Coface SA's Data-Driven Pivot: Can Credit Risk Analytics Fuel Long-Term Growth?

Coface SA, a global leader in trade credit insurance, has embarked on a strategic pivot to position itself as a dominant player in the data-driven credit risk analytics market. Over the past two years, the company has doubled down on its Business Information (BI) services, which now form the cornerstone of its "Power the Core" strategy (2024–2027). The question for investors is: Can this shift to data-driven tools sustainably boost growth and justify its current valuation?

### The BI Growth Engine: Double-Digits and Synergies
Coface's BI division—home to tools like ICON and its API-based risk assessment platforms—is its crown jewel. The division has already delivered 13% average annual growth since 2019, and management aims to accelerate this to double-digit rates in the coming years. The strategy hinges on three pillars:

1. Tech Modernization: Investing in AI, generative models, and real-time data integration to enhance risk scoring.
2. Client Ecosystem Expansion: Scaling platforms like CofaNet and Broker Portal to offer seamless access to risk analytics.
3. Synergy with TCI: Leveraging its global trade credit insurance infrastructure to cross-sell BI tools.



The BI segment is a capital-light growth driver, requiring no regulatory capital and contributing 50 basis points to ROATE by 2027. This contrasts sharply with its core TCI business, which faces pricing pressures (-1.3% in Q1 2025) and rising loss ratios (up to 39.1% due to geopolitical risks).

### Financials: Growth vs. Headwinds
Coface's Q1 2025 results offer a mixed picture. While BI revenue surged 14.7% (18.4% at current FX), TCI revenue grew only 1.2%, dragged down by flat pricing and macroeconomic uncertainty. The net combined ratio rose to 68.7%, though it stabilized sequentially, suggesting underwriting discipline.



The key metric to watch is ROATE, which stood at 12.7% in Q1—a solid figure but below the 14.1% consensus forecast. Analysts project ROATE to dip slightly to 12.5% in 2025 before rebounding, as BI contributions ramp up. Meanwhile, the solvency ratio (197% in 2025) remains robust, providing a buffer against volatility.

### Valuation: Attractive or Overhyped?
Coface's shares (ticker: COF) have lagged peers like Euler Hermes (part of Allianz) amid macroeconomic uncertainty. A shows the stock is down ~15% over three years, underperforming the index.

At current levels, the stock trades at 10.4x forward P/E, below its five-year average of 12.5x. However, the BI growth narrative must materialize for this discount to narrow. Key risks include:

- Pricing pressures in TCI, which could eat into margins.
- Rising loss ratios due to global trade policy shifts (e.g., U.S. tariffs) and regional insolvency risks (notably in CEE).
- Competition from tech-native firms like Moody's or S&P Global, which may undercut Coface's analytics edge.

### Investment Thesis: A Risky Bet on Data Dominance
Coface's pivot is compelling but far from guaranteed. The BI segment's scalability—with its 14.7% growth and capital-light model—could be a tailwind, especially as businesses demand better risk tools in an era of "permacrisis." The integration of AI and APIs (e.g., the Coface API Catalogue) positions it well for enterprises seeking real-time risk monitoring.

However, investors must weigh this against near-term risks. The stock's valuation is reasonable, but execution is critical. A buy-and-hold approach might be suitable for long-term investors willing to bet on Coface's data-driven future, but traders should await clearer signs of margin stabilization.

In short, Coface's shift to data analytics is a high-stakes gamble. If it succeeds, it could unlock a new era of growth. If not, the stock's valuation—while cheap—may remain under pressure. For now, the jury is still out.

Final Note: Monitor Q3 2025 results for BI revenue trends and updates on the net loss ratio. A stabilization in TCI pricing could also be a catalyst.