -- they're going to vote. Are they going to stay? Or are they going to leave? And in 2016, the U.K. decided that they were going to exit the EU. I think the world was puzzled. We were all surprised, and it started a period of uncertainty for the U.K. You see on the top left here the evolution of corporate insolvencies in the U.K. So there was a little bit of a rise in 2016, nothing major. But remember, the U.K. decided to leave the EU at a time when the global economy was at its peak. You had growth in Europe, in the U.S. and in Asia, low interest rates, low oil prices and no tweets, right? So at the time, everything was fine. Despite that, the uncertainty in the Brexit decision led the U.K. economy to slow down. And you've seen the rise in delinquencies that happened in '18 and '19. It was quite significant, so a 20% increase in insolvencies in the U.K. over the last 2 years. We expect that to continue this year. So season 2 now is over. They have actually decided to leave. The season 3 is starting, which is how are they going to leave, right? So this thing is going to continue. But that's just for the side note. What Coface has done during that time, you see it on the top-right hand of the chart. The green line is our exposures, credit exposures in the U.K., and they've decreased by about 24% during that time. While at the same time, Coface continued to grow the rest of its exposure globally, that's the blue line, and the result of this is you see it on the loss ratio on the left-hand side. So forget '15, which was abnormally low. I didn't put the numbers, sorry, because this is competitive information. I just don't want to make it too obvious for others. But the -- so '15 was abnormally low and it was a great year, but these happen from time to time when we have recoveries. But overall, on '16, '17, '18, '19, we've had pretty good cost of risk in the U.K. And you see on the bottom right-hand side of the chart, we've actually grown during that time because the market has repriced. Demand has increased, guess what, people get scared. And overall, we have an actually profitable and growing business in the U.K. in this environment. So not all events are like this. This one played out over a long period of time. There are surprises that are more difficult to manage. But I just want to stress here that while it creates a bit more difficult environment for us, overall, it also means that our ability to make the difference is enhanced. And so it's a -- this is at the heart of the business that we carry. So you've seen this chart in Fit to Win. This is the kind of the way I think about the business. And I thought there's really no need to change it. This actually represents pretty well the broad range of clients that we're trying to serve, from SMEs to financial institutions, large corporates which has traditionally been the heart of what we do and which we serve with specific offers. They have different needs. They're in different parts of the world. They all have specificities in what they require from us. The goal is to give them what they want and what they need, but to do that from one single infrastructure. We have one single database, managing 70 million companies, interfaced with 100 different information providers around the world and, hopefully, using simpler and simpler systems to manage it. We believe there's 2 things we need to do well in order to compete effectively in the long term. One is to have the best skills, the best information, the best monitoring, the best risk modeling, the best underwriting knowledge. I think that's the heart of what we do. We need to have great sales tools to be able to maximize the value of our client relationships across a broader range of products. We need domain -- deep domain expertise and knowledge. That's one thing. The second thing we need is scale. We need to do this with enough scale that our price point will be low enough and that we're going to be efficient in what we do. We need to be able to reach through all these hard, far-flung places where risk is high, and that's what our clients need from us. We need to share the infrastructure where we can. We need to mutualize our IT where we can in order to lower our cost, reduce the number of errors, simplify the way we operate. And all of this underpinned by a unique culture which drives our ability to operate with agility. And I want to spend a little bit of time on the culture because we've been talking about clients. They all have specific needs. I mean if you're from the U.S. or if you're from Brazil or if you're from Thailand, if you're big or if you're small, if you operate in a certain industry or in services, your needs may be completely different. Our goal is to serve these clients and their needs, whatever their needs are and to try to adjust and be very flexible. The clients come to us because they're looking for that expertise. They're looking for this knowledge. They're looking for these people that are in 70 different countries speaking 70 different languages, reading newspapers, being ingrained in the local fabric and understanding what's happening. This expertise is key, but it's worth nothing if it's not collaborating with each other. So we'll describe later how -- we have a client in Spain that has -- that is selling to people in Sweden through a plant that's in Thailand. People in Spain, Sweden, Thailand need to operate seamlessly. We make 10,000 credit decisions every day with people being all over the world. So collaboration is clear. And then with all this information being shared, somebody needs to make a decision, and we need to do it fast. So a culture of courage, a culture of accountability, a culture of trust, where we trust -- we entrust the people all over the world to make the right call, and they trust us to trust them to make these right calls with the right controls, of course. That's the key. So it's not just a concept, this culture. It's the way we operate. It's linked to the way we do business. It aligns with our corporate governance. We hire people, we reward people, we promote people based on how they perform in this culture. And I do believe deep that this culture creates a competitive advantage. It is very hard to create a culture in the company. It's very hard to copy a culture. You can copy a strategy, you can copy a product, you can copy a system or a process. But copying a culture, that's very hard, and I think it creates for us a long-term differentiating advantage. This is why I put so much emphasis on culture. One thing we have spoken less about in the past is ESG. We have been doing a lot in ESG in Coface. But because we were focused on so many other things, we didn't communicate as much about it, and it's going to come up on our agenda higher, if you will. We know it's a significant concern from investors, from regulators, from citizens all over the world. Our purpose statement in Coface is we are for trade. So when we put it out there, people are like, yes, sure, that's your business. But I don't think people realize how an important a statement it is. I think today, in light of all the protectionism that's taking place in the world, I think it takes all of its meaning. We believe trade is good for the world. Trade creates wealth. I mean trade creates stability, social and [ military ]. And we believe trade is actually a good mission to support. That's what we do. We allow people to trade more, to trade safely. But we want to do that well. So over the years, we have been building into our practices a number of things. We've introduced a sustainability measurement in the way we rate countries and sectors, which -- where's Julien? And Julien has been driving -- oh, there he is. He's too close. We have been excluding from our insurance policies a certain number of areas, whether it's coal, whether it's offensive weaponry. We have been rating our own portfolio of investments against its sustainability. You know the French government mandates that we measure ourselves in terms of gender pay equality, and I'm proud to say that Coface achieved a 91 out of 100 score, meaning we are the best credit insurer when it comes to gender pay equality in France and, also, meaning we're in the top 10% of all insurance companies. Similarly, we've been rated in terms of our sustainability by ISS-Oekom, which is an NGO focused on providing ratings. And our rating came in as prime, again top 10%. So some achievements that are significant that we haven't really discussed as much, we intend to take that effort going forward, continuing to drive responsibility in the core of our business to align gender pay equality and the way we -- our employee relations, not just in France, but all over the world. We also are going to spend more time analyzing the impact of global warming on our own business, not just what it means for the rest of the world, but also what it means for our own operations. And then to drive ESG as a core value, as a core initiative throughout the company in all the 4 corners of the world. So our plan, and you'll hear from many of our colleagues here who are going to take you through different pieces going forward during the day, but our plan is built on 2 pillars and 6 initiatives. Very simple, 2 pillars, 6 initiatives. The first pillar has to do with trade credit insurance, which was, frankly, the core of what we did in Fit to Win. And underneath that first pillar, we have 3 simple initiatives. One, we want to simplify and digitize our operating model: faster, simpler, cheaper, less errors, more flexible. Number two is risk management and information. That's the core of what we do. We want to continue to invest and to innovate and to build our information and risk management capabilities. And then number three, continue to create value for the long term by making select investments in market segments where we can create value. Very simple. The second pillar, which did not exist in the first Fit to Win plan, is about specialty businesses. Coface has been involved for a very long time and has developed deep domain expertise in a number of specialty markets, which are about 12% of our revenue in 2019. And we want to grow these businesses faster and we want to grow them profitably. And we're talking about factoring, Single Risk and bonding and information and other services related to our credit insurance business. So I'm just going to take you quickly through some of these high-level themes, and then they will be debated more in much more detail in the coming presentations. When it comes to simplification and digitization, service is at the heart of what we do. So we're going to spend more time on quality of service. It's multiple metrics, it's not one thing. It's a mindset. It's a way of being. It's -- it needs to be at the heart of everything we do. We're going to continue to work hard and invest in simplifying our products, our processes, developing technology stacks that are shared across countries and that are more efficient. And then continuing to drive innovation where innovation is happening into our core processes. You know that there's a lot of activity in the fintech space. And fintech has been most successful, in my view, in financial services by driving process innovation more than client innovation. And our goal is to continue to absorb all these technologies where they make sense and where they're sustainable into the core of what we do as a business. Number two is information and risk. We have a trove of data, a wealth of data. We need to continue to make it better. So fresher, better, more accurate, different data and then the ability to invest in new techniques, new technology, new processes to be able to better understand what this data means and get better insights. We have developed a partial and total model, which has given us a lot of understanding on the risk side. And the question is now, how do we use that to our advantage? How do we build it into the different parts of our business in order to increase our resilience and our ability to manage risk volatility? Creating value through growth. This is something we already had on the agenda of Fit to Win. And it's really about choosing client segments and client geographies or a mix of the both to invest selectively in markets where we believe there is growth at our fingertips that we could drive profitably. And you'll hear some presentations today about this. Where is Oscar? Oscar will take us through the North America story, which is something we've been working on now for quite a while and where we want to invest more as an example of this strategy. Again, we're not here to drive growth for growth's sake. It means nothing in our business. That's easy to do. We are here to create value for the long term. What matters is creating those client relationships that will last 20 years, that will be great partnerships and create value both for their clients and for Coface. And then when it comes to the specialty businesses, I want to say a word about why these. So we've been in the factoring in many, many countries around the world prior to my joining, and the company has gotten out of those markets where we didn't have scale. We didn't have a good-enough infrastructure to have a fair chance of being able to operate well. But we have retained a business in Germany, where we're #2 or #3 in the market; and in Poland, where we have a fast-growing and very efficient business. And they've -- we've hired a team to improve these businesses. If you've been following us, you know that we've been working on adjusting our risk appetite and improving these businesses. The mandate we're giving this team now is to grow profitably. And the beauty about factoring is it utilizes the same core risk infrastructure that we use for credit insurance. So it is in complete synergy with what we do. It also is a way to expand our product offering towards our clients. We can offer factoring. When we offer factoring, we offer credit insurance. But clients can choose one or the other or both, right? So driving growth in -- profitable growth in these 2 countries in factoring is on our agenda. Single Risk and bonding are different businesses. They are, in some way, diversified from the risk that we carry in trade credit insurance. Single Risk is an area we've operated in for decades. We think we have a good base. We had to readjust our risk appetite in 2016, which we did. And we believe that from this new risk appetite, we can grow a profitable business going forward organically. Same for bonding, which is different. It's a multi-local business. We are in smaller lines, none in the wholesale, large-lines business. We do that in Italy, in France, in Germany and Austria. We want to grow organically these businesses. Maybe we'll go and explore a couple more countries, but that's the mandate. And then finally, information and services. We sit on a trove of data, which we believe has a lot of value for the market. We sell information to companies that are looking for credit information and history on other corporates. It's about EUR 40 million of what we do today. And we intend to continue to invest in this segment because it is right there, again, based on our same infrastructure. And by the way, it does not require regulatory capital. So we think it's a nice addition and complement to what we do. Financial targets. The thunder has been taken out of them by the press releases this morning. So I think we're raising every one of our financial targets. I think that's been made clear. The payout ratio goes from 60% to 80%. We have a strong capital base. And you know that in the last 2 years, we have returned a dividend that is 100% or even slightly more last year of our net income. We have a new solvency range. So it was 140% to 160%. We adjusted that after the introduction of the Partial Internal Model, and we have increased. So we have come up with a new solvency ratio target at 155% to 175%, reflecting, on one hand, that we're increasing the payout ratio and also reflecting a discussion with our regulator about the lower part of the range, where the fact that we are now not going to have the support of a shareholder of reference means that -- so they asked us to raise the bottom part of the range, which is, I think, is fair. And then when you go to the other ratios, we're lowering our combined ratio target from 83% to 80%. And then our return on tangible equity at 9.5% is improved from what we had in Fit to Win. So a set of consistent targets, returning more than our cost of capital consistently over time. And I just want to wrap it up for you with this page, which I think illustrates the journey on which we are. We wanted to become fit so that we could win, and I think we've proven this. Now we are going to build -- continue to build so we can lead. And it's all about going from being defensive and regaining control on the business to now being agile, proactive and leading and mending issues to being fast and consistent and flexible and predictable, being complex and fragmented to being simple, integrated and digitized. We have proven that we could turn around the business. Now the question is, can we grow profitably regularly over the long term? We have proven that we could claw back on results. We want to deliver above our cost of capital with a more resilient business model. And then we've built this culture. We want to live this culture. We think it's the right culture. We think it's -- we think we have the right strategy. We have the right plan. And we look forward to writing another chapter in the history of Coface. So thank you very much for your attention. I want to say we have new shareholders, and I want to welcome them to the story of Coface. I think we're very pleased that they have chosen to invest in our company. They've expressed their support of this plan and the support of the management team. And I think you guys have yourself have written an incredible story over the last 20 years, very highly respected in the industry. And to me, it is a great partnership, and so welcome to Coface. And then the good news is they'll be able to respond to any questions you guys have on what they have in mind. So thank you very much.

Okay. So good morning, everyone. I am really happy to be here. So my name is Julien. I work as the Chief Economist at Coface. And in this very short presentation, I will highlight, I will focus on 2 key issues that have already been highlighted by Xavier. So the first point is we think that in the next 4 years, corporate credit trends will be more and more driven by noneconomic risks. That's the kind of paradox. So it requires new methodologies adapted to these new types of risk, and I will come back to it. And the second one is, of course, the overall economic environment will be a bit more challenging because of lower growth, higher debt. In other words, as Xavier said, more and more economies, especially in Europe, will be more Japan-ized and it will create both risks and opportunities for us. But let me start with the first one. So of course, when you say more -- noneconomic risks are more and more important, you think first about politics. I mean political risk is everywhere. It's not only in risky emerging markets, it's also in large major economies. Political risks are also very diverse and more and more diverse. We are not talking anymore only about wars, conflicts. We are talking as well about terrorism, about more and more social protest movements. And all these types of political risks, they have concrete consequences on businesses. And again, Xavier said it, over the past 3 years, business insolvencies in the U.K. have increased by 17% because of uncertainties related to the Brexit process. And all those types of risks, now they stand close to all-time highs. You see it behind me. And behind me, you see, by the way, our in-house indexes because we have developed new methodologies to better monitor or better anticipate all types of political risks. So on the one side, we quantify, let's say, external political risk, risk of conflicts, risk of terrorism by looking at the total number of events, their magnitude. On the other side, we also better quantify what we name social risk. So the risk of a social movement that translate into effective political change in a given country. So how we do that? First, we try to measure on a country-by-country basis the level of frustration in a given society by looking at inflation, income inequalities, corruption and some other indicators. But on the other side, one of the learning of some recent political events is that in some societies, there's a high level of frustration, but it's not translated into effective political change because the population doesn't have any tool to express this frustration. And by tool, we mean access to Internet, level urbanization, level of education. And so when we combine all of this, we get the overall index you see behind me on the right. And the picture, on a country-by-country basis, is perhaps even clearer. So just to make it short, when a country is in red, it means that we expect a high level of social risk there. So in some of those countries, you have heard about them in the news recently, so our point here is that if you haven't heard about some of those countries in red on the map, they are the ones to monitor and to be cautious about in 2020. So of course, you still see a lot of places in Africa, in the Middle East, in Central Asia, in Russia. You can't avoid it given the size of the country, of course. So this mean political risk will remain a key issue in the years to come. Again, as highlighted by Xavier in his short presentation, trade protectionism, to some extent, is also a form of political risk. And it has increased very significantly over the past years, more than 1,000 protectionist measures decided last year in the world, quite similar to 2018, but much higher than it used to be in 2017, so the starting year of Fit to Win. And if you look at the detail of those 1,000 measures, first, you realize that it's not only custom tariffs. It's much more broad-based. It's also export subsidies. It's also tax breaks for local companies to protect them against foreign competitors. And if you look at the breakdown on a country-by-country basis, it's also very broad-based. It's not only China and the U.S. China and the U.S. only accounts for 23% of the total number of those protectionist measures that have been decided over the past 3 years. So more than 3/4 has been decided by a lot of other countries. And so again, this trend is a new normal. This is really broad-based. And businesses, of course, have to get used to this new normal. And by the way, this is -- this new normal in terms of trade protectionism takes part of a more challenging political environment where now superpowers oppose to each other at political level. And this is going to be a lasting trend. It doesn't depend on the name of the U.S. President. But on the other side, at economic level, businesses will continue to trade with each other in other countries. So it means that everything which is at the limit between these political uncertainties, political opposition on the one side and economic strong link on the other side, so everything which is related to economic policies for businesses, it will fast -- it will change fast. It will be very volatile, and it will mean a lot of uncertainties in the years to come. So trade protectionism is one of them, but we can also talk about exchange rate volatility. We can think about fast-changing level of taxes for businesses because taxes will be used more and more as an economic weapon and, of course, targeted sanctions for specific companies. So for us, it means, of course, new risks to monitor, to anticipate, but also for new opportunities because businesses are in need of understanding those new types of risk. And second point, of course, when we think about noneconomic risk, we now think about what's going on at environmental level. Five years ago, nobody was talking about it. Since last year, as you know, fires in Brazil, fires in Australia, new antipollution regulations in Europe, in China, just to name a few, so now whether you think about it from a consumer standpoint, from a citizen standpoint or from a business standpoint, you have to take this into account. And in terms of credit insurance, we think there are 2 big types of risks that needs to be better monitored, better anticipated. The first one is quite well known. This is the one you see on the left, which is -- which are physical risks, so the risk of extreme weather conditions that impact businesses in some cases. And the second one is what we name transition risk because of changing regulations. Because of changing consumer behaviors, some companies will face problem to adapt to this new normals. And if you think about it, what went on in the automotive sector with new antipollution regulation in Europe, in China is a good example of this type of risk. So we have made some efforts to better quantify those 2 types of risks on a country-by-country basis, on a sector-by-sector basis. Here, you see the example for physical risks where we take into account some indicators like the long-term expected increase in water levels on a country-by-country basis, the long-term expected increase in temperature. And in some other indicators, you get this map. So of course, you will not be surprised to see in red a lot of countries in Africa, in Asia and so on. But there are also some very significant and interesting differences among major economies. For instance, the U.S. or Japan look much more at risk regarding this physical risk of environment than in Europe, for instance. And same thing regarding transition risks, as I said. Here, we try to measure on a country-by-country basis and on a sector-by-sector basis which countries, which sectors perform well in terms of green economy. So in other words, it means which countries seem ready today to take some strong decisions to tackle the long-term effect of environmental change. So again, those types of reform in the medium term, they are more than welcome. But in the short term, in terms of credit risk, it also means that some companies will face problem to adapt to this new normal. So countries around the left of the chart in sectors like automotive, like transport, will, of course, will be more at risk in the short term. So we've made some efforts to develop new methodologies adapted to these new types of risks. Having said this, of course, in some cases, new risk arises. They are unexpected. And in that type of situation, we have to be pragmatic. And of course, the coronavirus is a good -- is a very good example. So how do we proceed in collaboration with risk underwriting in this type of situation? First step, we start at macro level. I mean, China, you know it plays a key role in the global economy. China supply a number of companies in various countries, in various sectors all around the world. So we have to identify them. And so step one, we identify countries that are heavily supplied, significantly supplied by China. And you see them on the top part of the left-hand chart. Step 2, after a very macro part, we go more into detail in some specific sectors for the countries we have identified as being at risk. So you see inside the bubble, Korea, follow the arrow, and then you go to the small table on the top of the right part of the slide. And here, you see some very specific sectors that are very dependent on China in Korea in terms of import. So it means that for those specific sectors, some examples, it will be very difficult to find alternatives if plants in China remains closed during a long period of time. Of course, we have also to weigh this and to take into account the level of inventories on a sector-by-sector basis. In every step, we do that in collaboration with risk underwriting. Our organization, the economic research is very similar to the one of risk underwriting. We are a worldwide team with a part of the team being based at the headquarters, another part in each and every region. And so at every step of this process, we work in close collaboration, but Cyrille will come back to it. Before that, a few words on the global economic environment. Xavier said it, we have to get used to a new normal of lower growth globally. Here, you see our global GDP growth forecast weighted for countries we operate. This is nominal GDP growth forecast. And of course, the slowdown will come -- is coming mainly from Europe, for us, given our large footprint because of a mix of, of course, structural factors, well known, lower productivity, population aging, but also cyclical ones with some industries facing some difficult times, automotive, metals, just to name a few. So what does that mean in terms of credit risk? We use those GDP growth forecasts in statistical model to forecast business insolvencies. So this is not Coface claims data. This is the official number of business insolvencies on a country-by-country basis. We expect them to increase by 2% globally this year, similar to last year. We expect the number of business insolvencies to increase in about 80% of countries. Just as a comparison, in 2017, so the starting point of Fit to Win, business insolvencies increased in about 40% of countries only. So the ranges for large markets is between plus 1% in France, expected this year, to plus 3%, for instance, in the U.S. or in the U.K. So you could also argue, you might be thinking that 2% only, it's not so significant given the current environment. That's true. It's because of another trend which will be even more important, and again, Xavier mentioned it in his presentation, more and more economies in the world look like Japan. And so in Japan, in the last 10 years, you see it in this chart, the paradox is, of course, GDP growth was very low. You see the average GDP growth for a period in small boxes. But the paradox is, in the same time, business insolvencies didn't increase because even large insolvent, too indebted and stagnant companies managed to roll over their financing because they beneficiated from very expansionary monetary policies. So you could -- at first glance, you can think it's positive news for us because there are less business insolvencies. But on the other side, those large indebted and stagnant companies, they're also inclined to pay with delays. And so for us, it doesn't mean less credit risk, of course. But in terms of how to monitor our credit risk, it means that we can't only look at business insolvencies. This is now the top of the iceberg, but the hidden part of the iceberg is also now looking at all those zombie companies that needs to be better quantified and anticipated. So having said this, this, let's say, trend of Japan-ization that will be more seeable in Europe in the years to come, it creates some new risks. It also perhaps creates some new opportunities for us because one of the learning of the Japanese experienced in the last 20 years is that a lot of businesses in Japan tried to offset lower growth and stagnant market in Japan by looking for more exports or for more yield abroad. And you see behind me 2 illustrations of this trend. First, regarding exports, the cumulative increase in exports for all major economies on the left. And you see that Japan did very well, even better than Germany. So it's a confirmation of what I've just said. And the second one on the right is regarding the stock of foreign direct investment in some selected countries. So you see it for Japan. And as a comparison, you see it also for China. Why China? Because everybody is talking about China. Everybody is talking about foreign investment of China. And you see that it's much lower, much less significant than the one of Japanese companies because they started to do it very early, and they did great in this regard. So we can expect the same type of trend in the 4 years to come, coming especially from Europe. So having said this, just to sum up this presentation, as the others said, we live in a much more complex, much more volatile environment, which requires some new methodologies to better monitor or better anticipate what's going on. When we -- when there are some unexpected risks that come up, we have to be pragmatic. This is what we try to do. We do that in collaboration with group risk underwriting. And now I leave the floor to Cyrille, who will tell you more about his action, his teams. And thank you very much.

Thank you, Julien. Good morning, everybody. My name is Cyrille Charbonnel. I'm the Chief Underwriting Officer for Coface. And this morning, I'm going to focus on the way we are operating in terms of credit risk management. Credit risk management is really what makes the global model of Coface resilient, and it is based on 3 main pillars: information, underwriting and Claims & Collection. Over the last 3 years, we worked a lot in order to make these pillars stronger, more robust. But just before to give you some information about what we have done, I just would like to give you some figures about what we are dealing with. First of all, maybe one characteristic of the product we are selling, the contract. And the main specificity, what is very specific in a TCI contract is the fact that you have -- when you are buying this kind of contract, you are buying an empty shell. You need to ask then on each of your customers to ask for credit limit. So it's the reason why we have to deal with so many requests from our policyholders, 10,000 per day in average, 2 million per year. So it means that you have to build a factory in order to be able to answer quickly as possible in order to satisfy the customers. But to answer to all these limits, you need also before to build an information database. You need to know the buyers, the customers of our policyholders, to know them and to identify them. What may be the most difficult point at the beginning is not to assess the risk, it's not to say it is a good risk or a bad one. It's to be able to say, I know him, I'm not confuse this buyer with another one to be able to manage to duplicate, to be able to manage all the links between the mother company and all the subsidiaries. We have 70 million that -- corporates database. And for that, we are working for a lot of external information providers in all the countries where we are operating and with 50 information centers to process the information. So we have this information and ready to pick in this database in order to make the decision. But before to make the decision, we also to assess the quality of the risk. In order to help us, we have created a unique score, internal score, which is called DRA, debtor risk assessment. On the scale from 0 to 10, 0 is insolvency, 10 is the best score you can have, and for that, we have people who are working on this score. Two kind of scores. One which is industrialized. We have models which are creating this score. And for the main sensitive risk, we have people who are doing a manual assessment of these buyers. Then you have all the machines to make the decision to answer to the 10,000 limit per day. One part of this decision are automatically underwriting by the system. We have developed engine. And the other part is underwrite manually by the risk underwriters. To have a complete view of the way we are underwriting the risk, it is not only through the decision made by a risk underwriter, but it is also through the contract. One part of the risk are taking directly through the contract. We have some specific clauses which allow, for example, which gives them autonomy to the policyholder to make his own decision or then to manage in some specific ways the way he is going to invoice and to declare then the claims, or not, to the company. The claims, sometimes, as we do not have any crystal ball, we can be wrong sometimes and we have a claim. The claim part is very important, first of all, to identify the right amount, but also to collect the money as the most important money we can collect. As you can see on the slide, globally, the recovery rate is 45% of the money entrusted. So it's a key element in the global economy of Coface. We are managing, as it has been said, more than EUR 500 billion exposure, spread over 2.5 million corporates all over the world. What we have done? We work a lot, and we have significantly upgraded our risk management practices through several changes. Maybe one of the most important change we have done is regarding the organization, and we are creating a global underwriting department, having the global view of what happen regarding risk management. Before this organization, the commercial underwriting was with the sales, and the risk underwriting was on the other part. So you have people who were fighting and not acting together. What we have done is to have all people aligned with a global view in order to be sure that the contract we have will be a profitable contract and, on the other hand, will be also a contract we will be able to manage. I'm going to give you one example, for example. We have very specific clause which postpone the decision made by risk underwriting thereof. You know we -- the contract is cancelable. The limits in the contract are cancelable. We can reduce or cancel the limit at any moment. But we can introduce, depending the specificity of the policyholder, some clauses saying that, okay, when you are receiving a reduction or a cancellation of the limit, we are going to postpone by 1, 2, 3 months the decision. So of course, the decision of the risk underwriters is not really what he has in mind when he took the decision. We know -- we need to know what we have in the contract. And today, we are really all aligned. The culture on which we are working is really to have people focus on profitability. And we also -- it's what, for example, Julien said just before, we have created some months ago -- 2.5 years ago, an underwriting policy committee. We didn't have that before. And around the table, we have people from sales, Nicolas Garcia representing the sales. We have Julien. We have people from commercial underwriting. We have people from risk underwriting. We are all around the table, defining what is the right strategy in terms of underwriting, what are the trends -- the macro trend, what are the feedback from the policyholders, what are our concern regarding risk management, the KPI we can have and the feedback we can have from the market. So altogether, we are building the policy, and we try to communicate on it in order to have all the countries align with what we want to do. We made a big effort also to change the infrastructure of the database. Before, the information on which we were working on was more -- document, was picture. We made a transformation in order not to have to deal with a picture, but to have to deal with structural information which can feed our algorithm and our engine. It was not possible before. We increased also the number of people in the field, especially in some countries where it's very difficult and complicated to get information, in Asia, in the Middle East, for example, or in Italy. And we have people meeting the corporate call -- make some calls in order to have directive information with the support of the provider, the policyholder asking information, specific information in order to help the decision process. And last but not least, we changed completely the automatic underwriting engine, benefiting from what we have done before regarding the structural information in order to provide much more efficiency and productivity in terms of decision. We increased by 50% the automatic acceptance rate, from 44% to 66%, giving much more time to the risk underwriters to either work on the prevention actions or to explain to the policyholder what we want to do, what we are doing. And you can see the result, globally, you know the figures. But we're seeking to have the loss ratio under control, knowing that these years have not been particularly easy to manage in terms of events. We -- the beauty of the thing of what we have done is that in the same time we were able to increase the number of prevention actions, the number of reduction and cancellation, we increased customer satisfaction, which was absolutely not obvious. If you ask to the sales guy, the most negative information we can provide to policyholders was considered as a reduction and cancellation. Or what we have succeed to -- what we have changed and implement, it's really what we provide you, what the added value of the service is this kind of information, be careful, guys, the risk is deteriorating, you need to have -- to step back and we are going to drive with you this situation. And we increased the number, as you can see, of reduction and cancellation by 30% in average in '19 and '18 versus '17. So it has been really a big work done by all the teams. And thanks, among other things, to the change done on the automatic engine. We changed the way we interact with the policyholders. We clearly are much more focused on the relationship with the policyholders, with the customers, in order to be sure that they understand clearly, completely what we are doing and to put some time specific-action to go and to support them in the situation they are facing. We will continue to work on these improvements. No big change regarding the structure and the organization to come, but we know that we have room to maneuver in order to improve the 3 main pillars: Information, underwriting, Claims & Collection. Information. We -- it's a never-ending job. We always can have more information, better quality information, information more fresh. So it is really a topic on which we are working on a continual way. And we are challenging all the providers which we are working on. We are also working on the model to provide a new score, more robust, with better capacity of prediction, internal DRA made by Coface, which will be -- we are going to land the first test in France in the weeks to come. On the underwriting side, we are never satisfied of the way we are working, and we have created a dedicated team to be in charge of the assessment of the prevention. We are assessing the buyers. We are assessing the quality of the -- of our policyholders. But we are also assessing the efficiency of our actions. And of course, we are delivering new functionalities in order to go and to support the business, either with new products. For example, Thibault will say a word about the new product we are going to launch in the U.S. with -- we call hybrid product. It's a mix of traditional policy plus non-term limit. We are also going to implement some new functionality in order to have a much better view about the use of our credit limits. You know that when we grant a credit limit, we don't know what is the use of this credit limit. So we will have a specific functionality to have this kind of information. And for the -- on the commercial underwriting side, we have done also -- it is almost delivered, built, we have built a complete new, well, a clause library in order to be sure that all the clauses proposed in a contract are the same in the all the Coface world and without having in each country kind of tailor-made clauses, which at the end bring a lot of complexity when the idea is to go through simplicity. Claims & Collection. We are -- we have 2 big projects ongoing to change completely the tools we are using in order to have a unique tool to manage claims and also to manage collection. It will be -- we are waiting. Normally, we should be able to go live of the collection tool before April, May, something like that. And we have 2 years to go to have -- to review of the full claims tool. We also are working on the new technologies, new artificial intelligence, machine learning, data mining. We are working also in order to detect new kind of information. There is a new world of open data, maybe the same information but much free information. And we have created 1 year ago a data lab with data scientists and data engineer in order to help us to create a new approach of risk management, either in information or in risk modeling. What I said before regarding a new DRA, for example, is completely linked to this approach. Or we can -- we could imagine with Julien to create something much more dynamic in terms of DRA to link our DRA, which is based on the information on the specific buyer, [ or ] with macro data in order to have something more dynamic. For underwriting, we -- the next generation of engine, automatic engine, will be in the scope of the data lab in the year to come. And for example, in claims management also, we have created a new score of prediction in order to measure how much money we could recover or collect when we receive a claim. It will change completely the way we are going to manage the claim in the months to come. A lot to do on this aspect. Another new input on which we are playing on, if I could say, is an internal model, which help us to have a new view about capacity, we -- about exposure allocation. We -- historically, the risk underwriters granted more or less the same amount, whatever the profile, whatever is the policyholder. And then according -- or capacity, we are going to drive it and to steer it much more precisely in order to be able either to grant the amount to the policyholder who deserve it or maybe to have some specific price for some specific exposure we could grant according this new approach. So it is something we are testing today. The risks we are facing, as Julien said before, are less and less economic, and we have more and more uncertainties to deal with. So the ambition we have is really to be able to face all these new risks and also the traditional one, improving the resilience of the model through the cycle. And we succeed to make it happen over the last 3 years and really acting on people and expertise. We are working to create today an underwriting academy. We are working on data, as I just said before. We are working on the systems and new technology. We are pretty sure that it will help the -- to make the system much more resilient and able to fulfill this ambition. Thank you for your attention. I give the floor now to Thibault and Keyvan.

Good morning. I'm Thibault Surer. I'm in charge of Business Development and Strategy.

I'm Keyvan Shamsa. I'm in charge of Business Technology in Coface.

So by now, you know that our Build to Lead plan is based on one pillar, which is focused on trade credit insurance; second pillar on adjacent specialty businesses. And also that amongst the 6 initiatives, the first initiative is focusing on simplifying, digitizing our operating model and enhancing the quality of service we deliver to our clients. Keyvan and I would like to walk you through our operation and IT agenda for the next years. Well, first, to set the stage, I'd like to come back for a second on Fit to Win. If you remember, when we launched Fit to Win, we announced that we would deliver EUR 30 million cost savings by the end of 2018. And following this announcement, we, actually, we initiated a cost-cutting program. This cost-cutting program is focused very much on, a, reducing headcount in select countries; b, improving our purchasing capabilities, renegotiating the contract of our premises; and reducing our organization structure by limiting the number of entities, I mean, legal entities we had across the world. Then without thinking about -- this is kind of short-term measures. If you think of it, how we want to initiate a longer-term plan to improve our operational performance and our IT performance, then we started reflecting on, then we will have to tackle the root cause of our costs. And the root cause of our cost is coming from our business model. And hence, we started thinking about how to reshape our business model, and that's what we did. And that's a journey that started in actually end of 2017, and that will last for a longer time. Example of what we've done in reshaping our business model, and I'll come back on that in a few seconds, is thinking about aligning our products with our segments, something that is quite important. We have invested in some tools, like, for example, Lean team that can help us work on processes. We've also put in place some shared service centers across the globe to leverage scales. We've done that for non-client-facing functions, like for information, some accounting functions, some back-office functions. And then we started working on our IT, IT infrastructure and IT governance. In IT infrastructure, we invested in some tools. We also decommissioned some IT tools. And on the governance, we actually completely reshuffled the governance to realign our IT operations with the functions. All in all, we have delivered, by the end of 2019, EUR 48 million cost savings, which represents roughly 2.4 percentage points of cost income. And in summary, I would say that I think that in 2020, we're in a much better place than we were in 2016. We were more agile, more cost efficient, and there is more to come.

Yes. And there's still a lot of opportunities for improvement. We are committed to step up further and really taking our quality of service to further new levels. We want to be recognized as the most agile player on the market, the one able to offer the best services, best intelligence and best risk management to our customers and focused on being closer to our customer needs. So what does it mean? It means that we have to increase the quality of service, exceed customers' expectations and being more and more client-centric. We have to simplify our products and our IT processes with the rollout of new suites of simplified products and a more automated back office. We want to be agile, and we target a time-to-market service delivery. We want to provide more innovative and digitized access to our services and being the best in terms of data-centric approach, contributing to the data quality of Coface.

Client service. We're absolutely convinced that the quality of the service we deliver to our clients is a long-term elements of differentiation for Coface. On this chart, we've put an example of what we mean by quality of service. Here, you have the way we measure time to offer. Time to offer is the time between the moment a client is making a request for Coface -- to Coface and the time we deliver the offer to the client. This is obviously something that is quite important because that's the way the client is measuring the reactivity and the efficiency of Coface, went from 14 days in 2017 down to 9 days in 2019. And we ambition to be at less than 1 week by the end of this plan. How are we going to achieve that? I would say that it's a mix of hard levers and soft levers. What I mean by hard levers is, I mean, for obvious reasons, we have to work on our operations. We have to focus on our systems. We have to focus on our processes. We have to automate as many tasks as possible to improve the efficiency of our systems overall. Second, we have to monitor and measure. Because ultimately, when you start measuring, then you raise awareness. When you raise awareness, then people start thinking about how they can improve things. It's as simple as that. And in order to do so, instead of just putting in place a Net Promoter Score, we went to a more granular approach, which is to measure the quality of service at the different steps of the client journey. That's reason why we've put in place a KPI focusing on time to offer. We've put in place a KPI that is focusing on time to issue a policy. We're also measuring obviously the time it takes to deliver a limit to a client. We're also measuring the number of mistakes we're making in invoices. That's quite important in the eyes of the clients, for obvious reasons. And we're even measuring how many phone calls from clients are not picked up within Coface. The third element is the one I would call the soft lever. We have the ambition to change mindset and behavior of people when it comes to quality of service. What do we mean by changing mindset and behavior? We're thinking about kind of training people, obviously. We are going to communicate more via the importance of quality of service. But more importantly, I would say that it's a matter of role modeling. People have to understand across the organization that quality of service matters to everyone, from top management to frontline people to account managers to sales back office, everybody has to be -- to understand that we're all involved in improving quality of service and that everyone in his role has the capability to change and to have an impact on quality of service. So this type of mix of hard lever and soft levers, in our opinion, is something that will really help us improve this situation and really allow us to create some differentiation. Simplification. We've talked a lot about simplification. We are absolutely convinced that a prerequisite to improve our operational efficiency and our IT efficiency is to simplify our operating model. And to simplify our operating model, we have to go to the root cause of our operating model, which is our product. Just picture the situation that we are facing at the moment. We are operating in 60-plus countries. We have probably something like more than 25 different policies across the globe. And we have thousands of different clauses. And sometimes, some of these clauses are so bespoke that they require not to work with our tools, that require some manual processing of the policy. This is what we mean that the complexity that we have to tackle. In order to do so, we've obviously made the decision to align our product suite on the different segments of our clients. We have EasyLiner to serve SMEs. We have TradeLiners to serve mid-market. We have GlobaLiners to serve our global international clients. Let me give you an example of TradeLiner. TradeLiner, I mean you're probably aware of it, is a product that was launched for the mid-market clients in 2014. What we realized in 2016 is that only less than 15% of our policies in mid-market had been transformed into TradeLiner policies. So this is why we started -- we embarked in a kind of a long-term effort by filing TradeLiner in all countries around the world, by training people, by explaining our partners, I mean, most specifically our brokers, how -- the benefit of the product because that required some change in the relationship with the client. And we've also put in place and we've developed a new contract tool to support the commercialization and the management of the policy to go autonomy. In doing so, between 2016 and 2019, we've seen the rate of penetration of TradeLiner go from, say, less than 15% to 42% by the end of 2019. And we have the ambition to have 100% of our mid-market policies be TradeLiner policies by the end of this plan by 2023. In addition, the contract tool that I was mentioning will be rolled out in the major locations and will be carrying 80% of our operation also by the end of this plan. So as you can see, this is a long-term effort. But in our opinion, this is the only way for us to improve our productivity and our efficiency in the long run.

Okay. So as Xavier mentioned, Coface has a quite complex application architecture because of its vast geographical footprint and its development. We had over 550 applications, and we have been able to reduce this number to 465. And we continue to work on it. And this is going to enable us to reduce the maintenance costs, too. We track the complexity of our information system with an internal index. And we want to reduce this complexity by 30% in 2023. I'm not going to go through the different topics, different initiatives, just mention the important ones. On the data backbone, we initiated a data-centric strategy enabling innovation using the latest technological approaches: artificial intelligence, machine learning, and bringing additional efficiency and value to the business. We started the implementation of our data lake, which will reduce the number of our datawares from 50 to 19 and we will enable the business and the data scientists to have access to all information within Coface using a unique platform. Data. Data is at the heart of what we do. Trusting the quality of data is key and critical. That's why we are automating our reconciliation processes and data quality controls using a machine learning technology. In terms of API, Coface has been using APIs, Application Programming Interfaces, technology within its information system for a while, which means that many of our systems are communicating using APIs. So what we are going to do now, we are going to make available some of these APIs for our clients in order to enable them to communicate with Coface automatically and retrieve data from our information system. We are in a cloud business center. So our cloud strategy is to be, what I call, cloud-first and cloud as a service, which means that each time we need a new service, we need to replace a new technology within Coface, we'll look first at what is available in the cloud. We have been already using some cloud services for our data strategy, for our regulatory projects and for our Internet sites. Obviously, this strategy brings additional value for the business and contributes to the reduction of the running cost of our IT systems. Here, I would like to talk about the way we think about innovation, data and technology. We have been investing into different innovations focused on the use cases driven by value and benefits brought for the business in terms of risk capabilities, sales and distributions and boosting our operational efficiency. We have created 3 teams to support this and preparing the future one. We created the data office, which is in charge of the definition of the governance around the data and different processes. We created the data lab, which was mentioned by Cyrille, where we have recruited high-profile experts in data and computer science, focusing on delivering new operational solutions. And the innovation team in charge of the market survey for partnership and looking for innovative solutions, which can be integrated within our information system. So far, we have been able to deliver and we continue to work on different topics. On the risk side, the automatic underwriting, which improved our automation by 50%, then a new debtor risk assessment model. On the client management side, we have been working on a client churn anticipation tool. On accounting and regulatory, we talked about the automation of our accounting data reconciliations and the integration of a rule engine, allowing us to better control all the data quality. On operational efficiency, we talked about the data lake that we are putting in place to give access to all Coface data. And on the top of this data lake, we are going to create an enterprise data dictionary. Obviously, we are working on data monetization initiatives, which will generate measurable economic benefits from available data in Coface.

To wrap up, I will say that pretty obviously that we -- our agenda is pretty substantial. Our operation and IT agenda is pretty substantial. It's quite ambitious. I think that we're quite confident that we're going to deliver, following on what we did with Fit to Win. We have our priorities right, quality of service for our clients, simplification of product, process and IT and embedding technology and innovation in our operations. Thank you very much. I'm leaving the floor to Carole and Declan, who are going to be talking about people and culture.

Good morning. I'm Carole Lytton, I'm the Group General Secretary.

Good morning. My name is Declan Daly, and I run our business in Central Eastern Europe.

Of course, all this transformation we've been talking about would not be possible without people and a strong company culture. I'd just like you to take a few seconds to remember 3 things, first of all, how broad our business is and how diverse, you can see all the figures on the left of the slide. Second, how volatile and changing the world we work in is today, just remember everything that has been mentioned by Xavier, Cyrille and Julien, all the disruptions that happen today. And I would add new regulations that are growing every day and getting stricter by the day. And thirdly, how technology is redefining the way we work and most importantly the pace at which we are expected to deliver and to work. So if we want to give our customers the best possible service, what do we need? We need 3 things. We need local expertise and we know that in our business, expertise is a basis. We need people who can work and make very quick decisions while cooperating with all sorts of other people at the other side of the world. And we need these people to be empowered while accountable. And now we're going to show you an example of these situations where people really need to collaborate in our everyday business.

So how does this work in reality? I'm going to just take a minute or 2 to take you through an example that will illustrate how our values are really tightly linked to the way we do business on a daily basis. And here, we have an example of a global solutions client. Basically, we have a Spanish policyholder exporting to buyers in Thailand, in Sweden and in Brazil. And to do something as complicated as managing the expectations of this Spanish policyholder, first of all, we have to know what the customer needs. So customer focus is going to be key. We need to understand how they want to structure the deal. And we need to understand what specific needs they may have. For example, how is the risk organized? Do they have a central risk department sitting in Spain? Or do they have risk people spread out across these locations where they're exporting to? How do they want us to interact with them? Do they want a single point of contact? Or do they want local service, where our local teams are interacting with their local subsidiaries? Secondly, we need to have experts. So in the green zones, which is the areas where they're exporting to, this is where we have the people close to the risk, the people speaking the local languages, reading local newspapers and really having a detailed knowledge of the local market. And this is key because these are the people that are actually making the decisions. And thirdly, they have to collaborate really well with the people in Spain because we need to make decisions fast. And in fact, as Xavier had mentioned at the beginning of the day, we have reduced the time to response for limit decisions over the past 3 years from 3.6 days to just below 1 day. And this is really key for our clients. And by the way, it's also important that the people in the green zones, that they truly understand how important is this Spanish customer for Coface as a whole. Why? Because limit decisions on the buyer side that may be in the range of only a couple of thousand euros, may have a big impact on a policyholder that's potentially paying millions in premium. So these are some of the complexities that we have to deal with as we look across this. Finally, somebody has to make a decision, so somebody making a decision in Thailand that could potentially affect somebody in Sweden or in Spain. To do that, you really need a system where people trust each other. So I think you can see here that the values that we have, they're actually fundamental to the way we do business on a daily basis and not just something that's for us nice-to-have or just words that we put on a poster and hang up somewhere.

Now this illustrates perfectly that tools and procedures can't do everything and will not be enough to help solve all the difficult situations we can meet. So as Declan said, what we really need is a set of values and a framework of behaviors that will guide our people in their everyday business. And this allows all our employees to act consistently all over the world, be it in Singapore and São Paulo. And this is precisely what company culture is about. And we believe this company culture drives both an employee and the client strong experience. For the employees, it provides them with the set of behaviors they can refer to when they meet any difficulty. And for our clients, it ensures them that they are treated in a consistent way all over the world in any Coface and that they're always dealing with one Coface, not with an addition of companies that happen to share the same brand or a few similar tools. So having said this, we need to make sure this culture is translated into reality and it does not remain poster words. And how do we do this? Three: first, we attract and we attract new talents; second, we encourage mobility and three, we reward. So we attracted new talents. We have -- over the last years, we attracted 83 new managers in our top management team. That is 40% of the top management team. And we also built on our existing expertise by promoting 39 existing managers already in the team. We look -- when we do this, we look for specific skills that match our values and we wanted to promote. So ability, for instance, to motivate, to energize, diversity of profiles to enrich our thinking, new skills that were not existing at the company. We already mentioned data scientists, computer scientists, innovation and many others I will not be able to mention here, and autonomy, accountability, ability to work in a matrix organization. So in all, 60% of our top management team changed over the last few years and creating no disruption to the business. So first, we hire, we promote and then we developed. In 2018, we launched the first large-scale leadership program we ever done in Coface. And 500 top and mid-managers participated in that program. We also launched a customer excellence program, which was especially dedicated to people managing our large CGS international programs, with the view to develop the specific skills that are necessary to manage these programs. And 90 account managers from 25 countries in the world participated. And then from a more technical point of view, we launched the commercial school. And over 700 people in our commercial teams were invited to participate. And we are actually designing an underwriting academy in order to grow also not only the leadership skills but also the expertise skills. So this is for the promotion and the development. And we also have tried to encourage mobility. Because mobility, we believe, is a very good way to ensure that our new culture spreads across the group. And as you can see on the slide, this mobility has increased very much over the last years. We had 37 expats at the end of 2017. We now have 61 of them. And very interestingly, 73% of these people are not French, which shows that this mobility is not only a movement from and to the center but also is a very transverse movement that will help spread the culture.

So you get what you pay for. So we also encourage the demonstration of these values in the sense of rewards. So we have regular quarterly awards from the CEO and also at regional level. Just to give you an example of that. Recently, I rewarded one of our Polish underwriters who made a tremendous contribution to the training of the underwriters in our newly acquired business in Slovenia, PKZ. And this is a win-win for both sides. We have a great and tremendous improvement on the integration side of this new entity. And the other side, this employee has a great development opportunity. So this is truly our new culture. And on the other hand, the values are now embedded in the governance of our business, and in this case, how we evaluate our employees. So obviously, we evaluate based on results. But we also give equal weighting to how those results are achieved. So I would say, in conclusion, that we've transformed the culture of this company over the last couple of years to be a lot more agile due to a very dedicated management team, with the right skill set, but also working in a very performance-related culture. But I would say the journey is not at an end. We still have a lot to do. And we will be focusing a lot on this continuous improvement in the years to come and continuing to drive these results. Thank you very much for your attention.

Can you hear me? Yes. So we're happy to take -- thank you to all the presenters. Happy to take questions. We will share them appropriately along the different participants. Hadley? Maybe we're going to pass the microphone, so we make sure everybody has a chance to hear the question.

Hadley Cohen from Deutsche Bank. I guess my first question is to Arch, if that's all right.

Give him the mic. Hopefully, this one works here or this one.

I mean I guess, Donald, we sort of touched on this before the presentations. But I guess, I think, why now? Because we've listened this morning around a slowdown in economic growth. We're quite late cycle and what-have-you, whereas, I guess, in contrast, there are a lot of your existing lines of business that you have exposure to, which are seeing some very strong price increases at the moment. And you're not necessarily exposed to the losses that are driving that. So why deploy capital now towards credit insurance? And I guess slightly linked to that, Coface clearly has an incredibly impressive dataset of corporates globally. To what extent do you think Arch can take advantage of that? I guess that's my first question.

One question? I'm not sure. Very complex in lots of different respects. So the first I would say, Hadley, I think I'm surprised that you would ask the question why now when you've seen this presentation and you've seen what the management team has been doing. And I think the future for Coface is actually quite exciting. So I think in answering the question why now, I think you've seen a lot of that already this morning. You are correct that in our business, we are a specialty insurance and reinsurance company. And in the property casualty areas today, we are seeing significant price increases. We are hopeful that this will continue. Arch is a very long-term, strategic thinker. And there is an opportunity with Natixis to come in and form a partnership right now. And even if in the short run, this does not meet the same returns that we might find in other lines of business, we like the idea of making an investment, particularly in a management team like this that is making the right types of corrections to make this a good book value growth story. As regards to your point about synergies and things, it's way too early for us to talk about that. I think part of what we've seen in our mortgage insurance business, we are personal credit-oriented. And data analytics has been fantastic in terms of bringing that into our property casualty business. When I think of the potential that Coface has with their dataset and using analytics to understand credit movements and trade around the world, there's a lot of potential. But it will take a long time, I think, to develop those.

And then sorry, Xavier, my second question is around, I guess, coronavirus and the data that you've shown. I mean you've obviously got a lot of information around exposures and what-have-you. To what extent -- is it possible to gauge to what extent the quality of that data, how much it's improved now relative to what it might have been, let's say, 2 or 3 years ago? And to Cyrille's point, is it possible to get a practical example of how you're dealing with that right now and how you're communicating with the company, your clients and what-have-you?

Relative to the virus?

Correct.

Yes. Well, I mean, so I think I tried to point out in the presentation how we've changed the architecture of how we think about risk, the segregation of duties, the technology that goes behind it, the kind of data that we look at, the rhythm at which we look at it and the way we are organized to do this, not just like in a box, but in clear connection with our clients. I mean they're just information we get ourselves from the data that we acquire, but there's also a lot of information that is exchanged with our clients during these long-term relationships that we build. So I think the chart I had on the bottom right-hand side showed the past. I mean the past is the past. We know a few things. I think if the past was to reproduce itself, we would manage it better than we have in the past. But the future is not the past, right? So clearly, the coronavirus is something new. I mean it's a kind of a left field event that humanity has dealt with in the past. But at that time, there wasn't any credit insurance. We don't know where it's going. I think it's an event that so far has been pretty much impacting China and more a certain part of China. And the question is how long does it last? And how broad does it get? And I don't think we have anybody has the answer to this question. If China were to -- I think we're seeing actually today, I mean you keep watching the numbers as they roll out, where you're seeing China starting to contain the spread of the virus and starting to slow -- it's starting to slowly start businesses again. Is that going to be the case? Is that going to work out? Don't know. Is the virus going to spread to other countries? We don't know. So what are we doing? So I can't answer for the future because -- and it falls right into the strategy I was describing. I mean these events that you see across the world, they are unpredictable. So rather than spend our time trying to predict them, we spend more time trying to manage them when they happen. And in our business, it's about taking action. You can't take action too soon because then the value of your value proposition goes down. But you can't take action too late because that's our job, to take action. So it's a constant dialogue between our people, our clients and the data, and monitoring this in a very active way. Cyrille described how we make 10,000 decisions a day, 2/3 of these are automated. But there's a lot of guidance and input that comes in from our experts. And a lot of these decisions are also driven through the dialogues we find with our clients. So I'll tell you about the coronavirus. It's very different, the impact, depending on which industry you're in. I mean if you're in hotels in Wuhan, it's pretty probably -- it's a pretty tough time if you're a retailer over there. If you're in the airline industry focused on that region in the globe, it's pretty tough. If you are in other industries, maybe you don't feel much. And if you are far away, there's, so far, been very little impact. So I think it's too early to say what the impact will be. But our teams all over the world, that's the dialogue they're having right now with their clients. And they're trying to think through -- I mean our Italian colleagues are on it right now as we speak. Too early to say, it's a region in Italy, it's recent. It very much depends where this goes.

Edward Morris from JPMorgan. A couple of questions, please. You talked a lot about the service element to what you do. And I'm just wondering whether you would say that, that's more targeted at increasing your retention rates or as a tool to continue to win new business. And really, the thinking around this is you've showed us charts around global GDP growth and your -- the sort of Coface footprint. Are you overall expecting that you should be able to grow faster than global GDP? So that's the first question. And then second question is around information. Just interested as to how large this business is for you today. And is the idea that this is a service you can sell to people that might otherwise be buying trade credit insurance? Is it an alternative for them? Or is it something that they would buy alongside trade credit insurance?

Okay. So on the growth question, we are a service business. I'm just trying to pinpoint that my opposition of being an insurer, where you would go to try to offload some risk exposure on a one-shot basis, like a trading desk type of thing, this is not our business. What we do is we build long-term relationships with corporates spanning the globe and which involve a lot of IT connection, a lot of people, knowledge, a lot of expert interaction, a lot of deep, reciprocal understanding of each other's business. And that can only be built over time. So what we mean by growth in our company is how do we keep, retain, embellish, grow these existing relationships? And how do we acquire new ones, right? So growth for us means both things. It's not just retention. It's also acquiring new clients in places, clients that actually want to engage with us in that way. If they're just looking for a one-shot, get rid of some risk because I'm not too comfortable with that, there's other players that they should invite them to go to, to find that capacity. We do not provide growth targets, and I'm not going to change that strategy. And the reason is very simple. We want to create value for the long term. So yes, over the long term, we want to grow the business that actually improves our scale. It's a -- we're in a business where scale matters. Because the more we grow, the more we can invest in our database, the more we can spend money to build skills that differentiate us from the rest of the market. So that growth makes sense for us but not all kinds of growth, not at any price, not at any cost. And there's times when we can grow, we can subscribe and build new great businesses. And there's times when -- or places or types of clients where we actually don't want to do that. So we'll keep that flexibility going forward. Your second question was?

Information services.

Information services. So today, Coface for its own operations has purchases and creates and enhances and structures a whole series of data, I mean a trove of data is probably the way I'd describe it, in one unique database. We have organizations which produce this data. In certain countries, we're at the raw core production site. In other places, we buy the data. There's not 2 countries that are the same because what we want to do is go to the best possible source of data. And we're quite agnostic in the way and where and how that data is available. But today, you can come to us and get information on 70 million different companies in 200 countries in 1 place. That's something quite unique. So we actually sell that data in different parts of the world to different types of clients or people that are insured, but people that are not insured with us. And we hadn't structured that as a business unit or as a real endeavor, if you will, as part of our plan. So we think there's an opportunity for us to do more of this. The question of whether we're competing with ourselves in doing this, look, data is data. If they really want data, they're going to find it, right? We are going to provide it in an easy way and in a better way with -- I mean we have a brand name. We use it for ourselves. So we put our money where our mouth is when it comes to data. So I think there's an element of quality here, which would allow us to sell this data in an efficient way and make money at it. And then I would look at it the other way, I would say if we can establish a relationship with a company based on data, that might also be a way for us to enter, in the long term, into an insurance relationship at some point in time. So I think the view I look at our business is we will do everything. We'll provide data, we will insure, we will collect for you. By the way, if anybody has any collection needs, we do offer a one-stop shop collection capability in 200 different markets. They're again pretty unique, you're not going to find this easily. So that's service and that's our business model.

David Barma from Exane. My first question is on the products. You talked a lot about product simplification. Can you talk a little bit about how the terms and conditions change over the years? And you talked a little bit about clauses and especially clauses that could delay potential actions on some contracts. How much does that represent in your books? And you have a slide where you show the growth in termination, cancellation rates. Would that have looked very differently for 2016, say, on the products that you sell today? That's the first one. And second one on the Partial Internal Model. Besides the obvious capital benefits from running on this more aligned capital framework, can you come back a little bit on how this impacts your day-to-day business and especially on pricing? And does it open also new areas of growth, which you may have not considered in the past?

Yes. So on the clauses, so Coface, like all of its peers in the industry, grew from Western Europe and expanded into other parts of the world. Now imagine you're a client, you would like to have a global policy. So you say you're in France or you're in the U.S. and you say, "These are the terms and conditions that I want to contract with Coface." And then because of regulatory needs and because of -- we have to take that policy around the world. We have to have a policy in Poland. We have to have one in Brazil. We have to have one in Thailand. Different language, different legal system, and by the way, different lawyer on the client side negotiating with somebody from Coface. So it creates all sorts of opportunities to have different wordings and different -- and so the level of complexity that you end up managing is quite spectacular. When it comes to coding all of that into a system and understanding what it means and being able to pull all these clauses in one central place, it becomes extremely complex, right? So all of this is being done manually, one-by-one, clause-by-clause, country-by-country historically, and we're trying to pull that into a system. In order to do that efficiently, you can't just have people change words here and there and there and -- because they like it that way versus that way. You have to kind of standardize your product so that you can be faster, simpler, and manage it more fluidly across markets. So that's really what we're trying to do. It's a little bit like the clothing industry. You start out making T-shirts. You can take the measurements of every one of your customers and then you change the sleeve's length by 0.5 inch or 0.25 inch. That's great. But at some point, if you really want to lower the cost of a T-shirt, you're going to have to kind of do off-the-shelf and do new standard measurements and people will be happy enough with the T-shirt they have. If they want tailor-made T-shirts, we can provide that, too, but it's more expensive, right? So I think that's really what's behind this drive. The second question, I'm not quite sure what you're referring to, what chart or which...

The -- you have a chart where you show how limit cancellations have grown over the years. And I was just wondering if with the simplification you've done and especially on the clause side of things, how would that chart have looked a few years ago?

These are 2 different things. So this is not linked to the clauses. This is linked to the active management of the policy once it's in place. So you're a client, you have -- you're a Coface-insured client. You have 1,000 customers around the world, and we monitor the health of these clients -- of your clients for you. And it's a lot of work. You've just got to pull the numbers and analyze the balance sheets of these companies. And so we have increased the frequency and the depth of the review over the time, right? So we're going to be more accurate and we're going to catch things faster than we did in the past. We're going to be more actively dialoguing with you as a client in terms of what's going on with that company. What do you know? What do I see? What does it mean? And what are we going to decide to do? So that's really what we've been driving. It's different from the contractual side which is something we set at the beginning of the contract and then we live by the terms of this contract. So when it comes to the internal model, yes, we spent a lot of money, put our best experts, hired the best available talent everywhere, whether it's consultants or experts or whatever, to help us build this model. It's never been done in France before. And this is the first time we developed something like this. And you can imagine what a model like this is. And to -- I hope I'm not boring you, guys. But what it is, is you take 200 countries and you divide that by 15 different economic sectors, industries. And you take your entire history available of data on digital files to understand the risk distribution in each one of these 3,000 risk entities. And then you build a matrix, 3,000 times 3,000, to correlate these risks between them. So we actually know the correlation of risk between the Chinese noodle industry and the Canadian auto sector, it's low. So that's a good news. But what it does is it gives us a much better understanding of when you take on a new client, when you board a new portfolio of what is the statistical risk that's involved with that portfolio and over time, how did it resist through economic shock, changes in market conditions and things like this. And so we're able to much more accurately price or estimate the risk. And we're also able to better arbitrage opportunities that might happen in the market. So this whole effort of trying to build this new tool, this new way to understand the risk into -- now given it's only in the past, it doesn't forecast the future, but it gives you a better understanding of how things have worked so far. And part of the future is going to be a repeat of the past, part of the future is going to be something different, right?

Thomas Fossard from HSBC. Three questions. The first one would be on the penetration rate of credit insurance. I'm always amazed to see and to hear that you're selling a product which has a 7% penetration rate. I know that actually countries are working on a different basis than in North America. But either a question of affordability of the credit insurance product where very often that it was a very expensive product for your clients. So I don't know what the reason why, I mean, over time that the 3 leaders, and it's a very concentrated market, you all have scale, have been able to increase further the penetration rate of credit insurance. Second question is on the investments. Actually, you've got a lot of project ongoing to further improve the product ability and -- of Coface. Can you share a bit how much you're going to invest over the next 3 years? I mean in the past, you've been able to invest by extracting costs, so self-financing all the investments you needed. But is that going to be the case over the next 3 years, having in mind that you're starting from a 33% cost ratio? And the third question would be about innovation. So you've been talking about artificial intelligence. Can you maybe share some of the outcome of what you've managed to build in terms of artificial intelligence and potentially how much you've seen maybe on a couple of projects, how the underwriting benefit using artificial intelligence compared to what you've got currently in terms of automated underwriting? How much are you able to further improve under automated underwriting through use of artificial intelligence? And maybe a last one for Arch. That won't be a question on timing, but why only 29.5%?

We'll let him respond to this. Let me grab a few of these questions. I forget, what was the first one? Sorry.

Penetration.

Penetration. Okay. Sorry. So maybe let's start with penetration. Not (sic) [ no ] 2 markets are the same. I mean we go with a concept of credit insurance, but we operate in very, very different markets from a practice standpoint, from a legal standpoint, from an economic context, political or regulatory, you name it, right? So credit insurance was invented in Western Europe 70 years ago. Actually, in Germany, we've been doing this for almost 100 years. It's 97 years. And this is where it's grown. It's become a staple and -- or something that people know about and they've gotten comfortable. Even in Western Europe, the penetration rates vary widely between the highest like Spain and some other countries that are much lower. So there's an element of culture here. There's an element of choices made by people to either do this in-house or to do it externally. I mean think of the U.S., there's not an industrial company in the U.S. that doesn't have a credit department. It's just the way you do things. Payment delays or payment terms are shorter in the U.S. than they are in Asia, for example. But in any company, they have a credit department. There's a great number of people in the market whose career is credit management, and they go from company to company. So it's organized that way. In other places, in smaller markets, I mean think of it, the U.S. is huge. You can speak one language, one legal system and there's a huge capacity. In other places, it's very small. So the expertise you need is very unique, right? So there's all sorts of reasons why it's not just one big global market and why just aren't you growing like easily. The other thing is our industry started with large corporates. And large corporates, they have the time and the resources to engage with us on pretty complex products. We were just inventing this. Now when it comes to an SME, they don't have time, don't have the expertise, they don't want to bother. And we don't even have enough resources to go and talk to them because there's millions of them, and we are only -- Coface is only a company with 4,200 people. So we can never get to them. So we have distribution challenges. We have simplicity challenges. We have a different set of products to invent for certain segments. So yes, I mean this whole thing like the potential is gigantic. Yes, this is true. But the way to get there is not that simple. Otherwise, it would have been done, right? So in order to get there, you need to make investments. You need to simplify your products. You need to work on sales force. You have to convince people, do market development. That's expensive, and we can only do it at a certain pace. And we want to do it, by the way, safely because we don't want to just grow for growth's sake. So I think that's the reality. So once you know the reality, we make -- that's why we make select choices, saying, "We think here, there's an opportunity, and we're going to place our bets here versus there, right?" Your second question was IT investments. So we're going to talk about this afternoon. So if you can hold it during lunch, we will go beyond your wildest dreams in answering that question, right, Carine?

Yes.

That's not me. It's her. Artificial intelligence, yes, we -- I always play jokes with the term artificial intelligence, you only -- because we try to have intelligence, a real one. There's a lot of tools that people have brought lately. Artificial intelligence, when you look at it, these tools, it's just the good, old correlation but to the nth power. So it's just the ability to process a lot more data a lot faster and to extract insights from a whole, hugely bigger set of data than people were able to do in the past. So we're on it. I mean we're on it. We're using these tools when they come. The issue, in my view, is not artificial intelligence. It's the data. Once you have the data, the tool is easy. Any now 21-year-old with a math diploma will be able to roll out an AI program on it. The issue is the data. And so we've been investing a lot on data, on architecture, on expertise, on availability and connectability of that data. And then we are running tools in all sorts of directions but the difficulty in the space is to find the user case that's compelling, the one where the application of technology actually means something and is going to yield stable, valid results through time. And so I mean the project that we spoke about in terms of increasing from 44% to 66% the number of automated decisions, in theory, it's pretty simple. You take your data, you run an AI machine through it or deep learning or whatever, or -- it doesn't matter what the name is, and you learn some things. But then you have -- before you put that into production, the tough part is to make sure you have that under control. You understand how it's going to behave. That it's going to control the past events in the same way we would have done it or actually better than we would have done manually, to back-test everything, to make sure you've got the right routines and controls. It's like building a software for an airplane, see what I mean? So we're taking this very seriously. And so is it going to be there in the future? Yes, absolutely. I think technology -- when I started my career, I didn't have a laptop. And the reason was that laptops had not been invented. I didn't have the Internet. And the reason was it hadn't been invented. And I didn't have a cellphone either for the same reason. Actually, the first one I had was about this big and it had a suitcase attached to it. And now if you think of this, I don't have a computer anymore. I'm running Coface with this machine, which is incredible, right? I would never have imagined that we would be there. So technology is not something new. It's something that has come at us over the last 30 years. It's profoundly changing the way we do business. Our job is to incorporate it as it appears and as it becomes stable and relevant into our core processes. And the battle between the fintechs and the old techs is about incorporating fast enough the relevant elements of technology into what we do so as to capture the strategic advantage that these technologies represent for us without wasting our time chasing every new fad out there because, quite frankly, we could just be -- it's a limitless analyst quest. And so it's all about discerning what makes sense and what doesn't. So we'll do more of this going forward. We have already invested into this and it's a continuous process in my view. Oh, a question for Arch, you guys are on again.

I think Thomas had told me I might be asked to come up here once or twice. I hadn't expected for your Investor Day. I think as you can appreciate, it is -- it was not a simple discussion for us to have, what I was talking to Carine earlier. And I said it's very much like we would like to begin dating the company. So we go to the parent. We go to Natixis and say, "We'd like to," and they say, "You have to demonstrate that you're serious." "What do you mean you're serious?" "Well, you have to put up a significant chunk of change, if you will, an investment in this company. And then we can begin these discussions." So for us -- and we're hearing, you're hearing a lot of similar philosophies. But what we would like to see at Arch is that there is an alignment in philosophies and underwriting quality, the value of the people where knowledge and expertise make a difference. We would like to have time for this relationship to develop. And so we'd like the plan that the management has put forward. It is interesting to us. We know the business reasonably well as a reinsurer for a long period of time. This is an opportunity for us to demonstrate that we are serious but allow them to say, "This is not an arranged marriage." This is something that's a two-way street. This is something that we hope that they will embrace our culture and we can embrace theirs. And so the intent is let's see how the relationship develops. And in the meantime, we're very excited about the transformation that's taking place. And this is giving us insight into a part of the world that we are not invested in right now.

We have a question from the webcast...

I was going to say what don't you already know, Thomas? I was getting worried here.

I'm just transmitting the question. So do you measure the employees' engagement? And what does it say?

Absolutely. We measure employee engagement. It says it's getting better, but there are still a lot of things to fix. That's the short answer. We -- when I joined Coface, I think we were -- it was a tough time for the company. The first year, we did not do a measurement of -- because I knew the answer. I mean it was bad. So why bother? And it would have -- we would have used precious time. The second year, we launched an employee survey. And guess what? It was bad. So we were right. It was actually pretty bad. The third year, we did it again, and it was better, still improvable. And we haven't done it because if you read these things too often, they kind of -- people get tired to them. So we're going to do a new one in a few months. And I hope they will be better. We will see. But we take this very seriously. We measure engagement in different dimensions. And we try to understand what people are telling us. And it spans a broad array of things in terms of how we're running the company, the strategy, the communications, the operations, what they feel concerned about, the way we treat people, et cetera, et cetera. So I'm absolutely convinced that the company is better and employee engagement is higher. I mean you just have to sit in the room and watch it. I mean people smile or they don't, right? But there's certainly things that we need to continue to work on. So we will be doing this over the course of the next years.

We have one last question before lunch.

There's one up there. No?

Just wanted to come back on your strategy to sell more your data. I think that over time, we've seen a couple of time credit insurance willing to sell more of that data outside. I think that throughout the long history of Coface, we had also several times this approach. Either it's failed or I mean a couple of competitor have retrenched, thinking that was probably not the right idea. At the end of the day, you are saying that this is something -- this is external data that you are managing to enrich yourself, so it has a lot of value to feed your underwriting engine. So the question is really, I mean, what kind of data are you ready to sell to external clients? Which one are you going to retain? And what is the price of this data you're -- that will be available to sell? Because at the end of the day, I guess, that today, data is key and a lot of people will be willing to get your data and maybe to do something else that you can't do with it. And it seems to be such a competitive edge that you've got internally that it's a little question mark, but if it's not short term only for...

Yes, I understand. We have the full awareness of the value of data. But I can tell you, basic data is a commodity. I mean you can get data anywhere in the world. You just have to find the right provider. So basic data is a commodity. Making the basic data available in one place is already value-added. Of course, we don't do this for free, just in case of -- to avoid any doubt. So we think it's actually a profitable thing that enhances our ability to purchase more data, enhances our ability to reinvest in the core machine. When it comes to higher-quality insights, i.e., data that we have scored or manipulated or derived insights from, then of course, we get more and more aware of the value -- of the unique value that this has, to put it this way. So of course, we will be more and more prudent as to what we do with it and at what price we sell it and if we do sell it at all. So I think we're talking about -- we make a big difference between basic data that's available anywhere, which I think we can -- it's really not that much of a trade secret to some of the best insights that we have, where obviously we're very well aware of the value it has and why it's our competitive advantage. Okay? So well, look, thank you very much, hope this was helpful. We go into session 2 this afternoon. And you're all welcome to lunch. [Break]

Good afternoon. Nicolas and I would like to walk you through our growth agenda for the Build to Lead plan. I think that, first of all, what we're going to talk to you about is we're going to focus on the way we intend to grow in our TCI business, in our Trade Credit Insurance business. We're going to develop the way we -- I mean, the ambitions that we have in terms of geography, in terms of client segments. Then we'll spend a little bit of time on adjacent specialty businesses. We already talked about it this morning, we'd like to go one level deeper in explaining to you how we think about these businesses. And then we have invited 2 regional CEOs to come and illustrate what we mean by growth, I mean our -- what we have achieved and how we are thinking about growth going forward. We will have Oscar Villalonga, who is our Head for North America, come and talk about the ways we gain control of our distribution in the U.S. and how it's regaining market share in a pretty difficult environment. And then Katarzyna Kompowska, who is the CEO for Northern Europe, is going to come and talk to us about the way she's turning around our factoring business in Germany. So to set the stage, I'd like to come back to Fit to Win for a moment, and remind you of the -- what we told you in terms of growth and the way we are considering growth when we launched Fit to Win. Three things. One, we say we didn't give any objective. There was no objectives in terms of growth. Second, we said that growth had to be profitable. Third, growth had to be differentiated. On the profitability, I think that this chart is giving you a sense of what we have achieved. The green curve represents the evolution of our premium. As you can see, we had a pretty lackluster growth record in 2016 and 2017, we even shrunk in 2016. And then we resumed growing in 2018 and growth accelerated in 2019. More interestingly, I think that the blue curve shows our loss ratio. And as you can see, the growth sequence of 2018 and 2019 did not -- was not achieved well compromising risk, which is something that's quite important. Second, I mentioned the growth had to be differentiated, differentiated because when defining a growth strategy, this growth strategy has to be aligned with the very characteristics of the market and also has to be aligned with our risk experience and our risk expertise in this specific market. That's the reason why we had defined several clusters of countries to create some homogeneity in the strategies that we apply to these different clusters. We -- and these clusters were defined on the basis of: one, the volatility that we record in these countries; and b, on the level of penetration of trade credit insurance in these countries. Hence, the 3 clusters that we have here. Stable market, stable mature markets, which represent countries where we have good visibility on the economics and the volatility and low volatility in the country, while having a pretty high level of penetration for trade credit insurance. This is typically what we observe in European countries. Under-penetrated advanced economies. These are the economies where we have also some kind of low level of volatility in the economy, but where trade credit insurance is not well penetrated. This is typically what we observed in the U.S. and what we see in Japan. And highly volatile country; no need to explain where they are, and this is mostly what you consider the markets in Latin America and in Asia. What we've done for Fit to Win for stable and mature markets, was primarily focused on reorganizing our commercial setup, redefining the structure and the organization of the sales forces, defining objectives, rolling out some sales force effectiveness to enhance the effectiveness of the salespeople, expanding our distribution through partnerships. This is really very much what we focused on in Europe. In addition, we've made 2 acquisitions to expand and consolidate our presence in some specific countries. We acquired PKZ in Slovenia, which is the leading trade credit insurance in Slovenia. And more recently, we acquired a company in Norway, which is also a region where we want to increase our presence. In under-penetrated markets, I would say that -- let's just talk about the U.S. more specifically what we've done was to regain control of our distribution. And we did that 2 ways. One, by buying out our agents in the U.S. and transforming them progressively into direct sales force; and second, reconnecting with the brokers. The brokers are population of partners we had lost sight of for a long time because the quality of our service was not adequate. Let's put it this way. And second, because we have put so much emphasis on our agent network. In Japan, it's a bit different. We have very much focused our activity on our large accounts, our CGS, and we launched a new product that Nicolas will talk a little bit more about, which is our Japanese solution. I'll leave him talk -- I'll let him talk about if further. In a highly volatile market, we did 2 things. The very first thing that we did was to redefine our risk appetite. There's no point in thinking about distribution and expanding if we don't have a clear view on our risk appetite. What do I mean by risk appetite is being clear about what kind of sector, what kind of industry we're ready to underwrite, and we're comfortable to underwriting because we have sufficient risk expertise because we have sufficient information. Then we started thinking about rebuilding the distribution. So after 3 years, what results this Fit to Win plan produced? I would say 2 things. One is we regained momentum in stable, mature markets. And more specifically, we resumed growing in 2 countries where we had trucked for a long time, Germany and France. This was a major achievement. Second, in the rest of the world, we kept on growing at different rates, different depending on the country. But more importantly, we achieved this growth while not compromising on risk and reducing our loss ratio. What are we going to do going forward? We're built to lead. I'm tempted to say there's going to be more of the same. More of the same, why? Because, I mean, what's the point of changing your strategy that has produced good results. So we will continue focusing on differentiated profitable growth strategy. Is this plan going to be exactly the same? The same one as the one we had in Fit to Win? No. Are we in the same situation as we were in 2016? No, clearly. But I think that what is really important is that I think that in 2020, we have a much better perspective and much more granular perspective on where we have opportunities to grow and how to seize these opportunities. If you think about the stable and mature markets, the main idea in these markets is going to focus on managing multi-channel distribution. We are active with our brokers, we're active through that sales force, we are active with agents, we're active through partners. And we have to continue managing actively these 4 channels to enhance and to manage to have as many contracts with clients and prospects as possible. To do so, we're developing some tools, we're developing some approaches. What I have in mind is what we've done, for example, with our broker portal that we have launched 6 months ago to enhance the relationship that we have with brokers in Europe, to share information and to make the relationship that we have with brokers, seamless. And that had a really good impact on enhancing our image in the eyes of the brokers. On mid-market direct sales force. We're going to continue rolling out our sales force efficiency because, basically, it's an execution business. And what really matters is making sure that our teams, our sales teams, are well-aligned and have the right incentives and know-how to operate. This is something that is pretty critical. In SMEs, Nicolas will talk a little bit more about it. You know that we've launched EasyLiner. We have made some investment to make it even more simple, simple to operate, simple to distribute. We'll keep on investing in this type of product to increase our penetration with SMEs. In under-penetrated market, and more specifically, I would say that we are quite optimistic. Oscar will give you more flavor and more detail about what we intend to do in the U.S. But I would say that the 5 ideas that are important to keep in mind. One is the quality of service and retention has improved over the years of 2019. That's very important because that paves the way for further growth in the U.S. Second, we have regained control of our agents. We have internalized them, they're now direct sales force, we can work on improving their sales force efficiency, we can redeploy them across the country to align their presence with the potential of the different regions in the U.S. With brokers, we're reconnecting with brokers. We've put in place a broker desk. In our opinion, this is the time for us to increase our presence in the upper mid-market of the U.S. because the fact -- because we are very much geared towards our agent sales force, we are much focused on SMEs now. We have the opportunity to go for the mid-market and get more interestingly for the upper mid-market, where we have a very, very little presence. And I would say the last, but not least, when you think about the U.S., you're thinking about financial institutions, we've put in place a dedicated team. We're going to consider financial institutions as a priority segment for us going forward. In highly volatile market, we're going to continue putting the emphasis on serving our multinational clients. Why? Because these clients, because of their global reach and the globe footprint, are the clients that see the highest value in our global network. Hence, the fact that they are a priority client for us. Second, we're going to continue investing in risk capabilities and an information platform. Because, as I mentioned earlier, we cannot have a long-term presence in these countries with high volatility, unless we have the means to underwrite and to grow safely in this market. What I mean by volatility is we have to be agile in decision-making. We have to be agile in decision-making to serve our clients in good days and bad days. We have to be agile to control risk, to manage risk. We had this discussion this morning with Cyrille. And we also have to be agile to seize opportunities when they arise in this market. And then just give you 2 quick examples of what we think about when we -- what we think about when we talk about agile decision-making. In Turkey, which is a market we have a pretty strong presence. If you think about what happened between, say, 2017, 2019, such a short period of time, we had to manage situations where we are very much restricted in terms of risk, in terms of granting credit limits and then right after because the conditions changed, we were more on the expansion side. In Southeast Asia, we know in which markets we can be on the attacker and in which market we have to be in the defensive, because the nature of the market, because of the nature of the competition, don't make any kind of growth in this market realistic. So in short, this is what we mean by agile, differentiated growth strategy.

So talk our clients and prospects. So within Fit to Win, we have defined 4 segments of clients. And as you've seen earlier today in the introduction of Xavier -- in the presentation of Xavier, we're going to keep these 4 segments. And we're going to keep having differentiated growth strategy according to the segment. The first segment, international groups. We're going to run 2 main initiatives for this segment. First of all, we will keep investing in the quality of service for this segment in order to provide them tailor-made services. International groups tend to require fast program decision at program level, very precise and detailed discussion on the main key buyers in the advanced economies. The discussions are very detailed on a buyer-per-buyer basis. While in more volatile economies, they are looking for more open dialogue on how to manage the risk, what are the good risk management practices. So we will continue to invest in order to provide this type of service, especially with the development -- improve the quality of service with the development of our teams around these aspects. The second initiative is related to penetration in some key geographies. We have identified geographies where our natural market share in international groups is not reached. So we're going to invest in these 2 markets, namely U.S. and Italy, in order to catch up and to grow the multinational business in these geographies. On the mid-market segment, we're going to run mainly 3 types of initiatives. First of all, we already mentioned this morning, the quality of service, the enhancement of the quality of service. I would like to really -- to stress that we expect a very strong improvement in the way we deliver our service to our mid-market clients, thanks to the new operating model and the rolling out of TradeLiner and the new IT suite that is being deployed at the same time. The second big initiative is that we will keep investing in our multi-distribution -- in multi-channel distribution, as mentioned by Thibault, brokers, direct sales, agents and partnerships, I will say, a deeper word on partnerships. The SME segment, which is quite under-penetrated segment market for us. We have developed a very simple product name EasyLiner, and we have also developed a digital platform, which is a distribution portal that allow us to simplify the subscription, the underwriting of these type of policies through distribution partner. I would say later, a word about distribution partners, but we want to continue to invest on that area. The last segment, financial institutions. Within Fit to Win, we've been very selective in choosing the financial institutions we wanted to work with. We have assembled specialized teams in few selected geographies in the U.S., in few key countries in Europe and in Singapore. On that basis, we're going to keep a very selective a very high level of selection of the clients we want to work with in the financial institution space and develop our relationship with these clients that's having an aligned risk management practice and culture with ours. All in all, we do not expect any major change in the weight of each segment on our book in the next 4 years. But we will maintain a very, very strong focus on execution, and a disciplined execution on each and every initiative we go into one per segment. Let's now illustrate a little bit more what we talk about -- when we talk about tailor-made solution for international groups. I would like to take the example of the development of our Japanese solution offer. There are more than 300 Japanese groups having a global reach, meaning that they generate more than 75% of their revenues out of Japan. To address their needs, we have invested in native Japanese commercial staff in few Asian countries, together with an investment of a strong-steering Japanese team based in Tokyo. The local staff is dealing relationship with the local entities of the Japanese groups, while the central team in Tokyo is dealing much more with the relationship at the head office level of the Japanese group, and they are working in a very aligned mode. Information is floating, and execution is extremely seamless between the 2 teams. Thanks to that, we have reduced -- we have improved cultural proximity with each type of clients. And we have reached the language understanding at -- also trust gaps, we could have with this type of clients. It's been a successful initiative that we're going now to deploy in more geographies, where we believe there's a great potential, namely in the U.S. and in Western Europe. Second case -- our second case study, we wanted to illustrate with you is related to the multichannel distribution strategy and the development of partnerships dealing with Coface. 10% of our revenues today are generated through partners, and it's been growing substantially over the last 3 years. We have 3 types of partners. The first up are fronters. It's the most historical type of partners. Fronters are insurance companies that, in some countries are issuing credit insurance policies on behalf of Coface. So we were using their license in order to expand our geographical footprint, especially in Asia, Asian countries, in the Middle East, and in Central America. The second type of partners we have are referral partners. Referral partners are usually banks that provide qualified leads to our direct sales force. These type of partnerships have 2 benefits for Coface and for the partner. The first benefit for Coface is that it gives us access to the partners' client database. Second benefit is that it's increasing a lot our conversion rate from the qualified leads to the signature of the policy. So the process is much more -- it's quicker with much more -- with much higher success rate. For the partner, the benefits are -- there are also 2 benefits. The first one is that they can offer to their clients a differentiating products. And this different product is in a very high level of retention rate. So the partner -- and also, we are creating a win-win situation with referral partners in -- with referral partners. The third type of partners are pure distribution partners. We mentioned it already several times, we have developed a simple product to penetrate more the SME market, EasyLiner, and a digital platform to sell it. This platform allows us to be embedded into the workstation of the pure distribution partner, commercial staff. So that we can be fully integrated in the commercial processes of the pure distribution partner. For us, we are creating with partners win-win situations we want to continue to invest in partnerships, not only in more geographies, but also to increase the number of partners, we're going to have in existing countries. We already have an experience because we have accumulated a unique experience on dealing with partners that we are now able to deploy much more. Okay.

Specialty businesses. Specialty businesses is the second pillar of the Build to Lead strategy. We have selected these 4 businesses: factoring, Single Risk, bonding, information. Because we have a real experience, natural experience in these businesses, because we have a proven track record and because these businesses offer some synergy potential with our trade credit insurance business. If you think about these businesses, these are activities where we can leverage the risk expertise that we have developed in trade credit insurance. These are businesses where we can leverage the global infrastructure that we have put in place. These are businesses that sometimes we can cross-sell with our trade credit insurance business. This is also businesses that are either capital-light or that can create some diversification situation with our traditional trade credit insurance. In a nutshell, our strategy will be focused on: A, for factoring, turning around our German business and driving growth in this activity; for bonding and Single Risk, keep on growing organically, mostly as we've done it so far within the same risk framework. I'll come back on that within the same risk framework. And with information, is actually to better monetize our assets, better monetize the information that we have in our database and transform the current business of information that we have into a real business. Maybe one thing that I would like to add is that we're not -- we've not chosen these businesses just for the sake of growing. We are absolutely convinced that we can bring these businesses with a little bit more resources and more attention to a different trajectory level and more value-creating situation. Now let me just spend a little of time on where we stand on these 4 businesses. First of all, you have to keep in mind that we already generate EUR 180 million revenues through these 4 business lines. That's what I mean by the fact that we're not newcomers there. We have some experience. In factoring, we're generating a little bit more than EUR 60 million revenues. As we -- as Xavier mentioned this morning, we're primarily focusing on Poland and Germany. The situation is the following: over the recent years in Germany, we observed a situation where we are lacking traction with clients for lack of, probably attention, or having not selected the right clients. Second, we are facing adverse refinancing situation, and the regulation was evolving, not the right way. As a result of the time, we said that our return on equity was decreasing. We started thinking about turning around the business a bit than a year ago. Katarzyna will walk you through what she's been doing so far. But more importantly, what was really the turning point for us is that we attracted brand-new team, not 1 person, 4 people coming from our direct competitor. On Single Risk and bonding, we have a little bit of different situation. These activities are primarily focusing on Europe. We're generating all in all with more than EUR 70 million. In bonding, this is a business where we have a pretty strong presence in Italy, which is actually the largest European market. And where we have a pretty interesting market share with 8%. We have always operated the bonding business in Italy profitably. It's a very well -- very well-diversified and granular portfolio, good loss ratio, and we've been growing it for years. Same thing in Germany and in France, where the -- our presence in bonding is more recent, but where we're also growing quite nicely. In Single Risk is a little bit different, different story. We've been there for 2 decades. We started operating in Single Risk beginning of 2000, under the brand of Unistrat. That was quite well known the industry. We grew quite well, pretty well controlled loss ratio for quite a long time until 2010, '11 when on the back of the previous success, the team started going into more dangerous areas like commodity business and so on and so on. As a result, the period 2012 to 2016 was characterized by pretty higher loss ratio. We turned around the business. We refocused our risk appetite in 2016, end of 2016, beginning of 2017 by refocusing, stopping business in commodities, refocusing on Tier 1, Tier 2 banks, putting limits on some certain types of deals and maturity and so on and so on. As a result, over time, the loss ratio has dramatically decreased. And now it's a pretty profitable business that is also growing. Information business is quite different. We are already selling, I would say, reselling information in 50 countries. We buy information, we resell information. There are 2 places, where we have a really strong hold. One is in Central Europe, where we also produce our information. And in Israel, where we enjoy a 250% market share in Israel. Basically, in this activity, what we intend to do, we decided to do 18 months ago is to think again and reconsider our strategy and think how we could move from a business that we are selling as a side business into a real business. And to do so, we have attracted, and we have recruited someone who's coming from the industry, who is a well-known specialist in information. Our strategy going forward. What you have in the middle of the chart are basically the assets we're going to build upon. Not going to go into detail, what you have to keep in mind is that the assets we're focusing on are: one, our global presence, our multi-jurisdiction presence. Second, our risk expertise that can be used for other types of businesses. And third, is the fact that we have already established some distribution channels with brokers, with banks, with partners. This is quite important if you want to grow these businesses. On the strategy, I'm not going to spoil Katarzyna's presentation of factoring. So I won't say anything. So just bear with us for a couple of minutes, she will tell you exactly what she's doing. On bonding and Single Risk, the idea is to continue what we've done so far. So grow in a disciplined manner, within the same risk framework, both for risk, for bonding and for Single Risk. In addition, for bonding, what we're going to do is we're going to launch a line of reinsurance bonding so that we can expand our expertise in markets where we're not present. And in Information, the strategy is to transform, share information into a real business to better monetize our information that we have in our database and to deliver products and services that embed our risk expertise, our economic research on the global footprint. Let me walk you through quickly on the way we've been thinking about information. As I said, initial -- a couple of minutes ago, when we started thinking about information, we recognize that we had several assets. Pretty strong assets, we could build upon. At the same time, we also had to recognize that it was not a business per se. I was not organized as a business. So the whole strategy and the whole idea was to move from these new assets. This kind of unequal and uneven presence and business, like, for example, Central Europe versus Rest of Europe and transform it into business. The assets we are building upon are our: a, our database. We already talked about the numbers of companies that we have in database. More importantly, we also have lots of connections with information providers that we're using for trade credit insurance that's what Cyrille mentioned this morning. Second, we have a real expertise in transforming financial information into scores, into credit opinion, into credit limits, this is an expertise that we have developed over time. Third, delivery. We have an IT system that has been designed specifically for information. And that is different from our trade credit insurance IT system. And fourth, I would tend to say that our image and our credibility are quite important when it comes to selling information. When we said that the information that we are selling is the same information that we are using to manage our EUR 500 billion exposure balance sheet. This is something that is quite compelling for clients. So what are we going to do going forward? Three things. One is we have to continue sourcing, increase our sourcing, expand our coverage, keep on working on the quality of the information that we have in our database. We're going to do that through partnerships with information providers, we're going to do that also by tapping into new technologies. There's a lot of potential around open sourcing. This is something that we've been reviewing, we can work on that. Second, we're going to continue working on data processing. Cyrille, this morning, talked to you about what we're doing in terms of DRA, how to increase and improve the quality of our DRA, but also including economic research in the way we process DRAs. What we're doing with trade credit insurance can be used to a certain extent, with what we will be doing with information. Last but not least, I would talk about delivery, 2 things. One is we're going to put in place specific and dedicated sales forces. Let's put it this way, you don't sell information the way you see our trade credit insurance. It's as simple as that. And second, because we have to deliver our product in a seamless manner to our clients, we're going to develop and invest in APIs. Thank you very much. Now I'm going to leave the floor to Oscar who is going to talk to you about what he's doing in the United States. Thank you.

Good afternoon. It's great to be here with you and to share the transformation story of the U.S. First, a little bit of background on the trade credit space in the U.S., the history of the U.S. for TCI is one of unrealized potential. This came up earlier in one of the questions in the first session. When you look at the U.S. market, our penetration is the lowest of any developed market, globally, by far. And we feel that there's a couple of reasons for that. If you think back to what Xavier was saying earlier, the trade credit business was created here in Western Europe was developed was conceived here and developed properly. That hasn't translated to the U.S., we think some of the reasons for that are related to a very stable economy, global, large economy that's been stable for many, many years, a stable political climate, low traditional insolvencies, and that has helped to keep the attributes of trade credit insurance as an afterthought for many CFOs. Now as we look at the future and we look at the mixed signals from the U.S. that you heard about earlier, there's hope for us that we will be able to elevate the discussion with CFOs for mid-market companies and beyond. There's a potential for greater insolvencies. We all know about the political climate changes that are occurring in the U.S. and the election this year. So we feel confident that, as we go forward, we'll be able to have these discussions and hopefully, move the needle on the growth of the market. So now a little bit about the history of Coface in the U.S. If you look at 2016, really our trajectory mirrors that of Fit to Win across the globe for Coface. We went into 2016 with a very high loss ratio of 85% at that time. So as you can imagine, all of our efforts in the company were geared towards portfolio management, remediation, underwriting changes and actions that we took and that resulted ultimately in 2019, achieving a 45% loss ratio for the business, which we're very proud of. At the same time, as you think about 2016, it affected our commercial activity. We had our focus on the right things at that time, but did not have the opportunity to focus on commercial activity as we wanted to. So what's changed? What's the difference? The difference is distribution. You've heard about a lot from speakers today. If I take you back to when Coface entered the U.S. market many years ago in 1998, we entered buying a carrier. So we acquired a carrier and at that time, we established our distribution network with independent agents. These agents were affiliated to us, were exclusive to Coface, were only selling Trade Credit Insurance, but they were independent. So we had limited capacity to influence their go-to-market approach. That approach served us well for 20 years. But as part of Fit to Win. And in 2018, we started internalizing the independent agencies, and we will complete that process by the second quarter of this year, where all of the agents that were independent before are now part of our staff, of our sales group. That includes every channel, and I'll talk to you a little bit more about that as we go forward. So what does that do for us? That gives us the ability to control not only new business, but it gives us the ability to control the all-important client account management. As you can see that on the 2 bottom charts, the one on the left around retention rate, retention rates already spiking up. In 2019 we were able to go up 7 points and our new business for 2019 went up double digits. So the early signs are good, and we will continue to work on this. So obviously, a lot more to do in this market. And I want to share with you some of what Thibault alluded to when he was speaking around our opportunities for the future. If you look at our trajectory, we've been a solid #2 for many years. And our intent, our ambition here is to be -- to continue to be at number two, that's okay, but we want to be the best trade credit insurance provider and the provider of reference, as Xavier mentioned before. Traditionally, our big market has been SME and mid-market. Mid-market, we referenced that with companies under $100 million, SME under $30 million. That's a big business for us. It's one we're going to continue to nurture and grow and hopefully, get more efficient around providing service. We have a tremendous amount of credibility in this space, and we want to make sure that, that continues to be there. But now that we have the sales teams internalized, we feel we have the opportunity to grow in different sectors. And one sector is the upper mid-market. So when you think of upper mid-market, think $100 million and up. This is a sector we neglected in the past because the agents either didn't have the footprint or the expertise and now we're resourcing around that. Traditionally, our agent network was focused only in the Northeast, Deep South and Midwest. This gives us the ability to go beyond that. What this does for us as well is help us with efficiency and account management efficiency. When you think about doubling our average transaction size for the upper mid-market companies, these are bigger companies. And the important factor here is that our loss ratio will remain the same. So we're not taking more risk for the sake of doing their business. And this is very critical to our success. So what does this mean? And how do we achieve this? We have 4 pillars of growth that we're executing on in the U.S. The first is a direct channel. This is 60% of our business. So this is a very important sector for us to make sure that we grow. Now that we have internalized the sales force, we can industrialize the way we go to market. What this means for us is we can train our people, we can hire them, we can develop them, we can institute a database management with science that tells us where to deploy our people and our capital in a better way than just the legacy approach that we had in the past. And we're seeing the results already. So we feel great about this. Broker channel, you've heard a lot about the broker channel. And in the U.S., it's very interesting that the most affected channel we had in terms of retention and new business after the 2016 results was a broker channel. We internalized them. We could have done a better job with that and we've admitted that. We've talked to our partners, and we are turning that around as well. Last year, we hired new leadership into the broker channel, folks that are coming in with a lot of experience in this space. And we're reorganizing, listening to our partners, getting closer to them and their broker partners in the geographies that they work in and getting closer to their customers. So this will be an area that in the future will continue to grow for us. I don't know if I mentioned this is 30% of our business today and hoping that it continues to grow. Next is financial institutions. Nicolas mentioned the importance of financial institutions for the Coface, for the group overall. This has been another area where we didn't have the expertise up until recently. We recently reorganized with all the work that's been occurring here as part of Fit to Win as well. And we're already seeing very good early results. Our approach here is very simple. We're following the approach of group going after Tier 1 and Tier 2 clients that are important to the group and want global coverage with the U.S. being a big part of that. And then finally, global solutions to me is the best example of the global reach and scale of the company. Traditionally, in the U.S., our global solutions team has been a recipient of inbound sales, and we've done a very good job with account management with very high retention rates. For the future, we want to build our program leader practice. What this means is that we're placing people in the market that can go out and sell to companies, that are headquartered in the U.S., where we can be the program leader. The example, and I don't know if it was mentioned for the U.S., but the Japanese example that Nicolas talked about is one that's been very successful for us in a very short period of time. So when we first talked about this opportunity, last summer, we hired a national Japanese local that knows the market in the U.S. very well, that has a lot of insight and experience, and the results have been fantastic in a very short period of time. So we expect to continue to grow this segment. So finally, what's the ambition? It's pretty simple for us. We think the actions we've taken as of now will continue to lead to greater retention, sustained above -- levels that have never been reached before in the U.S. We think our new business will continue to grow at double digits as we go forward. We think we will get better in terms of efficiency and our operational structure, where it will thrive, as we have internalized our account management across all the business. And I can also tell you that the early feedback we're getting from our customers, our partners, CFOs that we meet with, is that they want us to be a strong player, they like our capacity in the market, and we think our time is now. So thank you. And with that, I'll leave [ Kazia ] to talk to you about the great story in Germany.

Good Afternoon, ladies and gentlemen. Does it work? Yes. Okay. I'm happy to be here and to talk about Coface factoring business. So let's start with a short overview of our factoring activities. So as you see already on the first slide, the factoring business is an important asset for Coface and we strongly believe it's not only an important asset, but it's also underexploited asset for Coface that can generate meaningful revenues as it creates synergies with our core business, and it also leverages our existing infrastructure. We are running the factoring operations in Poland and in Germany. And as you can see, currently, both entities, they generate around EUR 64 million net banking income and EUR 80 million of operating result. That's almost 8% of our group result. The German subsidiary is the main business, factoring business for Coface, with around 85% of total factoring revenues. So factoring operations in Poland are performing well with EUR 4 million NBI and strong profitability. So we also approved for us that factoring can deliver value for Coface. For Germany, over the recent years, Coface finance experienced headwinds. On the one hand, the low interest rate environment, increased the competitive pressure and eroded margins. On the other hand, the capital requirements pushed the ROE down. So currently, the ROE is at the level of 7%, which is below our Coface target. So today, our factoring model, business model at Coface, it's more efficient and more resilient. It's well embedded into our TCI operations locally, but it also leverages our worldwide infrastructure. So this creates great synergies with our core business and allows us to build a value -- a unique value proposition for the client. So during Fit to Win, also in Germany, we fixed our core business, our TCI business, making our business model more robust, enhancing our risk management capacities, and we are undergoing also a strong cultural transformation in Germany. So we are now ready to focus and drive this adjacent business factoring. So let's look at the German market for a moment. We have been here for -- as Xavi mentioned, nearly 100 years as one of the oldest credit insurance company with strong operations in the country. Over the last decade, the factoring market in Germany has doubled in volume of purchased receivables. However, the total market penetration is still low at 7.1%, compared to Europe, 11%, and as an example, France, 14%. So we know that there is a room for growth in this market over the next decade. So today, we are the largest non-bank-owned factor with 15 years of operations with 13% market shares. And we've estimated position as #3. We are also known as the leading player for cross-border and export factoring solutions. So what makes us strong? Let's move to the next slide. So in this last 12 months, we undertook a full strategic review of our factoring business, and we came to the following conclusion. Coface finance has all it takes to thrive in the German factoring market. So what do we mean by this? On the one hand, the Coface unique international reach is a true competitive advantage for us for our cross-border factoring. We are able to finance German global companies in more than 19 jurisdictions, and we will continue to expand this network, thanks to Coface's solid underwriting capacities, combined with extended information and debt collection capabilities, we are able to finance debtors from all over the globe. And this way, we can also expand our export factoring solutions. We can leverage our large and still untapped TCI client base, especially for global companies, where Coface is a recognized supplier, but also for the stronger German Mittelstand segment. And last but not least, the solid IT infrastructure supports significant synergies with the core business. So to accelerate the turnaround, we clearly needed new impulse. So we renewed our leadership team, and we recruited from senior factoring executives from the market leader in Germany to lead this change. They have strong business leaders in risk, legal, commercial and advanced factoring solutions with about 20 years of experience each of them. So we see this team as a catalyst to activate the synergies within Coface and together with the network of experts to drive the factoring transformation. So since July 2019, they have actively contributed to elaborating and implementing the new plan. So what is the new plan? How do we want to seize the factoring opportunities on the German market? So we have developed a plan that addresses 4 major areas of improvement, which is commercial, risk, operational efficiency and capital optimization. So let's start with the first one, commercial repositioning. So with low interest rate environment, the plain vanilla factoring, this became more and more competitive, with always lower margins so that's why we started to reposition our portfolio and our sales activities on higher margin segments, such as cross-border factoring and [ MA ] private equity deals, adding factoring as a method of acquisition funding. So these growing segments require significant structuring expertise that we have at Coface, and thus limiting the competition. We are also the only one provider to provide the single, flexible offer for both factoring, financing and insurance. So the clients of us can, out of one hand, insure the whole portfolio and can choose to finance just certain geographies or sections of the business. So our clients can manage with Coface, their trade receivables portfolio end-to-end, which is a unique market proposition. On the risk, so we continue to use our local and international risk infrastructure, and we are also implementing advanced risk solutions to better mitigate the risk related to the insolvency of our clients, which is one of the important risks in the factoring business. In operational efficiency, we continue to increase operational efficiency by digitizing our operations. As you can imagine, with EUR 31 billion volume of purchased receivables with around 35,000 payment data processed daily, the efficiency of our operations is key. So we continue the process of digitization and automation of our core operations, payments, verification and client interfaces. But we also work on increasing synergies with our core business, with credit insurance while integrating our processes on claims management, client management and cross-sell. So this makes it simpler for our clients, but also more efficient for us. On equity optimization, the last pillar of our strategy, as capital requirement increases, we will continue to optimize the capital allocation. So first, we focus our growth on a higher yielded deals and so we position our current portfolio accordingly. And on top of that, we continue also to optimize the credit insurance enhancement of our factoring book, as you know, we insure our factoring book and make it compliant with Basel IV regulations. So all this will contribute to the turnaround of our return on equity. So to conclude, we are the only credit insurer in Germany to offer factoring, and create unique market proposition for our clients. This is a key differentiator for us and an opportunity to leverage our infrastructure with the core business, which is skill-based, risk management infrastructure, IT and our global footprint. So we have invested in this business, and we are working with our new leaders and the network of our experts to make factoring a strong contributor to profit and seize the growth opportunities on the German market. Thank you for your attention.

So I have the best part. Now to conclude the day. So I'm sure you understand everything, so my explanation, I'm sure, were very clear. Okay. You have seen that Fit to Win has been a great success. We met and even exceeded all our financial targets. And our new plans, Build to Lead, we have 4 years to taking us one step further and to even improve our financial targets and to improve more profitability in the long term. You have been explained during the days that the economy, the global environment won't be so easy, slowing growth, new rising risk disruption, environmental and so on. So we know that for us, it means that we have to face some risks. And that's why the strategy is clear. We will continue to improve our risk management. Cyrille explained to you, we will continue also to have a disciplined risk management. Having said that, the same environment create also some nice opportunities for us, proactive pricing approach. We will continue on yields. We know also that we may have a stronger demand when the corporate knows that they are rising risks, including the U.S. one, they may think that, now is a good time to be covered, then we may have opportunities, and that's why the plan also has been built, has been designed so that we are able to invest in geographies, where we think we can grow in a profitable way in some segments and so on. So the whole plan has been designed to tackle these opportunities. On top of that, we are starting that plan, I will say, clearly, in the better shape that Fit to Win, but also we have a very strong balance sheet. I will come back on it. And this strong balance sheet, we want to keep it during the plan. And that will be also a key asset for being able to meet or find our new increasing financial targets. So because of this global environment, which is moving agility, which was already in the core of Fit to Win is still the core for Build to Lead. And that's why when you look at the way we are expected to create value for the next 4 years, it's a kind of pool of multiple levers, multiple value creation levers. On trade credit insurance, on which we were more focused during the last [ 3 ] years, we will continue to be focused on it. We know that the activity of our client will be lower. It has already been the case in '19. I remind you that around half of clients' activity contribution in '19, if we compare with '18. So that's why the plan is clearly driven by commercial efficiency, client service, quality of our global commercial organization. So that we are less dependent on the activity of our own clients. What is new, and that the second pillar of the plan is adjusted specialties. Adjustments have been explained is that because we have already benefited from some synergies, particularly on the risk side in trade credit insurance. And that's why we are pulled also some -- added some initiatives, turnaround of factoring just explained by Katarzyna, invested on a selective way still in Single Risk in bonds in some selected countries. And something you know, which is very interesting from a return point of view, which is information if we find the correct way to do it. And that's our belief, because we don't need capital for that. So it can leverage also quite easily our return -- our future returns. So why will we do that? So all these several initiatives we have pulled to create value. And thanks to risk discipline, thanks to also operational leverage, we have decided that what you see here to review our financial target in term of combined ratio. We had, for the last 3 years, target of 83% of combined ratio through the cycle. And we have decided and we have the belief that we can reach now 80% through the cycle. So that's one of our first key positive improvement in term of financial targets. How to finance it? I heard this morning some questions around that. So it's a good question. Our approach remains the same. We make savings, and we grow in a profitable way to have the mean to invest. So no change. We continue what has worked. We continue to do it. So today, I announce you that we are launching a new saving plan, an additional saving plan of EUR 25 million for the years to come. First lever of the source of savings, process efficiency. We explained you a lot today, [ what sets ] of product simplification. We also want to leverage an existing shared service center. We will extend the scope of mission. And also, we are in the process of reviewing our finance operating model in the whole organization. So that will be the first lever of this saving plan. Second one is everything around, I would say, IT technology rationalization, decreasing the number of application, how to leverage an IT outsourcing and so on. So that's the second part, which will create additional saving. And finally, there are still some local efficiency measures. If you remember, in Q4 '19 results, we told you that we booked restructuring reserves, which was linked to Germany. So we have also, for instance, in Germany, some efficiency and local measures, which will be implemented. So all that, it's EUR 25 million additional savings. And thanks also to the expected profitability coming from the growth, we will maintain the current investment base. Here you have on this slide what is the share of these investments. Nearly 40% of investments will be dedicated to profitable growth. You -- Oscar explained you what we are currently doing in the U.S., also to invest in adjacent specialties. So that will be nearly 40% of investment. You have around 23%, which will be dedicated to technology. So all what we want to do also to improve ourself. 20% operational efficiency. When I told you before that we have a plan to have some savings for our shared service center, but first, you need to invest so that you can make the transfer of mission, just to give you one example. And finally, around 15% on risk, compliance, underwriting, regulatory. You know that we are in an environment where regulatory is more and more demanding. I just quote one, and I'm sure you know them, because you follow -- you know that we have to implement IFRS 17. So it's a small investment to do on that field. So that's why we still have some investments. So that allow us all the way we are structured. You see exactly the same Fit to Win to review globally our combined ratio, and that will be the key to improve our final target of return on average tangible equity. And I tell you that, because it's a good transition on -- to speak with you on financial investment portfolio. You know we have an investment portfolio a little less than EUR 2.9 billion. We have decided to keep the same investment principles. I think it's very, very important. We already have optimized our allocation. Some examples, we have fully redeployed our real estate program. We are optimizing our cash position. But we don't want to chase yield at the detriment of the risk, particularly in the environment we have described you during the day. So we'll maintain investment discipline, with an increasing focus on ESG. Xavier told some words this morning. We have around 80% of our books, which are rated. And we have decided not to invest anymore in what is called G category. You know that the ranking is the poorest ranking. So we decided not to go anymore in that kind of -- that line of assets. So financial investment, I will say, no news on that respect, because we do believe that we prefer to keep the capital we have on operation rather than put it in on the financial portfolio. So as a consequence, as long as the environment and I think it is what more or less is expected by everyone of low interest rate environment and considering our share of bonds in our portfolio, we are expected that the contribution to the financial income, to the global operating profit of Coface will decrease. We have estimated that it will represent a decline by around 100 basis points of return in Build to Lead to compare with Fit to Win. So it's on purpose we are doing that, because -- and I'll come back really on that. The capital we have, because we have capital, we want to deploy it on the business and the operations. In term of capital, we haven't spoken a lot on that, but I'm sure you know and -- that we already have a nice payout for the last few years. We already have returned EUR 390 million to shareholders, while improving our solvency ratio around 140%, 190%, so 40-point increase in 4 years' time. A little less than half and Partial Internal Model and -- a little half, because we have optimized reinsurance, because we have worked on the formula and because also we have improved the business and the loss ratio and you have, that seen. So very, very strong position and payout policy, attractive in our view. And I think also what is key now, if we look forward, is that we do consider that we have the proper way to calculate our solvency need, particularly following what we have had with the Partial Internal Model, but also what we have done with factoring in terms of optimization. And so we have a new capital requirement, which is closer to economic reality. Here, I remind you what we have at the end of '19, so 190%. And you see that around 2/3 of our needs are for insurance and one -- a little less than 1/3 for factoring. On Partial Internal Model, Xavier told you, Cyrille told you, it's a question of capital, and I will come back finally at the payout ratio policy evolution. But it's really also something that we will use and we are expected on that, that it could help also to improve the profitability of the business. Here in that slide I just mentioned how we have measured thee projects, okay, because it was a great success, but not only just to show you that 80 persons have been involved, not only actuarial financial people, but risk underwriter, commercial underwriter, BT people. We have been able to rebuild the 20 years of data of history, which is also an asset, 3,000 segment analyzed, more than 500,000 simulations. So a lot of work has been done. And thanks to that, the way we are thinking of how we will use it is, it was, I think, also one of your question, better capital allocation in term of pricing per segment, per countries and per type of risk of clients. We also will be able to better review our risk appetite and some dedicated risks. So we will adjust that and also differentiate in a certain way the -- our growth appetite. We already have used it for reinsurance. You have seen that we have decided to reduce our quota share starting this year from 26% to 23%. So it's -- we say the first output of Partial Internal Model in term of business decision. Okay. Clearly, higher capital means that, okay, we will see -- it allow us to support organic growth. So it's a good news. We have the capital we need for expected growth for the next 4 years. We also have room from some bolt-on M&A, as we did last year, when we bought Coface PKZ in Slovenia, when we also have announced the acquisition of a company in Norway. So we have also room for this kind of deals as long as we do believe that they are interesting. And finally, we also -- this level of capital allow us to improve our guidance in term of capital return with still what you know in term of comfort scale. In Fit to Win, we stated that as long as we were in the comfort scale, we have a target of minimum 60% of payout ratio, and we have improved that target from 60% to 80% in a newly target range, which is between 155% to 175%. It allow us to also keep our capital principals, meaning high rating profile, being able to support the growth of the plan, which are key, I would say, pillars of our capital management policy, also enable us to face any future economic cycle changes. And the new target range has also been revised to take into account the change of shareholder structure, which has been announced this morning following the request of the French regulatory body. So all in, an increasing target payout ratio above or equal 80% distribution over the plan. So when you combine this improved combined ratio, when you combine also the fact that we expected lower investment income, you see that our target improved in term of return on average tangible equity. We come from, let's say, 8% plus 1%, so 9%. That was the target of Fit to Win. Improving combined ratio will be positive to this return. Lower investment income a little negative. But all in, we go from 9% to 9.5%, which are the new target for Build to Lead for the years to come. To summarize the last financial targets, Xavier already show you, but it's, let's say, a circle, if we can say, something which is virtuous and positive. 80% combined ratio coming from 83%. Return on average tangible equity at 9.5% coming from 9%. Payout ratio above 80% coming from 60%. And the new target range, which is now between 155% and 175%. So all our financial targets, as when I start my speech, have increased in Build to Lead. So let's start with new adventure and open for questions.

If I go back to the Fit to Win ROE target of 9%, it was 8% operational and then 1% from capital optimization, I think you said on the full year call that you've only done 60 bps of that 100 bps. So if I roll forward to the new strategy, the incremental -- and you actually delivered the 9%, the incremental improvement is all operational-driven, given the strength of your capital. Why shouldn't we be thinking about 9.9% rather than the 9.5%? And then my second question is on the factoring business. The 22% margin in Germany on that business, I think, it's 44% in Poland, how much scope is there for -- where can those margins get to potentially? I mean how should we be thinking about those trending going forward? And can you just remind us on the capital requirements on that business? I think it's 10.5% on the RWA now. But is that 10.5% stable, or is it increasing going forward?