Interim financial report, First-half 2016

This document is a free translation of the Coface Group's Financial Report ("Rapport Financier, Premier semestre 2015"). The financial report, in its original French version, is publicly available at www.coface.com. This free translation is provided for the convenience of English-speaking readers only.

NOTE

COFACE SA (hereinafter, the "Company") is a société anonyme (joint-stock corporation), with a Board of Directors (conseil d'administration) incorporated under the laws of France, and is governed by the provisions of Volume II of the French Commercial Code (Code de Commerce). The Company is registered with the Nanterre Trade and Companies Register (Registre du Commerce et des Sociétés) under number 432 413 599. The Company's head office is at 1 Place Costes et Bellonte, 92270 Bois Colombes, France. Unless otherwise stated, references in this document to the "Group" or the "Coface Group" are references to the Company and its subsidiaries, branches and holdings.

At the date of June 30, 2016, the Company's share capital amounts to €786,241,160, divided into 157,248,232 shares, all of the same class, and all of which are fully paid up and subscribed.

Presentation of financial and other information

This report includes free English language translations of the audited consolidated financial statements of COFACE SA as of and for the year ended December 31, 2015 and of the audited interim condensed consolidated financial statements of COFACE SA as of and for the six months ended June 30, 2015 and 2016. The annual consolidated financial statements were prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"). The audited interim condensed consolidated financial statements were prepared in accordance with International Accounting Standard ("IAS") 34, the IFRS standard as adopted by the European Union applicable to interim financial statements. COFACE SA publishes its consolidated financial statements in euros. Sum of aggregates and totals may not match due to rounding.

COFACE SA presents certain figures on both an actual historical basis and, in some instances, on a "constant scope of consolidation" or "constant exchange rate" basis. In this report, where figures are presented at a constant scope of consolidation, the previous year's figures (N-1) are adjusted to reflect the entities that enter or leave the scope of consolidation during the most recent year (N). COFACE SA believes providing figures on a constant exchange rate and constant scope of consolidation basis is helpful in permitting investors to analyse and understand the effect of exchange rate fluctuations and changes in the scope of consolidation on its financial results. However, figures provided on this basis are not measurements of performance under IFRS and should not be considered in isolation from or as a substitute for the IFRS figures.

Forward-Looking Statements

This report includes forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes," "estimates," "anticipates," "expects," "intends," "may," "will" or "should" or, in each case, their negative, or other variations or other comparable terminology. These forwardlooking statements relate to all matters that are not historical facts and should not be interpreted as a guarantee of future performance. They appear in a number of places throughout this report and include statements regarding COFACE SA's intentions, beliefs or current expectations concerning, among other things, COFACE SA's results of operations, financial position, liquidity, prospects, growth, strategies and the industries in which the Coface Group operates.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. In addition, even if COFACE SA's financial position, results of operations and cash flows, and the development of the industry in which it operates, are consistent with the forwardlooking statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause those differences include, but are not limited to the risks described in paragraph 2.4 "Report from the Chairman of the Board of Directors on corporate governance, internal control and risk management procedures" and in chapter 5 of the registration document filed by the French Financial Markets Authority (Autorité des Marchés Financiers) on April 13, 2016 under the number R.16-020.

Risk Factors

You are strongly encouraged to carefully consider the Risk Factors described in the registration document filed by the French Financial Markets Authority (Autorité des Marchés Financiers) on April 13, 2016 under the number R.16-020. The Risk Factors of the said documents describe all risks which are likely to have a material adverse effect on the business, financial position and/or operating results of the Coface Group. Additional risks that are not known at the date

of this report, or that the Coface Group currently considers immaterial based on the information available to it, may have a material adverse effect on the Coface Group, its business, financial position, operating results or growth prospects as well as on the market price of COFACE SA's shares listed on Euronext Paris (ISIN: FR0010667147).

All this information is available on the websites of the Company (www.coface.com/Investors) and the AMF (www.amffrance.org)

I.		Half-year activity report 8
	a)	Economic environment in the first half-year 8
	b)	Significant events in the period8
	c)	Events after June 30, 2016 10
	d)	Comments on the results at June 30, 2016 10
	e)	Group cash and capital 22
	f)	Risk Factors 24
	g)	Future risks and uncertainties 25
	h)	Outlook 25
II.		CONSOLIDATED FINANCIAL STATEMENTS 28
		Consolidated balance sheet 28
		Consolidated income statement 30
		Consolidated statement of comprehensive income 31
		Statement of changes in equity 32
		Consolidated statement of cash flows 33
III.		Notes to the consolidated financial statement 36
		Basis of preparation 36
		Note 1. Significant events 37
		Note 2. Goodwill 39
		Note 3. Other intangible assets 39
		Note 4. Insurance business investments 39
		Note 5. Receivables arising from banking and other activities 44
		Note 6. Investments in associates 44
		Note 7. Cash and cash equivalents 44
		Note 8. Share capital 44
		Note 9. Provisions for liabilities and charges 45
		Note 10. Financing liabilities 45
		Note 11. Liabilities relating to insurance contracts 46
		Note 12. Payables arising from banking sector activities 46
		Note 13. Consolidated revenue 47
		Note 14. Claim expenses 48
		Note 15. Overheads by function 49
		Note 16. Income and expenses from ceded reinsurance 49
		Note 17. Investment income, net of management expenses (excluding finance costs) 50

	Note 18. Other operating income and expenses 50
	Note 19. Breakdown of net income by segment 51
	Note 20. Earnings per share 54
	Note 21. Off-balance sheet commitments 54
	Note 22. Related parties 55
	Note 23. Events after the reporting period 57
IV.	Key Indicators 60
V.	Statutory auditors' review report on the half-yearly consolidated financial statements 72
	VI. Statement of the person responsible for the financial statements 76
	VII. Appendix : Calculation of financial ratios 79

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I. Half-year business review

I. Half-year activity report

a) Economic environment in the first half-year¹

As in each quarter, the Coface Group economic research team adjusted in June its global growth forecasts for 2016; it also presented its first growth forecasts for 2017. Coface confirms the continuing recovery in the eurozone (and in Europe in general), albeit at a modest level (stable growth rate at 1.7%). Despite expectation of a slight rebound this year, activity should continue slowing down in the major emerging countries.

According to Coface Group forecasts, global growth should reach 2.5% in 2016, versus 2.6% in 2015. Several factors can explain this persistently sluggish growth: the US and the UK have reached the turnaround point, growth in Japan is likely to remain weak (downgraded to A2), China will continue to slow down and, more generally, all areas worldwide (except the eurozone and North Africa – Middle East) will report shrinking growth.

The major countries in the eurozone will report better performances than the previous year, except for Spain. As such, Coface has upgraded France and Italy (to A2 and A3 respectively). Household consumption and private equity will continue to be the leading growth engines. Low oil prices (positive effect on company margins), budgetary loosening (Spain, France) and the ECB's ultra-accommodating policy will fuel purchasing power and boost household and investor confidence. Moreover, the ECB may decide to further extend its asset buying programme as a result of the Brexit decision. The uncertainty around the UK's decision to leave the EU might however have a negative impact on investor confidence, as shown by the historically low levels reached on the bond market. The UK's growth outlook has therefore been lowered to 1.2% in 2016 (versus 1.8% before Brexit).

In the US, the activity slowdown (1.8% in 2016 versus 2.4% in 2015) has already led to the deterioration of the financial situation of companies (downgraded to A2). The number of defaults rose in the first quarter of 2016 (+0.3%) and profits declined significantly (-6% in one year). There were fewer job creations than usual while the employment rate continued to fall.

With respect to emerging countries, activity is expected to be less dynamic due to the difficulties encountered by most BRICS. The recession is likely to persist in Brazil and Russia this year (-3.4% and -1.5% expected in 2016 respectively –Brazil has been downgraded to C-), South Africa will hit a trough since 2009 (0.6% this year) while South-East Asia is likely to be affected by the Chinese downturn (as shown by Coface's downgrading of China, South Korea, Hong Kong, Singapore and Taiwan). Only India seems capable of maintaining a sustained pace of growth (7.5% in 2016). For other emerging countries, low commodities prices, especially oil prices, will continue to affect a large number of them such as Nigeria, Angola, Algeria, Ecuador and Azerbaijan. Against this background, Coface has downgraded several countries adversely impacted by the persistently low oil price: Canada, Saudi Arabia, United Arab Emirates, Qatar, Algeria and Angola.

b) Significant events in the period

Changes in governance

Coface's Board of Directors held a meeting on January 15, 2016, under the chairmanship of Laurent Mignon, and appointed Xavier Durand as the new Chief Executive Officer (CEO). This appointment became effective at the end of the Board of Directors' meeting of February 9, 2016 which approved the 2015 financial statements. Mr. Jean-Marc Pillu acted as the Chief Executive Officer (CEO) of Coface until that date.

The severance payment of Mr. Jean-Marc Pillu, granted by the Board of Directors' meeting of January 15, 2016, amounts to €1,979 thousand and will be recorded in the income statement of the year-end 2016.

¹ Group's estimations updated on July 11th 2016.

New regional organisation

The Coface Group Executive Committee decided to review the organisation in Europe in order to rebalance the regions and make them more coherent from a geographical viewpoint.

The regional organisation of the Coface Group has changed as follows:

Spain and Portugal, formerly part of Western Europe, are now managed by the Mediterranean & Africa region;
Russia, previously included in the Northern Europe region, is managed by Central Europe region.

Contingent Capital

On February 9, 2016 Coface established with BNP Paribas Arbitrage a contingent capital line of €100 million, for a period of three years (that may be reduced to two years at the discretion of COFACE), available in one tranche and that may be exercised in the event of certain extreme events.

The contingent capital line supplements the existing capital management and solvency tools by offering an effective and competitive solution in terms of costs (annual commission of 0.50%). It is part of a conservative capital management strategy in connection with pillar 2 of Solvency II and allows the Group to reinforce its financial strength to protect its business against extreme risks.

Management of State export credit guarantees

The French State informed Coface that the transfer of State export credit guarantees can only be completed after the adoption of the 2016 amending Finance Act.

Coface recalls that the French State and the Group have agreed on a pre-tax amount of €89.7 million payable to Coface for the transfer of this activity. The non-recurring gain after deducting immediate impairment provisions (estimated at €16.3 million before tax at December 31, 2015) may be recognised for financial years 2016 or 2017, depending on the effective date of the transfer.

Financial strength affirmed by rating agencies

On June 10 and May 23, 2016, rating agencies Fitch and Moody's reconfirmed the Group's Insurer Financial Strength (IFS) Ratings at AA- and A2 (stable outlook), respectively.

Appointment of directors

In the context of its new strategy deployment, Coface has decided to strengthen its teams within the first half of this year.

Three newly positions have been created:

Thibaut Surer as Strategy & Business Development Director in charge of strategy, development, marketing and innovation. He is now a member of the management committee and executive committee.
Valérie Brami as Chief Operating Officer in charge of information systems, organisation and process improvement. She joins the management committee and the executive committee in this capacity.
Pierre-Emmanuel Albert as Group Head of Business Processes Transformation

As well as:

Bhupesh Gupta Chief Executive Officer of the Asia Pacific region. He joins the Group executive committee.

Thierry Croiset, Risk Director, Thomas Croiset will join Coface on September 2016 as Investors Relations and rating agencies Director. They will both report directly to Carine Pichon, Chief Financial & Risk Officer.

Referendum of June 23rd 2016: Brexit :

The vote that took place on June 23rd 2016, in favour of the United Kingdom's exit from the European Union , had as immediate consequence the drop of the pound, the increase of uncertainties and the volatility of the financial markets.

In the short term, the Group anticipates that this increase of risk will weaken specific sectors and has taken measures to adjust its exposures (debtors engaged in Commodities / Commodity Trading, Contractors in the Construction Sector & related, Recruitment Policies, Importers).

The Group has also taken adjustment measures on its exposure to financial risks.

In the medium-term, Coface believes that the consequences of the referendum, especially the trade agreement negotiation between the United Kingdom and the European Union, will play a decisive role in the future risks' evolution and it is adjusting its monitoring of risks accordingly.

c) Events after June 30, 2016

There has been no significant change to the Group's financial or commercial position since June 30, 2016.

The Board of Directors' meeting of July 27, 2016 decided to reduce the par value of the share from €5 to €2. The purpose of this operation is to redefine the value of the share and bring it to a level comparable to that of most peer companies.

Accordingly, the share capital is reduced by €471,744,696 and has dropped from €786,241,160 to €314,496,464. This decision does not change the number of shares comprising the share capital, namely 157,248,232 shares.

d) Comments on the results at June 30, 2016

i. Revenue

The Group's consolidated revenue fell 5.7%, from €760.3 million as of June 30, 2015 to €716.7 million as of June 30, 2016. It was down 3.4% on a constant group structure and exchange rate basis.

The negative foreign exchange impact of -2.3 percentage points is mainly linked to devaluations of the Argentinean peso, Brazilian real and the pound sterling.

The table below shows the changes in the Group's consolidated revenue by activity as of June 30, 2015 and 2016:

Consolidated revenue by business	At June 30		Change
line (in millions of euros)	2016	2015	in €m	%	% (Like-for-like)
Insurance	681.9	724.7	-42.8	-5.9%	-3.5%
Gross earned premiums	565.7	603.0	-37.3	-6.2%	-3.4%
Services*	116.1	121.6	-5.5	-4.5%	-3.9%
Factoring	34.9	35.6	-0.8	-2.2%	-1.5%
Consolidated revenue	716.7	760.3	-43.6	-5.7%	-3.4%

*Sum of revenue from services related to credit insurance ("Fees and commission income" and "Compensation for public procedures management services") and services provided to customers without credit insurance (access to information on corporate solvency and marketing information ("Information and other services") and debt collection services ("Receivables management")).

Insurance

Revenue from the insurance business (including surety bond and Single Risk) dropped 5.9% (-3.5% on a constant group structure and exchange basis), from €724.7 million as of June 30, 2015 to €681.9 million as of June 30, 2016.

Gross earned premiums dropped by 6.2% (-3.4% on a constant group structure and exchange rate basis), from €603.0 million as of June 30, 2015 to €565.7 million as of June 30, 2016. The decline of gross earned premiums can be explained by the sluggish sales activity in the most mature regions (Western Europe and Northern Europe). In Asia, the commercial portfolio was reviewed to improve loss ratio management.

The production of new contracts, totalling €81 million (in annual value) in the first half of 2016, was down 5% compared to the half-year ended June 30, 2015 (€84.8 million). This decline is linked to the weak commercial performance in Asia and the United States, and the decline in the production of new CGS (Coface Global Solutions) contracts. The retention rate of contracts (ratio between the annual value of renewed policies during the half-year and the annual value of policies to be renewed during the same half-year) remained high at 90.2% as of June 30, 2016 versus 88.0% as of June 30 2015 during which the Coface Group faced fierce competition with pressure on prices. The "client business volume" component contributed to the growth of our portfolio but to a lesser extent (-82% compared to the first half of 2015). The price effect recorded on credit-insurance contracts was -1.8% as of June 30, 2016, versus -2.7% as of June 30, 2015.

Revenue from the services business dropped by €5.5 million, from €121.6 million as of June 30, 2015 to €116.1 million as of June 30, 2016, i.e. -4.5% (-3.9% on a constant group structure and exchange rate basis) primarily linked to the drop in debt collection income in Central Europe.

Factoring

Revenue from the factoring business (in Germany and Poland only) dropped 2.2% (-1.5% on a constant group structure and exchange rate basis), from €35.6 million as of June 30, 2015 to €34.9 million as of June 30, 2016.

Germany recorded a 3.2% drop in business, as a result of the decline in purchased receivables combined with a negative price effect on the interest margin and a drop in factoring fees. The portfolio's contraction can be explained by cancellations and the business slowdown for our customers.

Factoring in Poland dropped 5.5% (+11.5% on a constant group structure and exchange rate basis) owing to the commercial deployment of the activity in the first half which fuelled the growth of the receivables portfolio and an increase in interest income.

Changes in revenue by region*

The following table shows the changes in consolidated revenue (net of intra-group flows) within the Group's seven geographic regions as of June 30, 2015 and 2016:

	At June 30		Change
Change in consolidated revenue by region of invoicing (in millions of euros)	2015	2014	in €m	%	% (constant exchange rate basis)	% (like-for like)
Western Europe	167.0	187.5	-20.5	-11%	-10%	-10%
Northern Europe	158.2	165.9	-7.8	-4.7%	-4.7%	-4.7%
Mediterranean & Africa	166.3	178.8	-12.6	-7.0%	-5.2%	-5.2%
North America	68.9	66.3	2.6	3.9%	5.2%	5.2%
Central Europe	61.3	62.2	-0.9	-1.4%	2.0%	2.0%
Asia-Pacific	55.5	56.7	-1.1	-2.0%	-1.5%	-1.5%
Latin America	39.5	42.9	-3.3	-7.8%	14%	14%
Consolidated revenue	716.7	760.3	-43.6	-5.7%	-3.4%	-3.4%

*The composition of the regions was modified on April 11, 2016 and led to certain adjustments. Portugal and Spain, which were initially included in Western European, were transferred to the Mediterranean and Africa.Russia, initially included in Northern Europe, was transferred to Central Europe.

All regions reported a drop in revenue, with the exception of North America (+5.2% on a constant group structure and exchange rate basis), Latin America (+14% on a constant group structure and exchange rate basis) and Central Europe (2.0% on constant group structure and exchange rate basis).

In Western Europe, revenue was down 11% (-10% on a constant group structure and exchange rate basis) due to a slowdown in commercial activity and strong pressure on prices. In particular, the revenue generated by Single Risk2 dropped sharply in Western Europe (-42% half-year on half-year). Remuneration for Public Guarantees dropped €2.7 million.

In Northern Europe, revenue declined by 4.7% (-4.7% on a constant group structure and exchange rate basis). The commercial reorganisation launched in 2015 within the region's prime contributor, Germany, has not yet borne fruit. Factoring revenue was down 3.2% in Germany.

However, the services business rose by 5.3%.

Central Europe reported a 1.4% drop (+2.0% on a constant group structure and exchange rate basis): premiums were slightly up 0.6% (+4.0% on a constant group structure and exchange rate basis), especially in Romania and Poland due to buoyant commercial activity. Meanwhile, related services dropped by 13.4% (-13% on a constant group structure and exchange rate basis). Debt collection was down (-22.6% on a constant group structure and exchange rate basis) as a result of the activity slowdown, especially in Romania. The information selling business (-7.3% on a constant group structure and exchange rate basis) was impacted by strong pricing pressure. Revenue from the factoring business was up 11.5% on a constant group structure and exchange rate basis. The strong commercial development in the first half of 2016 boosted the growth of the receivables portfolio and generated additional income.

Revenue for the Mediterranean & Africa region dropped 7.0% (-5.2% on a constant group structure and exchange rate basis) especially in Italy (-6.5% of earned premiums), Spain (-22% of earned premiums) and South Africa (-7% of earned premiums). This drop is primarily due to the recording of non-recurring income in the first half of 2015 in Italy.

Services were down 7.9% (-8.8% on a constant group structure and exchange rate basis).

In Northern America, revenue was up 3.9% (+5.2% on a constant group structure and exchange rate basis).

In Latin America, we noticed a 14% increase in revenue on a constant group structure and exchange rate basis. This growth was primarily fuelled by the high inflation observed in the region. Apart from this effect, the trend was stable. Foreign exchange had a huge impact on the region's revenue considering the fluctuations of the Argentinean peso and the Brazilian real.

Asia-Pacific reported a 2.0% drop in revenue (-1.5% on a constant group structure and exchange rate basis). This drop can be explained by two effects: a drop in revenue from the Single Risk offer (-45% on a constant group structure and exchange rate basis), and poor commercial performance in Japan and China.

ii. Underwriting income

Underwriting income before reinsurance

Underwriting income before reinsurance dropped €74.9 million like-for-like, from €103.3 million as of June 30, 2015 to €28.3 million as of June 30, 2016. This change can be explained by two effects: a drop in revenue (- €43.6 million) combined with an increase in loss experience (€40.9 million).

The combined ratio before reinsurance amounted to 94.2%, up by 12.5 percentage points, the loss ratio rose 10.6 percentage points together with the cost ratio (+1.9 percentage points), primarily due to a significant drop in revenue, especially in earned premiums (-€37.3 million).

² The Single Risk offer is for financial companies and institutions exposed to commercial and political risks through one-off, complex transactions, for a high amount (exceeding €5 million).

Loss experience

Loss experience ratio before reinsurance dropped by 10.6 points, falling from 51.3% as of June 30, 2015 to 61.9% as of June 30, 2016. This deterioration can be explained by the much higher than expected increase in risks on emerging countries. The deterioration led to the development of losses in emerging countries at a much higher level than anticipated, equally affecting the loss experience of exporting companies located in mature countries. We also recorded a higher average cost of loss, combined with longer recovery times in these emerging regions. The five sectors most affected by this increase in loss experience were the metallurgical and chemical industries, raw materials, textiles and agriculture.

Loss experience		At June 30	Change
(in millions of euros and %)	2016	2015	in €m	%
Claims expenses incl. claims handling costs	350.1	309.1	40.9	13.2%
Loss ratio before reinsurance	61.9%	51.3%	0.1	10.6 ppts

Earned premiums	565.7	603.0

In Western Europe, the loss ratio was up 4.9 percentage points: from 34.4% as of June 30, 2015 to 39.3% as of June 30, 2016). Major losses were recorded in France and in Switzerland especially in the second quarter of 2016.

In Northern Europe, the loss ratio deteriorated to 58.4% (+25.1 points): losses were reported in the first half, in Germany in particular and in the Netherlands in the industrial sector. In Germany, late losses were reported in the last half of 2015, the loss ratio began to increase from the third quarter of 2015.

The loss ratio for the Mediterranean & Africa region rose by 5.2 percentage points to 52.5%. Spain was impacted by a major loss in the second quarter of 2016. The loss ratio of Turkey was up given the unstable economic and political environment.

In North America, the loss ratio rose sharply to 86.2% (+30.2 percentage points), due to the recording of major losses in the United States, in the industrial and services sector and the late reporting of losses that occurred in 2014.

Central Europe presented a loss ratio down to 46.5%, a significant improvement over June 2015 (- 54.4 percentage points). The action plans implemented in early 2015 in Russia bore fruit and helped to improve the loss ratio.

In Latin America, the loss ratio stood at 60%, up by 10 percentage points compared to the half-year ended June 30, 2015 (70.7%), constant improvement on all countries in the area especially in Argentina and Columbia. However, the situation continues to give cause for concern in Brazil (political instability and recession).

Asia Pacific recorded a loss ratio of 127.1% and significant losses have been recorded in Australia, Singapore and in Hong-Kong since the fourth quarter of 2015. Provisions were recognised in particular for losses linked to the "Single Risk" product in the first half of 2016.

Change in loss by region of invoicing	At June 30		Change (% points)
(in %)	2016	2015
Western Europe	39.3%	34.4%	5pts
Northern Europe	58.4%	33.3%	25.1pts
Mediterranean & Africa	52.5%	47.2%	5.2pts
North America	86.2%	56.0%	30.3pt
Central Europe	46.5%	100.9%	-54.4pts
Asia-Pacific	127.1%	72.2%	54.8pts
Latin America	60.0%	70.7%	-10.7pts
Loss ratio before reinsurance	61.9%	51.3%	10.6pts

Overheads

(in thousands of euros)	At June 30, 2016	At June 30, 2015
Internal overheads	274,725	281,698
Of which claims handling expenses	12,807	13,854
Of which internal investment management expenses	990	1,102
Commissions	75,188	79,221
Total Overheads	349,913	360,919

Total overheads including claims handling expenses and internal investment management expenses dropped by 3.0% (-1.1% on a constant group structure and exchange rate basis) from €360.9 million as of June 30, 2015 to €349.9 million as of June 30, 2016.

Policy acquisition costs were down 5.1% (-2.8% on a constant group structure and exchange rate basis) from €79.2 million as of June 30, 2015 to €75.2 million as of June 30, 2016. This change can be partly explained by the premiums earned between June 30, 2015 and June 30, 2016. It is also primarily driven by reinsurance fees, down in North America in particular.

Internal overheads including claims handling expenses and internal investment management expenses dropped by 2.5% (-0.6% on a constant group structure and exchange rate basis) from €281.7 million as of June 30, 2015 to €274.7 million as of June 30, 2016.

Payroll expenses rose by 1.4% from €153.5 million in the half-year ended June 30, 2015 to €155.6 million on June 30, 2016 (+3.3% on a constant group structure and exchange rate basis).

IT costs decreased over the period to €25.8 million, down -7.7% on a constant group structure and exchange rate basis. Other expenses (taxes, information purchases and rents) dropped 6.8% from €100.1 million as of June 30, 2015 to €93.3 million as of June 30, 2016. In particular, savings were made on information purchases, travelling and costs of agents. The action plans initiated in the regions continued to yield positive results (overheads kept under control).

The cost ratio before reinsurance dropped 1.9 percentage points, from 30.4% in the first half of 2015 to 32.3% in the first half of 2016. This change was primarily due to the drop in revenue, especially in earned premiums (6.2 percentage points).

In Western Europe, overheads were down 8.3% (-7.4% on a constant group structure and exchange rate basis). The decline primarily concerned internal overheads (drop in tax expense, savings on travel, IT costs as well as information costs).

In Northern Europe, they rose by 2.5% (2.5% on a constant group structure and exchange rate basis), an increase observed on policy acquisition fees. Internal overheads dropped 6.5%.

In the Mediterranean and Africa, overheads dropped 7.8% (-6.1% on a constant group structure and exchange rate basis), in particular costs linked to debt collection.

In Central Europe, overheads rose by 5.3% (+8.6% on a constant group structure and exchange rate basis), an increase fuelled by policy acquisition fees, especially in Poland. Internal overheads were down (-0.7% on a constant group structure and exchange rate basis).

In North America, overheads dropped 1% (+0.3% on a constant group structure and exchange rate basis). Fees were up 8.4% (on a constant group structure and exchange rate basis) and internal overheads were up 7.8%.

In Latin America, overheads dropped 11.2% (+11.3% on a constant group structure and exchange rate basis).

Foreign exchange (mainly the Argentinean peso and Brazilian real) had an adverse impact of €6.9 million.

In Asia-Pacific, overheads were contained at +0.3% (+0.6% on a constant group structure and exchange rate basis).

Underwriting income after reinsurance

Underwriting income after reinsurance dropped €48.6 million, from €77.6 million as of June 30, 2015 to €28,9 million as of June 30, 2016, a trend similar to that of underwriting income before reinsurance (-€74,9 million).

Reinsurance income rose significantly, from -€25.7 million as of June, 30 2015 to +€0.6 million as of June 30, 2016. This change can be explained in particular by the increase in the loss ratio which had a positive impact on the Group's reinsurance cost and by a non-recurring gain of €13.8 million (exceptional debt collection in Northern Europe).

	AT JUNE 30		CHANGE
(in thousands of euros and %)	2016	2015	(in thousands of euros)	(in %)
Revenue	716,728	760,317	-43,589	-5.7%
Claims expenses	-350,067	-309,149	-40,919	13.2%
Policy acquisition costs	-126,326	-139,083	12,757	-9.2%
Administrative costs	-140,175	-135,292	-4,883	3.6%
Other current operating expenses	-41,200	-41,059	-141	0.3%
Expenses from banking activities, excluding cost of risk	-6,978	-6,734	-244	3.6%
Cost of risk	-2,163	-1,902	-260	13.7%
Underwriting Income before reinsurance	28,334	103,290	-74,957	-72.6%
Income and expenses from ceded reinsurance	601	-25,734	26,334	-102.3%
Underwriting Income after Reinsurance	28,934	77,557	-48,622	-62.7%
Combined ratio after reinsurance	92.2%	81.9%	-	-

iii. Investment income, net of management expenses (excluding finance costs)

Financial markets

The first six months of the year were riddled with uncertainty. First of all, there were fears of a global recession due to concerns about the Chinese economy, the sharp drop in oil prices and the emergence of doubts about the efficiency of the solutions proposed by central banks. However, the sharp rally of oil prices, reassuring Chinese statistics, stronger signs of the recovery in the eurozone and new monetary policy announcements (such as the extension of the ECB's asset buying programme) helped to allay these fears in February. June was marked by a wait-and-see attitude then, more importantly, by the UK referendum which led to a decision to leave the European Union, which retriggered another episode of uncertainty. The outcome of the UK vote also pushed back anticipations of an increase in US key interest rates, which had been high during the half-year.

In this highly volatile context, the bonds of major developed countries served as a safe haven. Bond yields therefore dropped significantly, falling to historically low levels. In the United States, the yield on the government 10-year bond dropped from around 2.25% at the end of December to around 1.50% at the end of June, its lowest level since 2012. In the eurozone, this phenomenon was strengthened by the continuation of the ECB's asset buying programme. German 10-year rates dropped from around 0.60% to around -0.15%, while French bonds lost 60 basis points by dropping from around 1% to nearly 0.20%. The 10-year yield rates fell less sharply in Italy and Spain, dropping from around 1.6% to 1.3% and from around 1.7% to around 1.11% respectively.

These uncertainties strongly affected equity markets, especially at European level. First, European stock markets plunged, then recovered before plunging again after the result of the UK referendum. The EuroStoxx 50 thus lost -12.3% in the first six months of the year.

Chinese economic statistics and the oil price rebound gave a boost to emerging countries and especially to oil exporters after a rather complicated start to the year.

Financial income

In this global economic context, the Coface Group, as part of the defined strategic allocation, wished to gradually reduce its exposure to the equity market and to the sovereign rates of the eurozone in favour of investment grade credit bonds.

All these investments are made within a strictly-defined risk framework; the qualities of issuers, sensitivity of issues, dispersal of issuer positions and geographic areas are governed by strict rules defined in the different management mandates granted to the Coface Group's dedicated managers.

The overall value of the portfolio has fallen by €88 million from since the start of the year, due in particular to the dividend payment at the end of May.

The following table shows the financial portfolio by main asset class:

Market value (in millions of euros)	June 30, 2016	Dec. 31, 2015
Listed shares	156	207
Unlisted shares	12	12
Bonds	1,657	1,685
Loans, deposits and UCITS money market funds	483	512
Total investment portfolio	2,309	2,415
Investment property	126	112
Associated and non-consolidated companies	127	122
Total	2,561	2,649

In the first half of 2016, marked by the strong volatility of equity markets and another drop in interest rates to historically low levels in absolute terms, the investment portfolio generated income of €20.2 million, i.e. a carrying yield of 0.8% at June 30, 2016, compared to an income of €32.6 million, i.e. 1.3% of the carrying yield at June 30, 2015. The favourable trend, especially, on the eurozone equity markets, allowed the externalisation of €7.9 million in capital gains for all asset classes in the first half of 2015 versus -€1.3 million in the same period in 2016.

Investment portfolio result	As of June 30
(in millions of euros)	2016	2015
Equities	-1.3	10.8
Fixed income	19.6	21.1
Investment property	1.9	0.7
Investment portfolio total	20.2	32.6
Associated and non-consolidated companies	0.8	1.8
Currency translation profit/loss and derivatives	5.2	-4.6
Financial and investment charges	-1.7	-1.5
Total	24.6	28.2

After equity investment income, currency translation profit/loss and derivatives, financial and investment charges, financial income amounted to €24.6 million in the first half of 2016 versus €28.2 million over the same period in 2015.

The economic yield rate of financial assets for this first half-year amounted to 2.1%³ compared to 1.0% over the same period in 2015. This increase in economic yield rate is linked to the sharp fall in European rates since the start of the year, growing stronger in June.

³ Economic yield = (investment income year N + (revaluation reserve year N – revaluation reserve year N-1)) / (average outstanding year (N, N-1))

iv. Operating income

(in thousand of euros)	At June 30		Change
	2016	2015	In €m	In %	In % (constant group structure and exchange rate basis)
Current operating income including finance costs		92.4	-49.8	-5.45	-53%
Other operating income and expenses	-1.8	-3.2	1.4	-4.4%	-38%
Operating income including financial costs and excluding other operating income and expenses	44.3	95.5	-51.2	-54%	-52%
Realized gains	-	-
Interests costs	-8.1	-8.1	0.0	0%	N/A
Operating income including financing costs and excluding non-recurring costs	52.4	103.6	-51.2	-49%	-48%

Current operating income, including finance costs and excluding non-recurring costs, dropped €51.2 million, i.e. -49% (-48% on a constant group structure and exchange rate basis, in line with forecasts) from €103.6 million at June 30, 2015 to €52.4 million as of June 30, 2016.

Net combined ratio, including non-recurring items, rose 10.4 percentage points, from 81.9% as of June 30, 2015 to €92.2% as of June 30, 2016, of which +8.8 percentage points of net loss ratio (including +3.2 percentage points of non-recurring loss ratio) and + 1.6 percentage points of cost ratio.

Other operating income and expenses totalled €1.8 million and are primarily comprised of restructuring fees.

The interest expense of the hybrid debt reached €8.1 million as of June 30, 2016, stable compared to June 30, 2015.

The significant drop in the Group's operating income can be primarily explained by the fall in revenue and the deterioration of loss experience (Asia Pacific, North America and Northern Europe). All regions contributed positively to operating income, except Asia-Pacific and Latin America, which have been strongly impacted by an increase in loss experience since the last quarter of 2015

(in million of euros)	At June 30		Change	Share of half-annual total at June 30, 2016
	2016	2015
Western Europe	12.8	29.3	-16.6	18%
Northern Europe	40.4	50.9	-10.5	58%
Mediterranean & Africa	39.5	47.1	-7.6	57%
Central Europe	18.1	-3.3	21.4	26%
North America	-12.4	2.3	-14.7	-18%
Latin America	2.7	4.9	-2.2	4%
Asia-Pacific	-31.5	-6.2	-25.3	-45%
Total (excluding inter regional flows and holding cost not rebilled)	69.5	124.9	-55.4	100%

v. Net income for the year

The Group's effective tax rate increased from 29.4% as of June 30, 2015 to 41.8% as of June 30, 2016, representing an increase of 12.3 percentage points (non-activation of deferred tax on tax losses).

Net income for the year dropped 61.0%, from €66.1 million as of June 30, 2015 to €25.6 million as of June 30, 2016. Restated for non-recurring items (restructuring fees), net income for the year dropped 54% on a constant group structure and exchange rate basis, from €68.3 million as of June 30, 2015 to €30.5 million as of June 30, 2016.

e) Group cash and capital

Equity

IFRS equity attributable to owners of the parent amounted to €1,735 million at June 30, 2016, down compared to December 31, 2015, when it amounted to €1,761 million.

The -€26 million difference can be primarily explained by the distribution of €76 million to shareholders, the net income for the year of €26 million and the adjustment to revaluation reserves on available-for-sale assets (+€23 million).

Goodwill

The goodwill of €155. million remained unchanged compared to December 31, 2015 (€155.5 million).

Debt

The Group's consolidated debt, excluding current operating debts, comprised the financial debt and the operational debt linked to factoring refinancing.

Factoring financing amounted to €2,068 million at June 30, 2016, versus €1,965 million at December 31, 2015 (i.e. +€103 million), in line with the development of the factoring business.

Gross financial debt, excluding the factoring business, amounted to €383 million at June 30, 2016, versus €393 million at December 31, 2016. The difference of -€9.1 million mainly stems from the adjustment linked to the subordinated debt's accrued coupon amount (payment made on March 27, 2016). The gross financial debt rate of Coface SA Group stood at 22% of equity, the same level as at December 31, 2015.

Solvency of the Group

For the insurance activities, in compliance with the Solvency I Regulations, the Group has calculated its solvency capital requirement under the standard formula introduced by European directive No.2009/138/EC.

The Group's SCR evaluates the risks linked to pricing, underwriting, establishment of provisions, as well as market risks and operating risks. It takes account of frequency risks and severity risks. This calculation is calibrated to hedge the risk of loss corresponding to 99.5% quantile at a one-year horizon.

The Group also calculates the capital requirement for the factoring business line.It is estimated by applying a 9% rate to the risk-weighted assets (or RWA). RWAs are calculated on the basis of the factoring outstandings, by applying weighting as a function of the probability of default and the expected loss in case of default, determined according to the method in line with that used by Natixis.

The amount of the capital requirement for the insurance business and the capital requirement for the factoring business is comparable with the available capital.

As of June 31, 2016, the Group proceeded to the estimation⁴ of the Group's capital requirement and the hedge rate of the required capital. The amount of the Group's capital requirement calculated in June 30, 2016 amounted to €1,290 million (compared with €1 333 million in end 2015), of which €1 100 million refers to the insurance SCR (calculated according to the standard formula of Solvency II) and €190 million refers to the capital requirement for the financing companies.

As of June 31, 2016, the available capital is amounted to €1 996 million (compared to €1 956⁵ million in December 31, 2015). The amount of the available capital is comparable with the amount of the capital requirement for the insurance business and the capital requirement for the factoring business. At June 31, 2016, the hedge rate of the required capital (ratio between the Group's available capital and its required capital for insurance and factoring), therefore amounted to 155% (versus 147% at the end of 2015).

Return on equity

The return on equity ratio is used to measure the return on the invested capital of Coface Group. Return on average tangible equity (or "RoATE") is the ratio between net attributable income and the average of attributable accounting equity excluding intangible items (intangible asset values).

⁴ As the Solvency II Standard formula is interpreted by Coface, accordingly to its simplified approach on some modules and the treatment of the reinsurance which is assumed to be renewed and sliding.

⁵ Final calculation adjusted compared to the preliminary calculation in the 2015 Registration Document (€1 962 million).

The table below presents the items used to calculate the Coface Group's RoATE over the December 2015 – June 2016 period:

(in millions of euros)	As of June 30, 2016	As of Dec. 31, 2015
Accounting equity (attributable to owners of the parent) – A	1,735	1,761
Intangible assets – B	221	224
Tangible equity – C (A-B) At June 30, 2016, tangible equity was restated by including year-on-year income – C (A-B+E)	1,540	1,537
Average tangible equity – D ([Cn+Cn-1]/2)	1,538	1,511
Net attributable income for the year – E	26	126
RoATE – E/D Net income as of June 30, 2016, is reported year on year – E x 2/ D	3.3%	8.4%

f) Risk Factors

The main risk factors and uncertainties that Coface has to deal with are described in detail in section 2.4 "Chairman's report on corporate governance, internal control and risk management procedures" and in Chapter 5 "Main risk factors and their management inside the Group" of the registration document of Coface Group, filed with the AMF on April 13, 2016 under number R.16-020.

During the first half of 2016, Coface had to cope with a much higher than expected increase in risks on emerging countries. Against this background and according to the management principles described in the aforementioned paragraphs, the Group has already taken strong steps to adjust its risk management policy on these regions and continues to strengthen its teams accordingly.

g) Future risks and uncertainties

The vote that took place on June 23rd 2016, in favour of the United Kingdom's exit from the European Union, raises the level of uncertainty among the different factors impacting Coface, including risks related to the macroeconomic environment and the global financial markets.

In that context, and according to the management principles applied by Coface and described in its 2015 Registration Document filed with the AMF on April 13th, 2016 under the number R.16-020 , the group continues to intensify its risk monitoring and adjust its underwriting policy. In addition, the Group has also taken measures for adjusting its exposure to financial risks.

h) Outlook

i. Economic environment⁶

The global economy should continue to grow at a modest pace in 2016 (2.5% after 2.6%), due to the business slowdown in developed countries (especially in the United States and the UK despite a slight improvement in the eurozone). Growth will be more dynamic in emerging countries (3.7%, after 3.4% in 2015) and should remain clearly higher than that of developed countries (1.6%, after 1.9%).

In developed countries, the United States and the UK should reach a turnaround point. In the US, the business slowdown (1.8% in 2016 versus 2.4% in 2015) has already led to the deterioration of the financial situation of companies (more defaults, lower profits). In the UK, considering that the uncertainty related to the decision to leave the EU is likely to adversely impact investor and consumer confidence, we have decided to lower the growth forecast to 1.2% in 2016 (versus 1.8% before Brexit). The major eurozone countries will report better performances than the previous year, except for Spain. Household consumption and private equity will continue to be the leading growth engines. Low oil prices (positive effect on company margins), budgetary loosening (Spain and France) and the ECB's ultra-accommodating policy will fuel purchasing power and boost household and investor confidence. Moreover, the ECB may decide to further extend its asset buying programme as a result of the Brexit decision.

Emerging countries should have more buoyant growth in 2016 than in 2015, while staying below their precrisis levels. In China, business will continue to slow down (+6.5%), in a context of rebalancing towards private consumption and gradual financial liberalisation, but also persistent structural imbalances: high debt, existence of over capacities in many industrial sectors, etc. South Africa should experience less dynamic growth (+0.6%) than in 2015, owing to higher interest rates and the political instability affecting business, while the infrastructure deficit persists. In Brazil and Russia, the growth outlook is likely to remain very grim (- 3.4% and -1.5%): primarily due to low commodities prices, high inflation and political instability in Brazil especially. India should continue to be boosted by the positive factors which drove growth in 2015. Lastly, the Middle-Eastern countries should continue to be specifically penalised by the low oil price.

⁶ Group's estimations updated on July 11th 2016.

GDP GROWTH (as %): 2016 (source Coface)

ii. Group's outlooks

Coface remains cautious overall for 2016.

As announced on 4 July, the Group, faced with a greater than anticipated increase in risk in emerging countries, has taken strong measures to adjust its risk management policies in these regions and continues to strengthen its teams accordingly.

The development of claims in emerging countries at a higher level than expected, also affecting claims from exporting companies located in mature markets, combined with an increased average cost of claim and longer collection times in emerging regions, lead Coface to foresee a net loss ratio of 63% to 66% for FY 2016 (compared with 52.5% in 2015).

In mature markets, where risks are low, we expect commercial pressure to remain strong. While the positive impacts of the risk reduction measures taken last year in Latin America are beginning to materialize, we anticipate that the effects of risk actions taken end 2015 in Asia Pacific will translate progressively in our results over time.

We continue to focus on finely managing and adjusting our risk exposures as required by the current environment and on improving our operational and structural efficiency.

II. Consolidated financial statements

II. CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheet

(in thousands of euros)

ASSETS	Notes	June 30, 2016	Dec. 31, 2015

Intangible assets		220,776	224,307
Goodwill	2	155,440	155,467
Other intangible assets	3	65,336	68,840
Insurance business investments	4	2,560,412	2,648,119
Investment property	4	800	800
Held-to-maturity securities	4	3,722	3,721
Available-for-sale securities	4	2,453,513	2,512,526
Trading securities	4	17,763	55,468
Derivatives	4	15,007	6,123
Loans and receivables	4	69,607	69,481
Receivables arising from banking and other activities	5	2,426,175	2,370,902
Investments in associates	6	20,243	20,258
Reinsurers' share of insurance liabilities	11	340,424	327,986
Other assets		993,349	894,121
Buildings used in the business and other property, plant and equipment		63,783	65,107
Deferred acquisition costs		48,321	44,043
Deferred tax assets		63,507	57,538
Receivables arising from insurance and reinsurance operations		605,873	518,970
Trade receivables arising from other activities		12,294	14,238
Current tax receivables		60,294	68,937
Other receivables		139,277	125,288
Cash and cash equivalents	7	414,019	396,837
TOTAL ASSETS		6,975,398	6,882,530

(in thousands of euros)

EQUITY AND LIABILITIES	Notes	June 30, 2016	Dec. 31, 2015

Equity attributable to owners of the parent		1,734,494	1,760,954
Share capital	8	786,241	786,241
Additional paid-in capital		338,676	347,371
Retained earnings		500,721	442,231
Other comprehensive income		83,260	58,872
Consolidated net income for the year		25,596	126,239
Non-controlling interests		5,938	6,073
Total equity		1,740,432	1,767,027
Provisions for liabilities and charges	9	120,622	114,234
Financing liabilities	10	383,449	392,594
Liabilities relating to insurance contracts	11	1,613,668	1,514,862
Payables arising from banking sector activities	12	2,376,951	2,369,662
Amounts due to banking sector companies	12	429,189	352,379
Amounts due to customers of banking sector companies	12	308,315	404,218
Debt securities	12	1,639,447	1,613,065
Other liabilities		740,276	724,151
Deferred tax liabilities		151,528	144,266
Payables arising from insurance and reinsurance operations		239,620	241,339
Current taxes payable		83,123	111,527
Derivative instruments with a negative fair value		13,575	6,752
Other payables		252,430	220,267
TOTAL EQUITY AND LIABILITIES		6,975,398	6,882,530

Consolidated income statement

(in thousands of euros)

	Notes	June 30, 2016	June 30, 2015
Revenue	13	716,728	760,317
Gross written premiums		648,598	675,445
Premium refunds		(46,431)	(37,292)
Net change in unearned premium provisions		(36,427)	(35,116)
Earned premiums	13	565,740	603,037
Fee and commission income	13	69,104	66,602
Net income from banking activities	13	34,859	35,630
Cost of risk		(2,163)	(1,902)
Revenue or income from other activities	13	47,025	55,048
Investment income, net of management expenses	17	24,149	22,913
Gains and losses on disposals of investments	17	430	5,283
Investment income, net of management expenses	17	24,579	28,196
(excluding finance costs)
Total revenue and income from ordinary activities		739,144	786,611
Claims expenses	14	(350,067)	(309,149)
Expenses from banking activities, excluding cost of risk	15	(6,978)	(6,734)
Expenses from other activities	15	(21,486)	(23,808)
Income from ceded reinsurance	16	133,535	107,790
Expenses from ceded reinsurance	16	(132,934)	(133,524)
Income and expenses from ceded reinsurance	16	601	(25,734)
Policy acquisition costs	15	(126,326)	(139,083)
Administrative costs	15	(140,175)	(135,292)
Other current operating expenses	15	(41,200)	(41,059)
Total current income and expenses		(685,631)	(680,859)
CURRENT OPERATING INCOME		53,513	105,752
Other operating expenses	18	(2,307)	(3,753)
Other operating income	18	545	600
OPERATING INCOME		51,751	102,599
Finance costs		(9,216)	(10,226)
Share in net income of associates		993	1,256
Income tax expense		(17,762)	(27,166)
CONSOLIDATED NET INCOME BEFORE NON-CONTROLLING INTERESTS		25,766	66,463
Non-controlling interests		(170)	(346)
NET INCOME FOR THE YEAR		25,596	66,117
Earnings per share (€)	20	0,16	0,42
Diluted earnings per share (€)	20	0,16	0,42

Consolidated statement of comprehensive income

(in thousands of euros)	Notes	June 30, 2016	June 30, 2015
Net income for the period		25,596	66,117
Non-controlling interests		170	346

Other comprehensive income
Currency translation differences reclassifiable to income		1,674	17,606
Reclassified to income		(0)	(0)
Recognised in equity		1,674	17,606

Fair value adjustments on available-for-sale financial assets	4	22,885	(5,852)
Reclassified to income – gross		720	(7,626)
Reclassified to income – tax effect		(484)	2,438
Recognised in equity – reclassifiable to income – gross		31,012	5,470
Recognised in equity – reclassifiable to income – tax effect		(8,363)	(6,135)
Fair value adjustments on employee benefit obligations		19	0
Recognised in equity – not reclassifi able to income – gross		15	(1)
Recognised in equity – not reclassifi able to income – tax effect		4	(0)
Other comprehensive income for the period, net of tax		24,578	11,754
Total comprehensive income for the period		50,344	78,217
- attributable to owners of the parent		49,984	77,694
- attributable to non-controlling interests		360	523

Statement of changes in equity

						Other comprehensive income
(in thousands of euros)		Notes Share capital	Consolidated reserves	Treasury shares	Foreign currency translation reserve	Reclassifiable revaluation reserves	Non reclassifiable revaluation reserves	Net income for the period	Equity attributable to owners of the parent	Non controlling interests	Total equity
Equity at December 31, 2014 restated IFRIC 21		786,241	742,039	(709)	(20,681)	107,264	(21,382)	125,025	1,717,797	6,737	1,724,534
2014 net income to be appropriated			125,025					(125,025)
Payment of 2014 dividends in 2015			(75,460)						(75,460)	(697)	(76,157)
Total transactions with owners		0	49,565	0		0 0	0	(125,025)	(75,460)	(697)	(76,157)
December 31, 2015 net income								126,239	126,239	888	127,127
Fair value adjustments on available-for-sale financial assets recognized in
equity	4					(10,164)			(10,164)	(771)	(10,935)
Fair value adjustments on available-for-sale financial assets reclassified to income	4					(2,822)			(2,822)	(144)	(2,966)
Change in actuarial gains and losses (IAS 19R)							3,978		3,978	0	3,978
Currency translation differences					2,679				2,679	(351)	2,328
Treasury shares elimination				(1,934)					(1,934)		(1,934)
Free share plans expenses			641						641		641
Transactions with shareholders										411	411
Equity at December 31, 2015		786,241	792,245	(2,643)	(18,002)	94,278	(17,404)	126,239	1,760,954	6,073	1,767,027
2015 net income to be appropriated			126,239					(126,239)
Payment of 2015 dividends in 2016			(75,312)						(75,312)	(771)	(76,083)
Total transactions with owners		0	50,927	0		0 0	0	(126,239)	(75,312)	(771)	(76,083)
June 30, 2016 net income								25,596	25,596	170	25,766
Fair value adjustments on available-for-sale financial assets recognized in
equity	4					22,641			22,641	8	22,649
Fair value adjustments on available-for-sale financial assets reclassified
to income	4					236			236	0	236
Change in actuarial gains and losses (IAS 19R)							19		19	0	19
Currency translation differences					1,492				1,492	182	1,674
Treasury shares elimination				(1,448)					(1,448)		(1,448)
Free share plans expenses			316						316		316
Transactions with shareholders										276	276
Equity at June 30, 2016		786,241	843,488	(4,091)	(16,510)	117,155	(17,385)	25,596	1,734,494	5,938	1,740,432

Consolidated statement of cash flows

(in thousands of euros)	Notes	June 30, 2016	June 30, 2015
Net income for the period	20	25,596	66,117
Non-controlling interests		170	346
Income tax expense		17,762	27,166
+/- Share in net income of associates	7	(993)	(1, 256)
Finance costs		9,216	10,226
Operating income (A)		51,751	102,599
+/- Depreciation, amortization and impairment losses	$3 - 4$	14,267	7,529
+/- Net additions to/reversals from technical provisions	11	89,869	77,024
+ Dividends received from associates	6	1,008	900
+/- Unrealized foreign exchange income / loss		17,562	(33, 776)
+/- Non-cash items		25,138	34,082
Total non-cash items (B)		147,844	85,759
Gross cash flows from operations $(C) = (A) + (B)$		199,595	188,358
Change in operating receivables and payables		(74, 514)	21,184
Net taxes paid		(49, 646)	(20,005)
Net cash related to operating activities (D)		(124,160)	1,179
Increase (decrease) in receivables arising from factoring operations		(61, 771)	(133,062)
Increase (decrease) in payables arising from factoring operations		(69, 521)	(14, 924)
Increase (decrease) in factoring liabilities		82,901	131,904
Net cash generated from banking and factoring operations (E)	$5 - 10$	(48,391)	(16,082)
Net cash generated from operating activities $(F) = (C+D+E)$		27,044	173,455
Acquisitions of investments	4	(817, 231)	(1, 272, 905)
Disposals of investments	4	905,227	1,355,946
Net cash used in movements in investments (G)		87,996	83,041
Acquisitions of consolidated subsidiaries, net of cash acquired
Disposals of consolidated companies, net of cash transferred
Net cash used in changes in scope of consolidation (H)
Disposals of property, plant and equipment and intangible assets	3	(3,796)	(5, 490)
Acquisitions of property, plant and equipment and intangible assets	3	102	(198)
Net cash generated from (used in) acquisitions and disposals of property, plant and equipment and intangible assets (I)		(3, 694)	(5,688)
Net cash used in investing activities $(J) = (G+H+I)$		84,302	77,353
Proceeds from the issue of equity instruments
Treasury share transactions		(1, 448)	70
Dividends paid to owners of the parent		(75, 312)	(75, 460)
Dividends paid to non-controlling interests		(771)	(697)
Cash flows related to transactions with owners		(77,531)	(76,087)
Proceeds from the issue of debt instruments		0	(0)
Cash used in the redemption of debt instruments		(1, 437)	(1, 385)
Interests paid		(16, 825)	(15, 675)
Cash flows related to the financing of Group operations		(18, 262)	(17,060)
Net cash generated from (used in) financing activities (K)		(95, 793)	(93, 147)

Impact of changes in exchange rates on cash and cash equivalents (L)		1629	27 616
Net increase in cash and cash equivalents (F+J+K+L)		17,182	185,278
Net cash generated from operating activities (F)		27,044	173,455
Net cash used in investing activities (J)		84,302	77,354
Net cash generated from (used in) financing activities (K)		(95, 793)	(93, 147)
Impact of changes in exchange rates on cash and cash equivalents (L)		1,629	27,616

Cash and cash equivalents at beginning of period	7	396,837	278,624
Cash and cash equivalents at end of period	7	414,019	463,902
Net change in cash and cash equivalents		17,182	185,278

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III. Notes to the condensed interim consolidated financial statements

III. Notes to the consolidated financial statement

Basis of preparation

These IFRS condensed interim financial statements of the Coface Group as at June 30, 2016 are established in accordance with IAS 34 – Interim Financial Reporting, as adopted by the European Union.

The interim financial statements include:

the balance sheet;

the income statement;
the consolidated statement of comprehensive income;
the statement of changes in equity;
the statement of cash flows;
the notes to the financial statements.

They are presented with comparative financial information at December 31, 2015 for balance sheet items, and for the 6 months ended June 30,2015 for income statement items.

The notes to the interim financial statements do not contain all of the disclosures required for a complete set of annual financial statements. They should be read in conjunction with the consolidated financial statements for the year ended December 31,2015.

The accounting principles and policies used for the interim financial statements as at June 30, 2016 are the same as the ones used for the year ended December 31, 2015. They are prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union⁷ . They are detailed in the note 4 "Applicable Accounting Standards" of the consolidated financial statements for the year ended December 31,2015.

The condensed consolidated financial statements were reviewed by the Coface Group's Board of Directors on July 27, 2016.

⁷ The standards adopted by the European Union can be consulted on the website of the European Commission at: http://ec.europa.eu/internal_market/accounting/ias/index_fr.htm

Note 1. Significant events

Governance evolution

Coface's Board of Directors held a meeting on January 15th 2016, under the chairmanship of Laurent Mignon, and appointed Xavier Durand as new Chief Executive Officer (CEO). This appointment took effect after the Board's meeting of February 9th 2016, which validates the financial statements for the year-end 2015. Mr. Jean-Marc Pillu stayed as Coface's CEO until that date.

The severance payment of Mr. Jean-Marc Pillu, granted by the Board of Directors of January 15th, 2016, amounts to €1,979 thousand and it is recorded on the financial statements of the year-end 2016.

New organization in Europe

Coface Group's Exec team decided to adjust the regional structure in Europe in order to rebalancing the regions and giving them greater geographic coherence.

The regional structure of Coface Group is adjusted as follows:

Spain and Portugal, previously included in WER will transfer to MAR
Russia, previously included in NER will transfer to CER

Contingent capital

Coface established with BNP Paribas Arbitrage, on February 9th, 2016, a contingent capital line of €100 million, for a period of three years (that can be reduced to two years at the discretion of COFACE), available in one tranche and that can be exercised in the event of the occurrence of certain extreme events.

This contingent capital line supplements the existing capital management and solvency tools by offering an effective and competitive solution in terms of costs (annual commission of 0.50 %). It is part of a conservative capital management strategy in connection with pillar 2 of Solvency II and allows the Group to strengthen its financial robustness to protect its business against extreme risks.

Management of State export credit guarantees

The French State informed Coface that the transfer of State export credit guarantees can only be completed after the adoption of the 2016 amending Finance Act.

Financial strength affirmed by rating agencies

Fitch and Moody's reaffirmed the financial strength ratings (IFS) of the Group, AA- and A2 respectively (stable outlook), on June 10 and May 23, 2016.

Appointment of directors

In the context of its new strategy deployment, Coface has decided to strengthen its teams within the first half of this year.

Three newly positions have been created:

Thibaut Surer as Strategy & Business Development Director in charge of strategy, development, marketing and innovation. He is now a member of the management committee and executive committee.
Valérie Brami as Chief Operating Officer in charge of information systems, organisation and process improvement. She joins the management committee and the executive committee in this capacity.
Pierre-Emmanuel Albert as Group Head of Business Processes Transformation

As well as:

Bhupesh Gupta Chief Executive Officer of the Asia Pacific region. He joins the Group executive committee. Thierry Croiset, Risk Director, Thomas Croiset will join Coface on September 2016 as Investors Relations and rating agencies Director. They will both report directly to Carine Pichon, Chief Financial & Risk Officer.

Referendum of June 23rd 2016: Brexit

The Group has also taken adjustment measures on its exposure to financial risks.

All amounts are stated (in thousands of euros) in the following notes, unless specified otherwise.

Note 2. Goodwill

At June 30, 2016, the change in goodwill amounted to a negative €27 thousand, due to the fluctuation of the exchange rate.

Note 3. Other intangible assets

At June 30, 2016, the change in other intangible assets amounted to a negative €3,504 thousand. This change is mainly explained by a provision for depreciation and amortisation of around €5,000 thousand.

Note 4. Insurance business investments

7.1 – Analysis by category

At June 30, 2016, the carrying amount of held-to maturity (HTM) securities was €3,722 thousand, availablefor-sale (AFS) securities totaled €2,453,513 thousand and securities held for trading ("trading securities") came to €17,763 thousand.

As an insurance group, Coface's investment allocation is heavily weighted towards fixed-income instruments. The distribution of the bonds portefolio by rating at June 30, 2016 was as follows:

Bonds rated "AAA" 19%;
Bonds rated "AA" and "A" 35%;
Bonds rated "BBB" 32% ;
Bonds rated "BB" and lower 14%.

			June 30, 2016					Dec. 31, 2015
(in thousands of euros)	Amortized cost	Revaluation	Net value	Fair value	Unrealized gains and losses	Amortized cost	Revaluation	Net value	Fair value	Unrealized gains and losses

AFS securities	2,317,593	135,920	2,453,513	2,453,513		2,406,577	105,948	2,512,526	2,512,526
Equities and other variable-income securities	199,062	95,888	294,950	294,950		236,296	104,373	340,669	340,669
Bonds and government securities	1,994,169	39,174	2,033,343	2,033,343		2,059,275	1,659	2,060,934	2,060,934
o/w direct investments in securities	1,612,760	40,031	1,652,791	1,652,791		1,675,626	4,595	1,680,221	1,680,221
o/w investments in UCITS Shares in non-trading property companies	381,409 124,362	(857) 858	380,552 125,220	380,552 125,220		383,649 111,006	(2,936) (84)	380,714 110,922	380,714 110,922
HTM securities
Bonds	3,722		3,722	4,571	849	3,721		3,721	4,374	653
Fair value through income – trading securities
Money market funds (UCITS)	17,763		17,763	17,763		55,468		55,468	55,468
Derivatives (positive fair value)		15,007	15,007	15,007			6,123	6,123	6,123
(derivatives negative fair value for information)		(13,575)	(13,575)	(13,575)			(6,752)	(6,752)	(6,752)
Loans and receivables	69,607		69,607	69,607		69,481		69,481	69,481
Investment property	716	84	800	800		716	84	800	800
Total	2,409,401	151,011	2,560,412	2,561,261	849	2,535,964	112,155	2,648,119	2,648,772	653

(in thousands of euros)	Gross June 30, 2016	Impairment	Net June 30, 2016	Net Dec. 31, 2015

AFS securities	2,483,182	(29,669)	2,453,513	2,512,526
Equities and other variable-income securities	323,855	(28,905)	294,950	340,669
Bonds and government securities	2,034,099	(756)	2,033,343	2,060,934
o/w direct investments in securities	1,652,791		1,652,791	1,680,221
o/w investments in UCITS	381,308	(756)	380,552	380,714
Shares in non-trading property companies	125,228	(8)	125,220	110,922
HTM securities Bond	3,722		3,722	3,721
Fair value through income – trading securities
Money market funds (UCITS)	17,763		17,763	55,468
Derivatives (positive fair value)	15,007		15,007	6,123
(for information, derivatives with a negative fair value)	(13,575)		(13,575)	(6,752)
Loans and receivables	69,607		69,607	69,481
Investment property	800		800	800
Total	2,590,081	(29,669)	2,560,412	2,648,119

Impairments

(in thousands of euros)	Dec. 31, 2015	Additions	Reversals	Exchange rate effects and other	June 30, 2016
AFS securities Equities and other variable-income securities	29,696 29,688	756 (0)	(721) (721)	(62) (62)	29,669 28,905
Bonds and government securities Shares in non-trading property companies	(0) 8	756	(0)	(0)	756 8
Total	29,696	756	(721)	(62)	29,669

(a) Reversals are related to the disposal of AFS securities.

Change in investments by category

	Dec. 31, 2015						June 30, 2016
(in thousands of euros)	Carrying amount	Increases	Decreases	Revaluation	Impairment	Other movements	Carrying amount

AFS securities	2,512,526	446,723	(514,713)	31,733	(35)	(22,719)	2,453,513
Equities and other variable-income securities	340,669	26,936	(64,707)	(6,542)	721	(2,127)	294,950
Bonds and government securities	2,060,934	387,683	(432,948)	37,333	(756)	(18,902)	2,033,343
Shares in non-trading property companies	110,922	32,104	(17,058)	942		(1,690)	125,220
HTM securities
Bonds	3,721	1					3,722
Fair value through income – trading securities	55,468	343,449	(381,154)				17,763
Loans, receivables and other financial investments	76,404	33,998	(29,122)	6,190		(2,057)	85,414
Total	2,648,119	824,171	(924,989)	37,923	(35)	(24,776)	2,560,412

Derivatives

The structural use of derivatives is strictly limited to hedging. The notional amounts of the hedges therefore do not exceed the amounts of the underlying assets in the portfolio.

During 2016, the majority of the derivative transactions carried out by the Group concerned the systematic hedging of currency risks via swaps or currency futures for primarily USD-denominated bonds held in the investment portfolio that covers all of Coface's European entities (whose currency risks are systematically hedged).

Investments in equities were partially hedged through purchases of index options (which were out of the money). The hedging strategy applied by the Group is aimed at protecting the portfolio against a sharp drop in the equities market in the eurozone.

Several one-off interest rate hedges were also set up during the year for money-market securities.

None of these transactions qualified for hedge accounting under IFRS as they were mainly currency transactions and partial market hedges.

Derivatives also includes, from the first quarter of 2016, the fair value of the contingent capital instrument. This fair value corresponds to the fees due. This asset is shown in level 3.

4.2 – Financial instruments recognized at fair value

The fair values of financial instruments recorded in the balance sheet are measured according to a hierarchy that categorizes into three levels the inputs used to measure fair value. These levels are as follows:

Level 1: Quoted prices in active markets for an identical financial instrument.

Securities classified as level 1 represent 87% of the Group's portfolio. They correspond to:

equities, bonds and government securities listed on organized markets, as well as units in dedicated mutual funds whose net asset value is calculated and published on a very regular basis and is readily available (AFS securities);
government bonds and bonds indexed to variable interest rates (HTM securities);
French units money-market funds, SICAV (trading securities).

Level 2: Use of inputs, other than quoted prices for an identical instrument that are directly or indirectly observable in the market (inputs corroborated by the market such as yield curves, swap rates, multiples method, etc.).

Securities classified as level 2 represent 3% of the Group's portfolio. This level is used for the following instruments:

unlisted equities;
loans and receivables due from banks or clients and whose fair value is determined using the historical cost method.

Level 3: Valuation techniques based on unobservable inputs such as projections or internal data.

Securities classified as level 3 represent 10% of the Group's portfolio. This level corresponds to unlisted equities, investment securities and units in dedicated mutual funds, as well as investment property.

Breakdown of financial instrument fair value measurements as at June 30, 2016 by level in the fair value hierarchy

			Level 1	Level 2	Level 3
(in thousands of euros)	Carrying amount	Fair value	Fair value determined based on quoted prices in active markets	Fair value determined based on valuation techniques that use observable inputs	Fair value determined based on valuation techniques that use unobservable inputs
AFS securities	2,453,513	2,453,513	2,193,933	23	259,557
Equities and other variable-income securities	294,950	294,950	160,590	23	134,337
Bonds and government securities	2,033,343	2,033,343	2,033,343
Shares in non-trading property companies	125,220	125,220			125,220
HTM securities
Bonds	3,722	4,571	4,571
Fair value through income – trading securities
Money market funds (UCITS)	17,763	17,763	17,763
Derivatives	15,007	15,007	4,125	9,523	1,359
Loans and receivables	69,607	69,607		69,607
Investment property	800	800			800
TOTAL	2,560,412	2,561,261	2,220,392	79,153	261,716

The analysis of the breakdown of the portfolio by level allowed to detect that bonds and Government securities classified in level 2 on December 31st, 2015 were under the definition of level 1.

This reclassification from level 2 to level 1 has been realized during the 1st half-year 2016.

Movements in Level 3 securities as at June 30, 2016

			Gains and losses recognized in the period	Transactions for the period		Exchange rate
(in thousands of euros)	At Dec. 31, 2015	In income		Directly in equity Purchases/ Issues	Sales/ Redemptions	effects	At June 30, 2016
AFS securities	240,219		7,843	32,376	(17,058)	(3,823)	259,557
Equities and other variable-income securities Shares in non-trading property companies	129,297 110,922		6,901 942	272 32,104	(17,058)	(2,133) (1,690)	134,337 125,220
Derivatives				1,359			1,359
Investment property	800						800
TOTAL	241,019		7,843	33,735	(17,058)	(3,823)	261,716

Breakdown of financial instrument fair value measurements as at December 31, 2015 by level in the fair value hierarchy

			Level 1	Level 2	Level 3
(in thousands of euros)	Carrying amount	Fair value	Fair value determined based on quoted prices in active markets	Fair value determined based on valuation techniques that use observable inputs	Fair value determined based on valuation techniques that use unobservable inputs
AFS securities	2,512,526	2,512,526	2,096,980	175,326	240,219
Equities and other variable-income securities	340,669	340,669	211,349	23	129,297
Bonds and government securities	2,060,934	2,060,934	1,885,631	175,303	(0)
Shares in non-trading property companies	110,922	110,922			110,922
HTM securities
Bonds	3,721	4,374	4,374
Fair value through income – trading securities
Money market funds (UCITS)	55,468	55,468	55,468
Derivatives	6,123	6,123		6,123
Loans and receivables	69,481	69,481		69,481
Investment property	800	800			800
TOTAL	2,648,119	2,648,772	2,156,822	250,930	241,019

Movements in Level 3 securities as at December 31, 2015

(in thousands of euros)			Gains and losses recognized in the period	Transactions for the period		Exchange rate
	At Dec. 31, 2014	In income		Directly in equity Purchases/ Issues	Sales/ Redemptions	effects	At Dec. 31, 2015
AFS securities	155,470	1,526	806	83,894	(0)	(1,478)	240,219
Equities and other variable-income securities	125,469	1,526	890	2,718	(0)	(1,307)	129,297
Shares in non-trading property companies	30,001		(84)	81,176	(0)	(171)	110,922
Investment property	923	(123)					800
TOTAL	156,393	1,403	806	83,894	(0)	(1,478)	241,019

Note 5. Receivables arising from banking and other activities

(in thousands of euros)	June 30, 2016	Dec. 31, 2015
Receivables arising from banking and other activities	2,365,683	2,312,352
Non-performing receivables arising from banking and other activities	81,809	78,961
Allowances for receivables arising from banking and other activities	(21,317)	(20,411)
Total	2,426,175	2,370,902

Receivables arising from banking and other activities represent receivables acquired within the scope of factoring agreements.

They are recognised at cost within assets. Factoring receivables include both receivables whose future recovery is guaranteed by Coface and receivables for which the risk of future recovery is borne by the customer.

Where applicable, the Group recognises a valuation allowance against receivables to take account of any potential difficulties in their future recovery, it being specifi ed that the receivables are also covered by a credit insurance agreement. Accordingly, the related risks are covered by claims provisions.

Note 6. Investments in associates

The company accounted for by the equity method is Cofacrédit. At June 30, 2016, the change in investments in associates amounted to negative €15 thousand.

Note 7. Cash and cash equivalents

(in thousands of euros)	June 30, 2016	Dec. 31, 2015
Cash at bank and in hand	380,439	358,326
Cash equivalents	33,580	38,511
Total	414,019	396,837

Note 8. Share capital

Ordinary shares	Number of shares	Par value	Share capital (in €)
At December 31, 2015	157,248,232	5	786,241,160
Capital increase	0		0
At June 30, 2016	157,248,232	5	786,241,160
Treasury shares deducted	(493,194)	5	(2,465,970)
At June 30, 2016 (excluding treasury shares)	156,755,038	5	783,775,190

	June 30, 2016		Dec. 31, 2015
	Number of	%	Number of	%
Shareholders	shares		shares
Natixis	64,853,876	41.37%	64,853,870	41.32%
Public	91,901,162	58.63%	92,097,771	58.68%
Total excluding treasury shares	156,755,038	100.00%	156,951,641	100.00%

The parent company of the Coface Group is Natixis, which in turn is owned by BPCE, the central body of Banques Populaires and Caisses d'Épargne.

Natixis holds, at the end of June 2016, 41.37% of the Coface Group's shares excluding treasury shares, and 41.24% including treasury shares.

Note 9. Provisions for liabilities and charges

(in thousands of euros)	June 30, 2016	Dec. 31, 2015
Provisions for disputes	9,653	10,966
Provisions for pension and other post-employment benefit obligations	86,517	84,855
Other provisions for liabilities and charges	24,452	18,413
Total	120,622	114,234

Provisions for liabilities and charges mainly consist of provisions for pensions and other post-employment benefit obligations.

Note 10. Financing liabilities

(in thousands of euros)	June 30, 2016	Dec. 31, 2015
Subordinated debt	379,683	387,292
Obligations under finance leases	3,766	5,202
Bank overdrafts and other borrowings	0	100
Total	383,449	392,594

On March 27, 2014, COFACE SA completed the issue of subordinated debt in the form of bonds for a nominal amount of €380 million (corresponding to 3,800 bonds with a nominal unit value of €100,000), maturing on March 27, 2024 (10 years), with an annual interest rate of 4.125%.

The per-unit bond issue price was €99,493.80, and the net amount received by COFACE SA was €376.7 million, net of placement fees and directly-attributable transaction costs.

These securities are irrevocably and unconditionally guaranteed on a subordinated basis by Compagnie française d'assurance pour le commerce extérieur, the Coface Group's main operating entity.

On March 25, 2014, a joint guarantee was issued by Compagnie française d'assurance pour le commerce extérieur for €380 million, in favour of the investors in COFACE SA's subordinated bonds, applicable until the extinction of all liabilities in respect of said investors.

As at June 30, 2016, the debt presented on the line "Subordinated borrowings" of the balance sheet, amounted to €379,683 thousand, is composed of:

nominal amount of bonds: €380,000 thousand;

reduced by the debt issuance costs and the issue premium for €4,236 thousand;

increased by accrued interest of €3,919 thousand.

The impact on consolidated income statement income as at June 30, 2016 mainly includes the interest related to the period for €7,838 thousand.

Note 11. Liabilities relating to insurance contracts

(in thousands of euros)	June 30, 2016	Dec. 31, 2015
Provisions for unearned premiums	316,586	285,410
Claims reserves	1,179,450	1,122,211
Provisions for premium refunds	117,632	107,241
Liabilities relating to insurance contracts	1,613,668	1,514,862
Provisions for unearned premiums	(64,154)	(57,558)
Claims reserves	(251,439)	(247,147)
Provisions for premium refunds	(24,831)	(23,281)
Reinsurers' share of technical insurance liabilities	(340,424)	(327,986)
Net technical provisions	1,273,244	1,186,876

Note 12. Payables arising from banking sector activities

(in thousands of euros)	June 30, 2016	Dec. 31, 2015
Amounts due to banking sector companies	429 189	352,379
Amounts due to customers of banking sector companies	308 315	404,218
Debt securities	1,639,447	1,613,065
TOTAL	2,376,951	2,369,662

The lines "Amounts due to banking sector companies" and "Debt securities" correspond to sources of refinancing for the Group's factoring entities – Coface Finanz (Germany) and Coface Factoring Poland.

Note 13. Consolidated revenue

(in thousands of euros)

a) By business line	June 30, 2016	June 30, 2015
Premiums – direct business	608,471	625,206
Premiums – inward reinsurance	40,127	50,240
Premium Refunds	(46,431)	(37,292)
Provisions for unearned premiums	(36,427)	(35,116)
Earned premiums net of cancellations c)	565,740	603,037
Fees and commission income	69,104	66,602
Net income from banking activities d)	34,859	35,630

Other insurance-related services	2,760	5,022
Remuneration of public procedures management services	25,739	29,901
Business information and other services	11,854	12,881
Receivables management	6,672	7,244
Revenue or income from other activities	47,025	55,048

Consolidated revenue	716,728	760,317

(in thousands of euros)

b) By region of invoicing	June 30, 2016	June 30, 2015*
Northern Europe	158,151	165,908
Western Europe	167,032	187,537
Central Europe	61,332	62,194
Mediterranean & Africa	166,284	178,834
North America	68,858	66,288
Latin America	39,522	42,860
Asia-Pacific	55,549	56,696
Consolidated revenue	716,728	760,317

* The consolidated turnover at June 30, 2015 has been restated according to the new regional organization (see Note 1 – Significant events).

Geographic segmentation by billing location does not necessarily match the debtor's location.

(in thousands of euros)

c) Insurance revenue by type of insurance	June 30, 2016	June 30, 2015
Credit insurance	528,011	560,128
Guarantees	25,875	25,472
Single risk	11,854	17,437
Total insurance revenue	565,740	603,037

(in thousands of euros)

d) Net income from banking activities	June 30, 2016	June 30, 2015
Financing fees	16,863	16,930
Factoring fees	17,932	18,838
Other	64	(137)
Total net income from banking activities	34,859	35,630

Note 14. Claim expenses

(in thousands of euros)	June 30, 2016	June 30, 2015
Paid claims, net of recoveries	(279,234)	(245,646)
Claims handling expenses	(12,777)	(13,854)
Change in claims reserves	(58,056)	(49,649)
Total	(350,067)	(309,149)

Claims expenses by period of occurence

(in thousands of euros)	June 30, 2016			June 30, 2015
	Gross	Outward reinsurance and	Net	Gross	Outward reinsurance and	Net
Claims expenses – current year	(405,684)	retrocessions 77,180	(328,504)	(431,434)	retrocessions 85,257	(346,177)

Claims expenses – prior years	55,617	9,566	65,183	122,285	(20,438)	101,847
Claims expenses	(350,067)	86,746	(263,321)	(309,149)	64,819	(244,330)

Note 15. Overheads by function

(in thousands of euros)	June 30, 2016	June 30, 2015
Commissions	(75,188)	(79,221)
Other acquisition costs	(51,138)	(59,862)
Total acquisition costs	(126,326)	(139,083)
Administrative costs	(140,175)	(135,292)
Other current operating expenses	(41,200)	(41,059)
Investment management expenses	(972)	(1,102)
Claims handling expenses	(12,777)	(13,854)
Total	(321,450)	(330,390)
of which employee profit-sharing	(2,474)	(5,602)

(in thousands of euros)	June 30, 2016	June 30, 2015
Acquisition, administration costs and other current operating expenses	(321,450)	(330,390)
Expenses from banking activities, excluding cost of risk	(6,978)	(6,734)
Expenses from other activities	(21,486)	(23,808)
Total	(349,914)	(360,931)

Total overheads includes general insurance expenses (by function), expenses from other activities and expenses from banking activities. It came out at €349,914 thousand at June 30, 2016 versus €360,931 thousand at June 30,2015.

In the income statement, claims handling expenses are included in "Claims expenses" and investment management expenses are shown in "Investment income, net of management expenses (excluding finance costs)".

Note 16. Income and expenses from ceded reinsurance

(in thousands of euros)	June 30,2016	June 30,2015
Ceded claims	74,504	56,404
Change in claims provisions net of recoveries	12,241	8,415
Commissions paid by reinsurers	46,790	42,971
Income from ceded reinsurance	133,535	107,790
Ceded premiums	(141,271)	(144,840)
Change in unearned premiums provisions	8,337	11,316
Expenses from ceded reinsurance	(132,934)	(133,524)
Total	601	(25,734)

(in thousands of euros)	June 30, 2016	June 30, 2015
Investment income	23,840	27,152
Change in financial instruments at fair value though income	6,190	(33,712)
o/w hedged by currency derivatives o n "Colombes" and "Lausanne" mutual funds (1)	7,390	(33,898)
Net gains on disposals	430	5,283
o/w hedged by currency derivatives o n "Colombes" and "Lausanne" mutual funds(1)	(49)	(394)
Additions to/(reversals from) impairment	(1,300)	(592)
Net foreign exchange gains	(2,915)	31,571
o/w hedged by currency derivatives o n "Colombes" and "Lausanne" mutual funds(2)	(9,892)	33,776
Investment management expenses	(1,666)	(1,506)
Total	24,579	28,196

Note 17. Investment income, net of management expenses (excluding finance costs)

1) The change of the EUR / USD and the EUR / GBP caused significant impacts on the accounts, despite the hedge of investments by foreign exchange derivatives. The net impact after hedge was - € 2,502 thousand.

2) The - € 9,892 thousand foreign exchange gains from Colombes and Lausanne funds consisted of € 10,753 thousand in realised gains and € -20,645 thousand of unrealised gains.

Note 18. Other operating income and expenses

(in thousands of euros)	June 30, 2016	June 30, 2015
Other operating expenses	(2,307)	(3,753)
Other operating income	545	600
Net	(1,762)	(3,153)

At June 30, 2016, other operating expenses concern mainly restructuration fees. The previous year, the other operating income and expenses concerned mainly the compensations paid to sales representatives within the framework of the plan of restructuration and densification of the distribution network led in the United States.

Note 19. Breakdown of net income by segment

Premiums, claims and commissions are monitored by country of invoicing. In the case of direct business, the country of invoicing is that in which the issuer of the invoice is located and for inward reinsurance, the country of invoicing is that in which the ceding insurer is located.

Geographic segmentation by billing location does not necessarily match the debtor's location.

Reinsurance income, which is calculated and recognised for the whole Group at the level of Compagnie française d'assurance pour le commerce extérieur, has been reallocated at the level of each region.

Income taxes by segment have been calculated based on this monitoring framework.

Analysis of June 30, 2016 net income by segment

(in thousands of euros)	Northern Europe	Western Europe	Central Europe	Mediter- ranean & Africa	North America	Latin America	Asia - Pacific	Group reinsurance	Cogeri	Holding company costs	Inter-zone	Group total
REVENUE	155,969	169,145	62,670	167,216	68,858	39,522	55,549	476,480	14.065		(492, 747)	716,728
o/w Earned Premium	101,227	121,996	48,720	139,994	61,647	38,071	54,086	476,480			(476, 480)	565,740
o/w Factoring	30,489		4,369									34,858
o/w Other insurance-related services	24,253	47,149	9,581	27,222	7,211	1,451	1,464		14,065		(16, 267)	116,129
Claims-related expenses (including claims handling costs)	(59,081)	(47, 997)	(22, 671)	(73, 483)	(53, 150)	(22, 842)	(68, 718)	(306, 972)		(1,706)	306,553	(350,067)
Cost of risk	(1,880)		(283)									(2, 163)
Commissions	(10, 693)	(17, 744)	(2, 955)	(16, 605)	(14, 701)	(3,939)	(10, 708)	(139, 335)			141,492	(75, 188)
Other internal general expenses	(60, 905)	(71, 129)	(19, 851)	(46, 529)	(14, 267)	(10, 491)	(16, 211)		(13, 862)	(22, 433)	14,703	(260, 976)
UNDERWRITING INCOME BEFORE REINSURANCE*	23,410	32,275	16,911	30,599	(13,261)	2,249	(40,088)	30,172	204	(24, 139)	(29,999)	28,334
Income/(loss) on ceded reinsurance	11,737	(25, 762)	(1, 521)	2,914	625	(1, 556)	8,355	(24, 364)			30,172	600
Other operating income and expenses		(1,600)		504		(650)	(15)		(1)			(1, 762)
Net financial income excluding finance costs	5,453	7,232	2,777	5,731	675	2,812	475		(110)	(566)	99	24,579
Finance costs	(247)	612	(60)	(209)	(444)	(198)	(218)		(114)	(8,066)	(272)	(9, 216)
OPERATING INCOME including finance costs	40,353	12,756	18,107	39,538	(12, 404)	2,658	(31, 490)	5,808	(21)	(32, 771)		42,534
Share in net income of associates		993										993
NET INCOME BEFORE TAX	40,353	13,749	18,107	39,538	(12, 404)	2,658	(31, 490)	5,808	(21)	(32, 771)		43,527
Income tax expense	(12,998)	(5, 232)	(3, 747)	(12, 446)	3,898	649	2,362	(2,000)	7	11,283	462	(17, 761)
CONSOLIDATED NET INCOME BEFORE NON-CONTROLLING INTERESTS	27,355	8,517	14,361	27,092	(8,506)	3,307	(29, 129)	3,809	(14)	(21, 488)	462	25,766
Non-controlling interests	(1)		(313)	(1)		144	1					(170)
NET INCOME FOR THE PERIOD	27,354	8,517	14,047	27,091	(8,506)	3,451	(29, 128)	3,809	(14)	(21, 488)	462	25,596

* Underwriting income before reinsurance is a key financial indicator used by the Coface Group to analyse the performance of its businesses. Underwriting income before reinsurance corresponds to the sum of revenue, claims expenses, expenses from banking activities, cost of risk, policy acquisition costs, administrative costs, and other current operating expenses, and expenses from other activities.

Analysis of June 30, 2015 net income by segment restated according to the new regional organization

(in thousands of euros)	Northern Europe	Western Europe	Central Europe	Mediter- ranean & Africa		North America Latin America Asia-Pacific		Group reinsurance	Cogeri	Holding company costs		Inter-zone Group total
REVENUE	162,133	191,256	63,854	179,821	66,276	42,857	56,691	337,802	14,426		(354, 799)	760,317
o/w Earned Premium	108,017	137,735	48,470	153,191	58,942	41,257	55,568	337,802			(337, 945)	603,037
o/w Factoring	31,487		4,143									35,630
o/w Other insurance-related services	22,628	53,520	11,242	26,630	7,334	1,599	1,123		14,426		(16, 854)	121,650
Claims-related expenses (including claims handling costs)	(35, 958)	(47, 368)	(48,900)	(72, 378)	(32, 981)	(29, 177)	(40, 130)	(251, 756)		(1,903)	251,402	(309, 149)
Cost of risk	(1, 817)		(85)									(1,902)
Commissions	(9, 595)	(19, 983)	(2,598)	(19, 130)	(13, 747)	(5, 122)	(11, 333)	(87, 620)			89,906	(79, 221)
Other internal general expenses	(65, 147)	(75, 224)	(20, 518)	(47, 673)	(15, 676)	(10, 420)	(15, 278)		(14, 387)	(17, 806)	15,375	(266, 755)
UNDERWRITING INCOME BEFORE REINSURANCE*	49,616	48,681	(8, 247)	40,641	3,872	(1,863)	(10,050)	(1, 574)	39	(19,709)	1,884	103,290
Income/(loss) on ceded reinsurance	(7, 577)	(21, 867)	1,448	(1, 476)	44	3,370	5,815	(3, 917)			(1, 574)	(25, 734)
Other operating income and expenses	(48)	(1,045)	(92)	(20)	(1,889)	(17)			6		(49)	(3, 153)
Net financial income excluding finance costs	9,196	3,840	3,706	8,217	694	3,446	(1,781)		1,149	(322)	52	28,197
Finance costs	(313)	(289)	(113)	(255)	(425)	(84)	(213)		(166)	(8,056)	(313)	(10, 226)
OPERATING INCOME including finance costs	50,873	29,320	(3,297)	47,107	2,296	4,852	(6, 229)	(5, 491)	1,028	(28,087)		92,373
Share in net income of associates		1,256										1,256
NET INCOME BEFORE TAX	50,873	30,576	(3,297)	47,107	2,296	4,852	(6, 229)	(5, 491)	1,028	(28,087)		93,629
Income tax expense	(15, 536)	(11, 415)	215	(11, 822)	(621)	(2,879)	491	1,891	(427)	9,670	3,265	(27, 166)
CONSOLIDATED NET INCOME BEFORE NON-CONTROLLING INTERESTS	35,338	19,162	(3,082)	35,286	1,675	1,974	(5, 738)	(3,600)	601	(18, 417)	3,265	66,463
Non-controlling interests	(1)		(362)	(2)		19						(346)
NET INCOME FOR THE PERIOD	35,336	19,162	(3, 444)	35,284	1,675	1,992	(5, 738)	(3,600)	601	(18, 417)	3,265	66,117

Note 20. Earnings per share

		30 June, 2016
		Average number of shares	Net income for the period (in €k)	Earnings per share (in euros)
Consolidated scope	Basic earnings per share	156,853,340	25,596	0,16
	Dilutive instruments	0	0	0
	Diluted earnings per share	156,853,340	25,596	0,16

		30 June, 2015
		Average number of shares	Net income for the period (in €k)	Earnings per share (in euros)
Consolidated scope	Basic earnings per share	157,159,773	66,117	0,42
	Dilutive instruments	0	0	0
	Diluted earnings per share	157,159,773	66,117	0,42

Note 21. Off-balance sheet commitments

		June 30, 2016
(in thousands of euros)	TOTAL	Related to financing	Related to activity
Commitments given	954,684	922 036	32 648
Endorsements and letters of credit	922,036	922 036
Property guarantees	7,500		7 500
Financial commitments in respect of equity interests	25,148		25 148
Commitments received	1,156,530	886 876	269 654
Endorsements and letters of credit	123,477		123 477
Guarantees	143,377		143 377
Credit lines linked to commercial paper	600,000	600 000
Credit lines linked to factoring	286,876	286 876
Financial commitments in respect of equity interests	2,800		2 800
Guarantees received	224,439		224 439
Securities lodged as collateral by reinsurers	224,439		224 439
Financial market transactions	287,007		287 007

The endorsements and letters of credit amounting to € 922,036 thousand euros for the period ended June 30, 2016 correspond mainly to :

a joint guarantee of €380,000 thousand in favor of COFACE SA subordinated notes' investors (10 year maturity)
a joint guarantee of € 500,000 thousand euros given to banks financing the Factoring business.

The securities lodged as collateral by reinsurers are concerning Coface Ré for €112,684 thousand euros and Compagnie française pour le commerce extérieur for €111,755 thousand euros.

		Dec. 31, 2015
(in thousands of euros)	TOTAL	Related to scope of entities	Related to financing	Related to activity
Commitments given	924,417	5,569	911,348	7,500
Endorsements and letters of credit	909,853		909,853
Property guarantees	7,500			7,500
Financial commitments in respect of equity interests	5,569	5,569
Obligations under finance leases	1,495		1,495
Commitments received	1,228,810	2,776	958,900	267,134
Endorsements and letters of credit	121,146			121,146
Guarantees	145,989			145,989
Credit lines linked to commercial paper	600,000		600,000
Credit lines linked to factoring	358,900		358,900
Financial commitments in respect of equity interests	2,776	2,776
Guarantees received	409,216			409,216
Securities lodged as collateral by reinsurers	409,216			409,216
Financial market transactions	55,699			55,699

Note 22. Related parties

Natixis holds, at the end of June 2016, 41.37% of the Coface Group's shares excluding treasury shares, and 41.24% including treasury shares.

	Number of shares	%
Natixis	64,853,876	41,37%
Public	91,901,162	58,63%
Total	156,755,038	100.00%

Relations betwwen the Group's consolidated entities and related parties

The Coface Group's main transactions with related parties concern Natixis and its subsidiaries.

The main related-party transactions are as follows:

financing of a portion of the factoring activity by Natixis SA;
financial investments with the BPCE and Natixis groups;
Coface's credit insurance coverage made available to entities related to Coface;
recovery of insurance receivables carried out by entities related to Coface on behalf of Coface;
rebilling of general and administrative expenses, including overheads, personnel expenses, etc.

These transactions are broken down below:

Current operating income		June 30, 2016
(in thousands of euros)	Natixis SA	Natixis factor	Ellisphere

Total revenue and income from ordinary activities	(1,099)
Revenue (net banking income, after cost of risk)	(1,099)
Total current income and expenses	3	48	(83)
Claims expenses		3
Expenses from other activities		(2)	(83)
Policy acquisition costs	1	24
Administrative costs	1	14
Other current operating income and expenses	1	9
Current operating income/(loss)	(1,096)	48	(83)

Related-party receivables and payables				June 30, 2016
(in thousands of euros)	BPCE	Natixis SA	Natixis	Ellisphere	Kompass	Altus GTS
	group		Factor		International	Inc.
Financial investments	9,770	70,077
Other assets			66		175	73
Cash and cash equivalents		2,527
Liabilities relating to insurance contracts						83
Payables arising from banking sector activities		153,425
Other liabilities		59		11		0

The €153,425 thousand in financing liabilities due to banking sector companies, at the end of June 2016, corresponds to borrowings taken out with Natixis to finance the factoring business.

Current operating income	June 30, 2015
(in thousands of euros)	Natixis SA	Natixis	Ellisphere	Altus GTS
		factor		Inc.
Total revenue and income from ordinary activities	(1,493)	1	(1)
Revenue (net banking income, after cost of risk)	(1,492)
Investment income/(loss), net of management expenses	(1)	1	(1)

Total current income and expenses	(180)	97	(195)	50
Claims expenses	(11)	6	(11)
Expenses from other activities				(4)
Policy acquisition costs	(93)	50	(99)
Administrative costs	(48)	26	(55)	54
Other current operating income and expenses	(28)	15	(30)
Current operating income/(loss)	(1,673)	98	(196)	50

Related-party receivables and payables				Dec. 31, 2015
(in thousands of euros)	BPCE	Natixis	Natixis	Ellisphere	Kompass	Altus
	group	SA	Factor		International	GTS Inc.
Financial investments	34,757	20,576
Other assets			56		175	82
Cash and cash equivalents		668
Liabilities relating to insurance contracts						85
Payables arising from banking sector activities		119,869
Other liabilities		60		93		0

The €119,869 thousand in financing liabilities due to banking sector companies corresponds to borrowings taken out with Natixis to finance the factoring business in 2015 year-end closing.

Note 23. Events after the reporting period

There has been no significant change to the Group's financial or commercial position since June 30, 2016.

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IV. Key indicators

IV. Key Indicators

A. KEY PERFORMANCE INDICATORS

1. Financial indicators

For details on the definitions of these indicators, please refer to chapter 3, section 3.3.1 of the 2015 Registration Document filed with the AMF on April 13, 2016 under number R.16-020.

2. Operating indicators

For details on the definitions of these indicators, please refer to chapter 3, section 3.3.2 of the 2015 Registration Document filed with the AMF on April 13, 2016 under number R.16-020.

B. ALTERNATIVE PERFORMANCE MEASURES (APM)

This section deals with indicators that are not defined by accounting standards and are used by the company in its financial communication.

This section thas been developed in accordance to the AMF Position – IAP DOC 2015-12. The indicators below represent the company's APM

a) APM linked to revenue and its items:

Definition	Justification	Reconciliation with the financial	Comparison N/N-1
		statements	H1-2016	H1-2015
Turnover with restated items
(1) 2 types of revenue restatements: i- Calculation of the percentage of revenue growth in constant terms: -Year N recalculated at the exchange rate for year N-1 -Year N-1 in the scope of year N	i- Historic method for calculating proforma percentages for Coface Transfer of the Public Guarantee activity will be recognised in this category (impact in 2016 or in 2017 depending on the effective date of the transfer)	i- (Turnoever revenue N - Impact of change N-1 ) / (Turnover revenue N-1 + Impact scope N) - 1	i. -3.4% = (716.7M€ - (- 17,692M€)) / (760.3M€ + 0.0M€) - 1	760.3M€ = 760.3M€ +/- 0.0M€
ii- Removal or addition of revenue in value (€) considered as non-recurring. The term "non-recurring" refers to impacts on revenue which do not occur every year, such as the negotiation with the French State (revenues from public guarantees activity)	ii- Item considered as non recurring, which means that it will not occur again in the current year (Year N). As such, the decline in remuneration for the Public Guarantee activity due to renegotiations with the French State for the remuneration conditions of 2015 (negotiation in Q1 2016)	ii- Current turnover N +/- Restatements / Additions of non recurring items N	ii. 719.4M€ = 716.7 M€+ 2.7M€ (restatement of the adjustment of the decrease in public guarantees income in Q1 2016)
Fees and commission income /GEP -	Proforma
Weight of fee and commission income compared to earned premiums in constant terms: -Year N at the exchange rate for	Indicator used to track changes to fee and commission income compared to the main revenue item at constant rate and scope.	Fee and commission income / Earned premiums - Proforma	Current: 12.7% = (€71.9m/ €565.7m) for 2016	Current: 11.9% = (€71.6m / €603.0m) for 2015

year N-1 -Year N-1 in the scope of year N Fee and commission income corresponds to revenue billed for complementary services.			Proforma : 12.5% = (€72.6m / €582.4m) for 2016
Internal overheads excluding non-recurring items
(2) Restatement or Addition of items considered as non recurring to internal overheads. The term "non-recurring" refers to the impacts on expenses which do not occur every year.	Indicator used to compare the change in internal overheads, excluding non-recurring items.	Current internal overheads +/- Restatements / Addition of non recurring items	€271.6m =€274.7m - €3.1m (€2.6m for departure of former CEO & contingent capital of €0.25m & fees €0.3m)	€281.7m =€281.7m - €0.0m

b) APM linked to operating income:

Definition	Justification	Reconciliation with the financial Comparison N/N-1
		statements	H1-2016	H1-2015
Restated operating income excluding non-recurring items		(including financial costs and excluding other operating income and expenses)
Restatement or Addition of items considered as non recurring, to the operating income: these include non recurring income and expenses with an impact on either revenue (see definition above, (1)) or overheads (see definition above) (2))	Indicator used to compare the change in operating income, excluding non-recurring items.	Current operating income +/- Restatements / Addition of non recurring items	€50.1m = €44.3m + €2.7m (restatement of the adjustment of the decrease in public guarantees income in Q1 2016 ) + €3.1m (€2.6m for departure of former CEO & Contingent capital €0.25m & fees €0.3m)	€95.5m = €95.5m - €0.0m

c) APM linked to net income:

Definition	Justification	Reconciliation with the financial Comparison N/N-1
		statements	H1-2016	H1-2015
Net income excluding non-recurring items
Restatement or Addition of items considered as non recurring, to net income: These include non-recurring income and expenses likely to impact either revenue (see definition above, (1)) or overheads (see definition above) (2)) This aggregate is also restated to account for "current operating income and expenses"	Indicator used to compare the change in net income, excluding non-recurring items.	Current net income +/- Restatements / Additions of non-recurring items	€30.5m = €25.6m + [€2.7m (restatement of the adjustment of the decrease in Q1 2016 public guarantees) + €3.1m (€2.6m for departure of former CEO & Contingent capital €0.25m & fees €0.3m) + €1.8m (Other non-recurring costs, please refer to the Note 18. Other operating income and expenses) restated of tax]	€68.3m = €66.1m + €2.1m (USA portfolio agent for €1.9m and €0.3m of other) restated of tax
classified after operating income in the management income statement (3).

d) APM in connection with combined ratio:

Definition	Justification	Reconciliation with the financial	Comparison N/N-1
		statements	H1-2016	H1-2015
Net combined ratio excluding restated and non-recurring items [A]
Restatement or Addition of	Indicator used to compare the	Combined ratio after reinsurance +/-	[A]=[B]+[C]	[A]=[B]+[C]
items considered as non	change in combined ratios after	Restatements/ Addition of non
recurring to the combined ratio	reinsurance, excluding non	recurring items
after reinsurance. This includes	recurring items.

non-recurring income and expenses with an impact on either revenue (see definition above, (1)) or overheads (see definition above) (2))
Loss ratio excluding non-recurring items [B]
Restatement or Addition of items considered as non recurring, to loss ratio after reinsurance.	Indicator used to compare the change in loss ratios after reinsurance, excluding non recurring items.	Loss ratio after reinsurance +/- Restatements/ Addition of non recurring items	60.8% = 60.8% + 0.0pts	52.0% =52.0%+0.0 pts
Cost ratio excluding restated and non-recurring items [C]
Restatement or Addition of items considered as non recurring, to cost ratio after reinsurance. These include non recurring income and expenses with an impact on either revenue (see definition above, (1)) or overheads (see definition above) (2))	Indicator used to compare the change in cost ratios after reinsurance, excluding non recurring items.	Cost ratio after reinsurance +/- Restatements/ Addition of non recurring items	30.0% = €31.4% - €1.4pts (restatement of the adjustment of the decrease in public guarantee income in Q1 2016 + €3.1m (€2.6m for departure of former CEO & Contingent capital €0.25m & fees €0.3m)	27.7% = 27.7% + 0.0 pts
	Gross loss ratio with claims handling expense
Addition of claims handling expense to loss ratio before reinsurance excluding claims handling expense: Claims/Earned premiums) Claims handling expense refer	Key indicator in the claims monitoring	-[(Claims) + (Claims handling expense)] / [Earned premiums] (see P&L)	61.9% = -[(-€337.3m) + (-€12.8m)] / [€565.7m]	51.3% = -[(-€295.3m) + (-€13.9m)] / [€603.0m]

to the expenses generated by
the occurrence of claims and
their handing (e.g. lawyers'
fees, debt collection, etc.)
Gross loss ratio current year –	before reinsurance excluding claims handling expense [D]
Ultimate claims expense to loss	Indicator used to calculate the	= Claims current year/ Gross earned	73.7%	73.3%
(after recourse) compared to	loss ratio before reinsurance,	premiums current year	= see development triangle of	= see development triangle
earned premiums (after	excluding claims handling	See development triangle of ultimate	ultimate claims ratios	of ultimate claims ratios
Premium refunds) of the	expense.	claims ratios
current year. The reporting year
is the current year N only.
Gross loss ratio previous years –	before reinsurance excluding claims handling expense [E]
Corresponds to the Bonis/Malis	Indicator used to calculate the	[E] = [F-D]	-14.1%	-24.3%
of reporting years prior to the	loss ratio before reinsurance,		= 73.7% - 59.6%	= 73.3% - 49.0%
current year N which is not	excluding claims handling
included. A Boni or Mali refers	expense.
respectively to an excess or
deficit in claims provisions
compared to the loss ratio
actually recognised.
Gross loss ratio for all years –	before reinsurance excluding claims handling expense [F]
Corresponds to the book loss	Key indicator in claims	-(Claims / Earned premiums) (see P&L)	59.6%	49.0%
ratio relating to all reporting	monitoring		= -[(-€337.3m) /	= -[(-€295.3m) /
years (Current year N and its			€565.7m	€603.0m
prior years). Indicator used to
calculate the loss ratio before
reinsurance, excluding claims
handling expense.

e) APM in connection with equity:

Definition	Justification	Reconciliation with the financial		Comparaison N/N-1
		statements	H1-2016	H1-2015
RoATE
It is the ratio betweend Net income Groupe share/ Average tangible IFRS equity net of intangible	The return on equity ratio is used to measure the return on the Group's invested capital.	Net income group share N/ Résultat net part du groupe N /[(Tangible IFRS equity N-1 net of intangible N-1+ Tangible IFRS equity N net of intangible N)/2]	3.3% = (26M€x2)/ [(1540M€+1 537M€)/2] The net income of the year (x2) is taken into account in the calculation of the numerator and denominator of the quarterly ratio	8.7% = (66M€x2)/ [(1556M€+1 486M€)/2] The net income of the year (x2) is taken into account in the calculation of the numerator and denominator of the quarterly ratio
RoATE hors éléments exceptionnels non récurrents
RoATE (refer to the definition above) recalculated based on the net income excluding exceptional items and the average tangible equity excluding exceptional items. For the calculation, interest and commissions linked to the capital management instruments ( hybrid debt, or contingent capital) are not considered as exceptional items	The return on equity ratio excluding exceptional items is used to track changes on the Group's invested capital between two reporting periods.	Net income group share N/ Résultat net part du groupe N excluding exceptional items /[(Tangible IFRS equity N-1 excluding exceptional items net of intangible N-1+ Tangible IFRS equity N excluding exceptional items net of intangible N)/2]	3.9% = (30M€x2)/ [(1549M€+1 540M€)/2] The net income of the year (x2) is taken into account in the calculation of the numerator and denominator of the quarterly ratio	9.0% = (68M€x2)/ [(1561M€+1 492M€)/2] The net income of the year (x2) is taken into account in the calculation of the numerator and denominator of the quarterly ratio

f) APM linked to the investment portfolio:

Definition	Justification	Reconciliation with the financial		Comparison N/N-1
		statements	H1-2016	H1-2015
	Carrying yield rate of financial assets
Investment income before income from equity investments, currency translation gains or losses and financial charges compared to the balance sheet total of financial assets excluding equity investments	Indicator used to monitor the book performance of the financial assets portfolio	Investment portfolio income / ((market value of financial assets (stocks excluding equity investments, real estate, fixed-income instruments) year N+ market value of financial assets (stocks excluding equity investments, real estate, fixed-income instruments) year N-1)/2)	0.8% = 20.2 / (((2649 -122) + (2561 -127))/2)	1.3% = 32.6 / (((2584 - 124) + (2679 -121))/2)
	Carrying yield rate of financial assets excluding income on disposals
Investment income before income from equity investments, currency translation gains or losses and financial charges excluding gains or losses on disposals compared to the balance sheet of financial assets excluding equity investments	Indicator used to track the recurring book performance of the financial assets portfolio	Investment portfolio income excluding gains or losses on disposals / ((market value of financial assets (stocks excluding equity investments, real estate, fixed-income instruments) year N + market value of financial assets (stocks excluding equity investments, real estate, fixed-income instruments) year N-1)/2)	0.9% = (20.2 – (-1.3)) / (((2649 -122) + (2561 -127))/2)	0.9% = (32.6- 7.9) / (((2649 - 122) + (2561 -127))/2)
Economic yield rate of financial assets
Economic performance of the	Indicator used to track the book	Book yield rate of financial assets +	1.0%	2.1%

asset portfolio. We therefore add to the book yield, the change in revaluation reserves YTD compared to the balance sheet total of financial assets	performance of the financial assets portfolio	(financial assets revaluation reserves (stocks excluding equity investments, real estate, fixed-income instruments) year N- revaluation reserves of financial assets (stocks excluding equity investments, real estate, fixed income instruments) year N-1)/ ((market value of financial assets (stocks excluding equity investments, real estate, fixed-income instruments)	=(20.2+((151.011- 15,007-98,019)- (112.155-6.123- 93.310))) / (((2649 - 122) + (2561 -127))/2)	= (32.6 + ((128.981- 8.714-95,737)-(124.426- 2.834-93.607))) / (((2649 -122) + (2561 - 127))/2)
Investment portfolio income		year N + market value of financial assets (stocks excluding equity investments, real estate, fixed-income instruments) year N-1)/2)

Income from the investment	Used to monitor income from	Income from stocks excluding equity	20.2 M€	32.6 M€
portfolio (stocks, fixed-income	the investment portfolio only	investments + fixed-income	= - 1.282 + 19.596	= 10.767 +21.100
instruments and real estate)		instruments + real estate income	+1.931	+0.696
Others
Currency translation gains or losses and equity investments	Used to monitor income from equity investments and currency translation gains and losses that are not an integral part of the investment portfolio	Currency translation gains or losses + income from derivatives + income from equity investment.	6.0M€ = - 2915 + 8130+0.785	-2.8M€ = 31.571-36.215+1.783

g) API linked to reinsurance:

Definition	Justification	Reconciliation with the financial	Comparison N/N-1
		statements	H1-2016	H1-2015
Ceded premiums / GEP
Weight of ceded premiums compared to earned premiums. Ceded premiums correspond to the percentage of earned premiums that Coface transfers to reinsurers under reinsurance treaties signed with them. Earned premiums correspond to the sum of premiums issued and provisions on unissued earned premiums.	Indicator used to monitor changes to reinsurance result	- (Ceded premiums / Earned premiums)	23.5% =-(-€132.9m / €565.7m)	22.1% =-(-€133.5m / €603m)
Ceded premiums /total claims
Weight of ceded premiums compared to total claims. Ceded premiums correspond to the percentage of earned premiums that Coface transfers to reinsurers under reinsurance treaties signed with them.	Indicator used to track the weight of reinsurance income on the total of claims	(Ceded premiums /Total claims	39.4% =-(-€132.9m / €337.3m)	45.2% =-(-€133.5m / €295.3m)
Underwriting income before reinsurance

Please refer to chapter 3, section 3.4.2 of the 2015 Registration Document.

Underwriting income after reinsurance

Please refer to chapter 3, section 3.4.2 of the 2015 Registration Document.

V. Statutory auditors' review report on the halfyearly consolidated financial statements

V. Statutory auditors' review report on the half-yearly consolidated financial statements

This is a free translation into English of the statutory auditors' review report on the half-yearly financial information issued in French and is provided solely for the convenience of English-speaking users. This report includes information relating to the specific verification of information given in the Group's half-yearly management report. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.

For the period from January 1 to June 30, 2016

To the Shareholders,

In compliance with the assignment entrusted to us by your General Meeting and in accordance with the requirements of article L. 451-1-2 III of the French Monetary and Financial Code ("Code monétaire et financier"), we hereby report to you on:

the review of the accompanying half-yearly condensed consolidated financial statements of COFACE S.A., for the period from January, 1st to June, 30th 2016,
the verification of the information presented in the half-yearly management report.

These half-yearly condensed consolidated financial statements are the responsibility of the Board of Directors. Our role is to express a conclusion on these financial statements based on our review.

I- Conclusion on the financial statements

We conducted our review in accordance with professional standards applicable in France. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the accompanying half-yearly condensed consolidated financial statements do not give a true and fair view of the assets and liabilities and of the financial position of the Group as at June 30th, 2016 and of the results of its operations for the period then ended in accordance with IAS 34 - the standard of the IFRS as adopted by the European Union applicable to interim financial statements.

I- Specific verification

We have also verified the information presented in the half-yearly management report on the halfyearly condensed consolidated financial statements subject to our review. We have no matters to report as to its fair presentation and consistency with the half-yearly condensed consolidated financial statements.

The Statutory Auditors

Paris La Défense, on the 29 July 2016 Neuilly-sur-Seine, on the 29 July 2016

KPMG Audit Deloitte & Associés Department of KPMG S.A.

Francine Morelli Partner

Damien Leurent Partner

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VI. Statement of the person responsible for the financial statements

I hereby declare, after having taken every reasonable measure for such purpose, that the information contained in this registration document, to my knowledge, is true to fact and that no material aspects of such information have been omitted.

I certify that, to the best of my knowledge, the interim condensed consolidated financial statements of the period under review have been prepared in accordance with applicable accounting standards and give a true and fair view of assets, financial position and income of the consolidated scope of the Group, and that the interim business review, in paragraph I. of this document, includes a fair review of the important events occurring during the first half of the financial year and their impact on the financial statements, the main transactions between related parties and a description of the main risks and uncertainties for the remaining six months of the year.

The limited review report for the interim consolidated financial statements for the six-month period ended June 30, 2016 is reproduced above, in paragraph IV.

On July 27, 2016 Xavier DURAND Chief Executive Officer of COFACE SA

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VII. Appendix: Calculation of financial ratios

VII. Appendix : Calculation of financial ratios

In the course of its activities, and in addition to the financial information published in accordance with IFRS, the Coface Group tracks certain key operating ratios that provide an understanding of the Coface Group's performance and profitability of its products (loss ratio, cost ratio and combined ratio).

Loss Ratio

This ratio allows the Coface Group to measure the underwriting profitability of insurance contracts during the financial year. By analysing this ratio, it is also possible to price policies effectively by taking into account the amount of claims made by policyholders.

Loss Ratio before Reinsurance

The loss ratio before reinsurance is the ratio of claim expenses (as defined below) to gross earned premiums (the sum of the gross written premiums and unearned premium provisions), net of premium rebates. Premium rebates are reimbursements made to policyholders of part of the premiums paid by them when claims under their insurance policies do not exceed a certain threshold (low claims bonus) or when there are no claims (no-claims bonus).

Loss Ratio after Reinsurance

The loss ratio after reinsurance corresponds to the ratio of claims expenses (net of claims expenses ceded to reinsurers under reinsurance treaties entered into by the Coface Group) to the gross earned premiums (net of premiums ceded to reinsurers).

Cost Ratio

Cost Ratio before Reinsurance

The cost ratio before reinsurance is the ratio of overheads (as defined below) to gross earned premiums (as described above).

The cost ratio before reinsurance is used by the Coface Group to measure all the costs related to the acquisition and management of its portfolio of contracts in a given financial year. The Coface Group's credit insurance business is supported by services activities such as corporate information and recovery of receivables. These services are inherent to the traditional credit insurance activity (related services) and the related expenses are included in the overheads of the Coface Group. The overheads are also increased by complementary activities such as factoring (in Germany and Poland) and management of public procedures on behalf of the French and Brazilian States. However, in order for the cost ratio calculated by the Coface Group to be comparable to the cost ratio calculated by other main market players, revenue generated by the additional businesses (non-insurance) described above is deducted from overheads.

Cost Ratio after Reinsurance

The cost ratio after reinsurance is the ratio of general expenses (after deduction of reinsurance premiums paid by reinsurers) to gross earned premiums (net of premiums ceded to reinsurers).

Overheads

Overheads accounted for in the cost ratio are the sum of:

policy acquisition costs (consisting of the external costs of acquisition of contracts, corresponding to commissions paid to business contributor intermediaries (brokers or other intermediaries) and internal contract acquisition costs corresponding to the cost of maintaining distribution networks and the costs relating to drafting services in charge of writing contracts);
administrative costs (including Coface Group operating costs, payroll costs, IT costs, etc. excluding profit-sharing and incentive schemes);
other current operating expenses (expenses that cannot be allocated to any of the purposes defined by the accounting plan, in particular including management expenses);
expenses from banking activities (general operating expenses, such as payroll costs, IT costs, etc., relating to the factoring business); and
expenses from other activities (overheads related exclusively to information and recovery for customers without credit insurance) minus revenue related to:
o fees and commission income (ancillary fees charged under insurance contracts for the provision of credit insurance related services, such as debtor information, fees for monitoring credit limits of customers of policyholders and receivables management and recovery of receivables),
o other related benefits and services (ancillary services, such as administrative fees for managing claims and reinvoiced receivables recovery fees),
o information and other services (fees charged for access to information on corporate solvency and marketing information) provided to customers without credit insurance,
o receivables management (fees charged for receivables recovery services) provided to customers without credit insurance,
o the net banking income relating to the factoring activities, and
o compensation for public procedures management services.

Combined Ratio

The combined ratio measures the overall profitability of the Coface Group's activities and its technical margin.

The combined ratio is the sum of the loss ratio and the cost ratio. It is tracked by the Coface Group both before and after reinsurance (claims expenses net of those ceded to reinsurers under reinsurance treaties entered into by the Coface Group and overheads, less reinsurance commissions paid by the reinsurers over total gross earned premiums net of premiums ceded to reinsurers).

Calculation of ratios

In the course of its business, and in addition to the financial information published in accordance with IFRS, the Coface Group tracks certain key operating ratios that provide an understanding of its performance and profitability of its products (loss ratio, cost ratio and combined ratio).

Calculation of ratios

(in thousands of euros)		As at June 30
	Note	2016	2015
Earned premiums excluding policyholders' bonuses and rebates	13	612,171	640,328
Policyholders' bonuses and rebates	13	(46,431)	(37,292)
Earned premiums	13	565,740	603,036
Fee and commission income	13	71,864	71,624
of which Fees and commission income	13	69,104	66,602
of which Other insurance-related services	13	2,760	5,022
Remuneration of public procedures	13	25,739	29,901
Services	13	18,526	20,125
of which Business information and other services	13	11,854	12,881
of which Receivables management	13	6,672	7,244
Net income from banking activities (Factoring)	13	34,859	35,630
Consolidated revenue	13	716,728	760,316
Claims expenses	14	(350,067)	(309,149)
Income from ceded reinsurance	16	133,535	107,790
of which Ceded claims	16	86,745	64,819
of which Commissions paid by reinsurers	16	46,790	42,971
Expenses from ceded reinsurance	16	(132,934)	(133,524)
of which Ceded premiums	16	(143,643)	(143,270)
of which Ceded policyholders' bonuses and rebates	16	10,709	9,746
Policy acquisition costs	15	(126,326)	(139,083)
Administrative costs	15	(140,175)	(135,292)
Other current operating expenses	15	(41,200)	(41,059)
Investment management expenses	15	(972)	(1,102)
of which Insurance	15	(972)	(1,102)
Claims handling expenses	15	(12,777)	(13,854)
Expenses from banking activities, excluding cost of risk	15	(6,978)	(6,734)
Expenses from other activities		(21,486)	(23,808)
Overheads including expenses from other activities		(349,914)	(360,932)
of which employee profit-sharing	15	(2,474)	(5,602)

Ratios relating to credit insurance and surety bonds gross earned premium net of cancellation

	2016	2015
Loss ratio before Reinsurance	61,9%	51,3%
Loss ratio after Reinsurance	60,8%	52,0%
Cost ratio before Reinsurance	32,3%	30,4%
Cost ratio after Reinsurance	31,4%	29,8%
Combined ratio before Reinsurance	94,2%	81,6%
Combined ratio after Reinsurance	92,2%	81,9%

As at June 30
2016	2015

AI assistant

Coface SA — Interim / Quarterly Report 2016

1209_ir_2016-07-29_25b2491f-84ed-4054-9166-0c7cea453589.pdf

NOTE

Presentation of financial and other information

Forward-Looking Statements

Risk Factors

I. Half-year activity report

a) Economic environment in the first half-year1

b) Significant events in the period

Changes in governance

New regional organisation

Contingent Capital

Management of State export credit guarantees

Financial strength affirmed by rating agencies

Appointment of directors

As well as:

Referendum of June 23rd 2016: Brexit :

c) Events after June 30, 2016

d) Comments on the results at June 30, 2016

i. Revenue

Insurance

Factoring

Changes in revenue by region*

ii. Underwriting income

Underwriting income before reinsurance

Loss experience

Underwriting income after reinsurance

iii. Investment income, net of management expenses (excluding finance costs)

Financial markets

Financial income

iv. Operating income

v. Net income for the year

e) Group cash and capital

Equity

Goodwill

Debt

Solvency of the Group

Return on equity

f) Risk Factors

g) Future risks and uncertainties

h) Outlook

i. Economic environment6

GDP GROWTH (as %): 2016 (source Coface)

ii. Group's outlooks

II. CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheet

Consolidated income statement

Consolidated statement of comprehensive income

Statement of changes in equity

Consolidated statement of cash flows

III. Notes to the consolidated financial statement

Basis of preparation

Note 1. Significant events

Governance evolution

New organization in Europe

Contingent capital

Management of State export credit guarantees

Financial strength affirmed by rating agencies

Appointment of directors

As well as:

Referendum of June 23rd 2016: Brexit

Note 2. Goodwill

Note 3. Other intangible assets

Note 4. Insurance business investments

7.1 – Analysis by category

Impairments

Change in investments by category

Derivatives

4.2 – Financial instruments recognized at fair value

Breakdown of financial instrument fair value measurements as at June 30, 2016 by level in the fair value hierarchy

Movements in Level 3 securities as at June 30, 2016

Breakdown of financial instrument fair value measurements as at December 31, 2015 by level in the fair value hierarchy

Movements in Level 3 securities as at December 31, 2015

Note 5. Receivables arising from banking and other activities

Note 6. Investments in associates

Note 7. Cash and cash equivalents

Note 8. Share capital

Note 9. Provisions for liabilities and charges

Note 10. Financing liabilities

Coface SA Interim / Quarterly Report 2016

a) Economic environment in the first half-year¹

i. Economic environment⁶