Versicherungswirtschaft: Mr. Durand, the French team is one of the fancied teams for the World Cup this year. Which team do you root for?
Hopefully France will not face Germany.
As for Germany, even though my football allegiance is with France, I’m immensely proud of our position in this major market, one of the world’s biggest export nations. We’ve been present here serving companies since 1932 and we remain just as committed to the German market today. In fact we are the only player in Germany to offer the full range of credit and management services – credit insurance of course, but also factoring, bonding and information.
The world is becoming more complex and it’s certainly not Coface‘s role to predict the future geopolitical landscape. But I would say that amidst the strong world powers – the US and China notably - Europe has to stand for itself.
Switch to some more serious topics. The main economies face increasing nationalism and protectionism. What do you make of it?
How are credit insurers affected?
It’s only natural that, as credit insurers, we are impacted by protectionism: after all, our business is all about trade. We are for trade. Rising protectionism and political risk are part of what we have to monitor. However, our job is not to predict outcomes but to leverage our finely meshed international network to monitor debtor and other risks (under a close to the risk model) in order to help companies everywhere they operate - our clients - to be ready for any number of different scenarios. We want to act in partnership with our clients so they can better protect their businesses and build successful, growing dynamic enterprises whatever happens in 200 countries around the world. Coface‘s ambition is to be the most agile global credit insurer in the industry; and so adapting with agility to the changing geopolitical and sectorial risk landscape is simply what we must do.
Syria conflict, sanctions, deficits in the local markets and now the mega event World Cup. Where is Russia heading?
What I can say is that Russia has returned to economic growth, despite sanctions, which are estimated to have had a cumulative impact of 1% on GDP. The fall in oil prices; the main reason behind the 2015-2016 recession, has been partially reversed. Business confidence is returning. Coface estimates that GDP growth for the Russian Federation will be 1.8% this year. This brighter macroeconomic picture is reflected in our sector risk assessment, where we have upgraded three sectors: chemical, paper and construction. It’s not an easy place to do business, but Coface is active in Russia and can support and guide companies who want to develop there.
What are the main problems in Russia?
Russia has been attempting to diversify its economy to lessen its dependence on oil, and it is recovering, as I just said. We upgraded our assessment of the country to B last year. We expect household consumption to again be a main contributer to growth in 2018 (Coface estimate:1.8%). The country has low budget and account deficits, and political stability – in fact, the crisis in Ukraine, sanctions and aggressive international activitism have strengthened the popularity of Vladimir Putin, who can, in addition, claim to be the architect of economic recovery. Reforms are likely to occur after the recent March elections which could improve a mediocre business environment marked by state interventionism, random execution of contracts, relative respect for property rights and administrative delays.
Coface is everywhere in the world close to its customers. Can you sometimes act as a mediator in times of political and economic crisis?
I would say our purpose is to be there for our clients, to act for trade, which we see as a force for good in the world, contributing to prosperity and stability. Our job is to monitor and analyse risk and to provide insights to our clients so they can evaluate risks and opportunities, navigating economic downturns or anticipate growth. In short, to make the right commercial decisions. We don’t carry any political weight; we are not mediators in times of crisis – but we will help guide your business through one.
How do you see the future of credit insurance?
I don’t have a crystal ball but I can tell you that the future will see growth, trade, risks….So the future of credit insurance looks bright. The question is how we will perform in managing or balancing these factors. How can we provide a service that best meets the needs of companies of all sizes and sectors? The industry has been historically good at serving large companies, but no doubt less efficient at providing a service that really meets the needs of medium- and small-sized companies: services that are readily accessible and easy to manage. Under our 3-year strategic plan launched in 2016, Fit to Win, Coface is making targeted investments to adapt quickly to the challenges digitalisation poses: we’re adapting our processes, systems and tools to make the most of new digital evolutions and looking at ways we can harness artificial intelligence, big data to do our job faster and better… all in the interests of improving the quality of our client service…A client who in a digital and ever-changing world needs shorter response lead times, high-quality information, state-of-the-art service: who demands agility, in short. And of course, we firmly believe that being close to the risk is critical: Coface is the most international of the three global credit insurers, with direct or indirect presence in 100 countries across the world, and we intend to leverage that our unique, finely meshed network, to continue to serve companies whatever their size and wherever they operate.