Coface Sa

Good day, and thank you for standing by. Welcome to QFAS first quarter results presentation. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press star, one, one, on the telephone keypad. You will then hear an automatic message advising your hand is raised. To withdraw a question, please press star, one, one, again. Please be advised that this conference is being recorded. I would now like to hand the conference over to our speaker today, Xavier Durand. Please go ahead.

Thank you very much and good evening. Thanks to all of you for joining. Happy to report today our first quarter 2025 numbers. You all have seen from the headline, it continues to be a good story for COFAS. We're reporting net income at $62.1 million. The turnover is up 2% at constant FX and parameter with trade credit insurance growing actually 1.2%. That's an inversion of the trend that we had last year as we've had, I think, a negative or zero activity through most of the year. Client activity is up 1.2% for this quarter. Client retention near our record at 95%. Pricing still down, but pretty much in line with the prior year and with historical trends. Strong growth continues with business information growing almost 15%, same as debt collection. Factoring slightly down, that's really the reflection of the industrial Germany and Central Europe business. As you can see, the loss ratio came in at 39.1%, which is up 3.3 points. That brings the net combined ratio at 68.7, which is in line with Q4. Slightly higher gross loss ratio at 38.7. Higher opening year reserving and pretty stable reserve releases from the prior vintages. The costs are up 2.2 points at 29.5. We continue to invest deliberately according to our Power of the Core business plan, so the no change in strategy, deliberate investments because we think it is actually the right strategy in what is a pretty volatile and uncertain environment. And I think we're the company's well-positioned. So total 62.1, slightly down from last year, and ROAT at 12.7%. We've added a page on page five about the environment. I mean, it's pretty obvious that the environment is as uncertain as it's ever been. On the left-hand side of the page, you can see a chart that represents the global economic policy uncertainty. We are at the stage at a very high level driven by the US move away from free trade, which has sent this index to record highs. It's very hard to see where this all settles, obviously. There's been a lot of announcements, changes and U-turns, but I think whether or not it ends up at a very high or medium or lower level, for now we are very likely to see a negative impact on world economy and trade just because people are uncertain and that slows down investments and spending. But it also means for us as a business that we see more demand for our business proposition, whether it is insurance or short-term information. We think that our positioning basically on monitoring accurately, or as accurately as possible, short-term risks, looking into details by industry, by trade corridor, by business, the expertise we have, the network we have, are all extremely relevant in this environment. And so we think we've got the right strategy. We continue to invest deliberately to make our Power of the Core plan a reality. If you go to page seven, just a little bit more detail on turnover. So turnover is up 2% this quarter. As I said, trade credit insurance premiums are up 1.2 at all things equal. The other revenues are up 7.5%. I've mentioned business information at close to 15%. Same for debt collection, close to 15%. Factoring slightly down, insurance fees that we collect on our insurance contract continue to perform well at 4%, bringing the total insurance-related fees to premiums ratio at 13.3%, which is a nice number. When you go to the next page, on page 8, by geography, I think what you see here is really the description of the world economy with Northern Europe, Germany, mainly down from last year. Strong growth, though, in services, close to 18%. Central Europe has had a bit of a one-off with a large contract that's been reduced and transferred to an Asian region, but still negative. Western Europe doing a little bit better with France, the UK, and Switzerland growing at about 1.9%. Med in Africa actually continues to drive growth at 5.1%. continued southern Europe and dynamism in the Middle East. North America striking along at 1.5, Asia at 3%, and Latin America having a nice surge, actually. We're coming out of a period where we have been working on the risk quite a bit, and there's obviously inflation underlying those numbers in Latin America. If you go to page nine, the usual breakdown of our business, you see that it continues to be a strong new business year for us. Actually, at the level of last year, I think there's good momentum. We are seeing a nice demand and nice continued growth in our direct business. We see retention at this stage at 95%, very close to our record 95.7. The market is competitive. People are aggressive. But at this stage, I think we are performing pretty well. The price effect is still negative. As you know, the long-term trend in this business is something like negative 1.5. So it's pretty much in line with the first quarter of 2024. And then on the volume side, as I said, 1.2% is a nice change from, I would say, the negative or slightly positive we had last year. So it's a good start of the year. It's hard to say where this is going to go, obviously, as there's lots of uncertainties on the trade, as we've mentioned before. Going to then page 10, you see the loss history by quarter on the top left. As we discussed priorly, insolvencies around the world continue to normalize or actually creep up slowly. The current environment is actually not helping. I would say the frequency that we are seeing is not back to normal conditions. We are seeing the same number of claims that we had seen in 2019 prior to the COVID crisis and then the subsequent events. We see claims amount higher though because there's been inflation since and that's reflected in the amount of claims that we're receiving. The severity is growing, but it is still below, I would say, the historic average of the business. So nothing really surprising here. You can see on the bottom right-hand corner that we still are cautious in underwriting the new vintage at 82% pre-discount. And we are still getting very nice throwbacks from the prior vintages at minus 43.6%. So no change in our reserving policy, no change in our stance in the market. We are very conscious of the environment and we are actually being very close to our clients in managing the risks, knowing that the full effects of the tariff situation will probably develop over the next part of the year. On the next page, 11, we see the Q1 compared to the prior years. I don't think it's very relevant during the first quarter to look at this because we're comparing one quarter with full years. So I'd rather turn to page 12 where we are seeing the sequence of the last five quarters that the business has gone through. And pretty much I think what we see here is there's not much to talk about. On Western Europe, Northern Europe, Central Europe, Med and Africa, which are the largest and historically more stable markets that we operate in, you can see that the risk is really contained. It operates at levels anywhere from, let's say, 25% to 50%, but very, very stable. On the three smaller and traditionally more volatile markets that we're in, North America, Latin America, again, some claims here and there, but no real trend. And as you see, for example, in Asia Pacific, we had a low Q3, a higher Q4, and a lower Q1. So not much to report in terms of the risk side. The cost side on page 13, as I mentioned, we are continuing to invest deliberately in our direct origination capabilities, in our technology, in our data, and in our business services. So the costs in total from Q1 24 are up 5.7%. That brings the cost ratio before reinsurance on the bottom right from 31.7 to 33.1. That's an increase of 1.4 points. And that's driven by a number of things. Investments, as I mentioned, are up, increased the ratio by 2.9 points. Cost inflation that's been embarked from the past is still there and creates 1.4 points of drag. It's offset by the revenues that we get from the new business services by 2.6 points, and then some growth that we have in the premiums, which lower the ratio by 0.4. So the net cost ratio is up 2.2, very slightly lower insurance commissions. Fala is going to take us through this, but pretty much for us, a continued investment in our in our expertise, in our people, in our capabilities, which makes a ton of sense in this current market. And with that, I'm actually going to turn it over to Paula to take us through the rest of the pages.

Yeah, thank you, Xavier. So premium session rate, way, way close to where we were last year. What is changing is, of course, the premium session rate. You can see the increase from 21 to 26.4%. reflecting the increase in the loss ratio that we are seeing. As a result, we're passing on this result to the reinsurer, moving from minus 30 to minus 20 million euros pre-tax. Leading us to a net combined ratio of 68.7, very similar to what we've seen in Q4-24, with an increase in net cost ratio, and increasing the net loss ratio, but still below 70%. If we move to the next page, so we're now on page 16, financial portfolio, the market to market of our investment portfolio stands at 3.35 billion euros. with a high level in terms of liquid asset cash, which is 17% of the total portfolio. Of course, we are holding cash as we're going to pay our dividend at the end of this month for about 200 million euros. In terms of investment income, if we look at the first two lines for investment, material income and realized gain and loss, You can see that it is translated in the fact that we are increasing slightly the accounting yield with and without gain and loss. It's moving up. And the new money is now invested at 3.8, which is slightly below the level of investment that we had last year, but still above 3%. If we move to the FX line, something we have, you can see the minus 12.4, this includes 4.5 million related to hyperinflation, mainly in Turkey, which means that the remaining part is the FX negative impact. You can see the offset, actually, of this FX negative impact in the IFE line. You can see that the IFE is moving from minus 11 to minus 4, and out of the minus 4, you have six or seven million related to realized, well, positive P&L impact on ethics. So it's an offset in two geographies of booking between financial results and technical results. IFE, as I said, if you exclude the ethics impact, It will be pretty similar, at a similar level that what we have in Q1, 24, which is more or less 10, 11 million euros. These leaders to a net income of 62 million, still very strong net income, despite, I think, the decrease versus last year, but this is driven by the fact that our net combined ratio has increased. We turn on average tangible equity. We're now on page 18. Total life for us is moving from $2,194,000 to $2,234,000. This is mainly driven by the next net income of the period. And then we have, I think, some CTA, so currency translation impact on our equity. We turn on average tangible equity from 13.9 to 12.7. Of course, we're comparing year-end return on average negligible equity to an annualized Q1, so I think the impact would probably be much more meaningful, I would say, throughout the year than what we're seeing in Q1. You know that we don't disclose any solvency in Q1, but we can say that it will be anyway above the upper range of our control zone.

So a relatively short presentation today. I mean, clearly, we think this is another good quarter for COFAS. Combined ratio is at 68.7. It's stable versus the Q4 of 2024. We're getting nice income from our investment portfolio. The ROHE is above our target, as you know, through the cycle. Clearly, this is a complicated environment, I mean, not just for COFAS, but for every one of our clients and every industry participant. There's been lots of announcements made. Some hikes have actually taken place and are starting to weigh. Clearly, a lot of discussions, a lot of U-turns, you know, it's very unclear as to where exactly this settles in the end, negotiations that need to take place, et cetera, et cetera. I think when we see this, our impetus is on, one, staying very close to the action, so broken down the world in different segments, and we're talking 600 different segments that we look at, and looking at each individual industry and each individual sector's impact. I think this environment justifies what we do. I mean, we have experts all over the world. We have data that we've been investing on. We have technology. we have processes, we're very close to our clients, and we're making sure that we stay current with everything that's happening in the macroeconomic environment as well as with the individual situations of our clients. So I think our strategy, which is to be really the best at doing this, investing in risk-free services, investing in our technology, in our people, in our processes. I think that makes a ton of sense, and we feel we're as well positioned as possible in this environment. So that's pretty much what we have for you today. A bit shorter than usual, we are going to turn it over for questions for all of those on the call.

Thank you, dear participants. As a reminder, if you wish to ask a question, please press star 1-1 on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star 11 again. Mr. Bauer will compile the Q&A roster. This will take a few moments. Now we're going to take our first question. And it comes from Michael Hartner from Berenberg. Your line is open. Please ask your question.

Fantastic. Thank you very much. Could you give us a feel for how conservative the Last pick, the 82.2, is just to get a feel. If I look at the slide 10, the little blue band, which I kind of think of the conservatism, maybe I'm wrong, is a little bit narrower than in previous year, but maybe I'm wrong. Any comment here would be useful. The second is, you said your number of claims is similar now to 2019. But your combined ratio is about not quite 10 points better. I don't have the quarter, but I think in the year you were at 77% back then. You're now first quarter 68.7, so nine points or better. And I just wondered if you could get a feel. My feeling is what's changed is that, just like you said, you focus more on clients, et cetera, but your balance sheet is immensely stronger than it was back then, both in terms of the mix of assets, so some more fixed income, less real estate maybe, but probably also more reserving. I don't know, any comment here would be helpful. And then I know you said it's similar, but I always think of the sea as a kind of magic region, and it does stand out at 51.8, and I know you might say, well, 51.8, given where we've been, isn't a big variation, but the previous numbers have only ever, well, in the past few quarters, only above 41. So I just wondered if there's something there, which is unusual.

Thank you. Just on that one, one quarter ago, we were at 13, right?

Exactly. And you can see there's only 10% of the total premium, so it's still a little bit volatile, and we have one or two. claims that we had actually this drive this big. But other than this, there's nothing unusual to be reported.

There's a couple of claims that could tell the balance. But I mean, the law of large number only starts to work for large places. Michael, I wouldn't try to read into the, I guess you're referring to the dotted blue.

Which is a discounted effect.

That's the discount effect. So I wouldn't try to read in that number anything else than the interest rate discount, the interest rate that we're using for the discounting rate. So my comment to you on this one is we haven't changed our underwriting stance. We haven't changed our reserving methodology. There's really nothing new in these numbers as far as this quarter versus the year before or the two years before. In terms of your comparison with 2019, yes, we had the same number of claims, but the business was smaller at the time because we also have had more premiums, right? So the claims are larger in amount, but so are the premiums. So I think you also have to factor that part of the equation in.

But if I may say, but it's not a nice word, but anyway, You did highlight the reserving point. I feel still hungry for an answer. If you highlighted it, I thought it was fair to ask. You know, the 82.2. You actually said it's higher.

I think, as I said, we haven't changed our stance, right? So we have been, I think I've mentioned over this call, I don't know, time and time and time again, that we've taken a relatively conservative stance when it comes to looking at the market. knowing that a slow but steady normalization was underway for something like four years now, and that hasn't changed. So we continue to see normalization. I don't know if that's the right word, but we continue to see slow and progressive increase in the insolvencies around the world. We continue to be careful about what we underwrite. We continue to reserve appropriately for whatever might lie ahead. And that's it. That's all we're saying here in these numbers. Okay. Thank you.

Thank you. Now we're going to take our next question. And the next question comes from Amelie Zdravkovic from Deutsche Bank. Your line is open. Please ask your question.

Yes. Hello. Good afternoon. This is Amelie from Deutsche Bank. Thank you so much for taking my questions. I just have two, if I may, and it's It's mainly just, I mean, on the sort of the commentary around the impact of global trade and business failures. I was just wondering if you sort of have any more color to add on sort of how this impacts your outlook for 25. And I mean, are you building any new assumptions? Are you building in potential recessions? How are you sort of, how are you thinking about the outlook more generally? And then, I mean, you touched a bit on... Oh, sorry.

Go ahead.

No, and then my second question is just, I was just curious a bit on the demand side. I mean, you touched a bit on demand for a trade credit, but I was just wondering if you could add a bit more color on sort of where in particular you're seeing demand coming from. Yeah, that would be great. Thank you.

Okay. So on the economic outlook, I think, frankly, no one was last year expecting the barrage of tariffs and all the... activity that took place in the first 100 days of the U.S. administration. And so this has been, I mean, I'm not, this is no news for anyone here on the call, but this has been a bit of a shock to a lot of people. And clearly there are two effects, or there's a multiplicity of effects that we think are going on. First, people in the short term probably stocked goods so that probably increased the level of trade short term. Second, nobody knows where the tariffs really end, but I think we'll have to wait for actuals before we can form a view on how much impact there is today. If you think of 145% tariff between China and the US, it pretty much means trade will be very, very, very difficult. So it's anticipated this would not be the case, but is it Let's say from 20 to 145, there's a whole big world out there, so it's very hard to predict. The one thing, though, is everybody understands it's uncertain. Everybody understands it's volatile. And so I think after trying to protect the very short term by stocking up and making sure you did what you can for the next few months, people are probably being cautious in how they invest, how they spend. it's very hard to make an investment decision today on a factory or on anything. So our assumption is it's going to slow down the economy. I think our outlook for the world economy was something like 2.7% growth this year, and we've brought that down at this stage by 0.4%, something like this, to 2.3%. Same for Europe, where we're going from 1.1% to... 0.5% growth outlook. I mean, it is what it is. It's worth what it's worth for now until things change. But it's clearly, I think, in our view, an anticipation that the economy is going to be slower. Probably inflation will be higher in heavily hit sectors of the U.S. economy. And it's very likely, most likely, that insolvencies will keep going up in that environment because the adjustment to that new world is going to take some time and not everybody is going to do perfect. On the demand for trade credit, I think it's just the uncertainty. I mean, it's a natural phenomenon. When you start to see that the world is riskier, you start to think about, how do I protect my business? And you start to look for people who might have answers. We don't have an answer on where this all lands, but we do have means to look at your short-term counterparties and figure out how well they're doing, at least as good as anybody can. So I think that's where the demand comes. It comes from, I would say, almost all segments in the market. There is obviously interest in looking at what we have to offer and seeing if that can be put to good use in the different segments that we operate in.

Thank you. Thank you. Now we're going to take our next question. Just give us a moment. And the question comes to the line of Benoit Valot from OdoBHF. Your line is open. Please ask your question.

Yes, good evening. Thank you for taking my question. My question is, I'm sorry to come back on current economic environment, but can you maybe give us more color on the risk management action you've taken over the last, let's say, weeks and months and year to date in terms of number of action, in terms of, or your total credit exposure has evolved, or maybe, for example, some figures regarding potential reduction on your exposure to low-quality business. Second question, and I know it's partially only figures, but when I look, sorry to come back, also on your loss ratio per geographies, Is there anything specific to mention for LATAM? And regarding North America, I'm sorry it's only a quarter, but it seems that there is an increasing trend in terms of loss ratios. I just would like to have your view on that. And maybe the third question is regarding cost. When you look at your internal cost in absolute terms, it has increased by about 8% or 14 million euros versus Q1 last year. So it's a significant increase. You mentioned, of course, you've made some investment. What has been the increase which is related to BI in absolute term within this 14 million just to look at the underlying trend? Thank you.

Yeah, so let me start with the risk question. So on risk management, as I said, we've kind of broken down the world in, let's say, 600 different segments that our economists look at. We track the effect of the measures that are actually being put in place because all the other ones can change so fast on each one of these sectors. And then we drill down within those sectors and into the companies that are most likely affected and those where we have the biggest exposures or those where we have the weakest participants And so there's a whole amount of work going on. By the way, this is no different than anything that we've done in the past. It's just more intensity because there's more action and there's more news coming. The news flow is actually stronger. So we stay very close to our clients. I mean, I think our teams are busy. We're not sitting idle. We've been working on some of these sectors or industries for quite some time. I mean, we all know that the The automobile industry is right in the bull's eye, the steel industry, the aluminum industry. So these are all areas that our analysts are reviewing very, very diligently. In terms of the quarterly figures, you mentioned the U.S. I think we had a couple claims, larger claims, I would say. And the U.S. at the beginning of the year, but that number has been coming down. I mean, again, it's 9% on one quarter, so we're talking about something that if you look at it small enough, it's going to be volatile.

Exactly. I think, Bob, for North America and Latin America, if you exclude one or two claims, large claims that we have, I think the loss ratio is really benign.

Yeah, the other question was what? It was Latin America?

Yeah.

Yeah, but look at LendAmerica. I mean, if you look back in the history of our business, it keeps oscillating from zero to 100%. This is 4% on one quarter. So this is really 1% of our yearly turnover. It's going to be volatile. Then in terms of our investment, so I mean, we are really, to the letter, sticking to our power of the core playbook. I mean, we're managing the costs very tightly, and we are deliberately investing in those things that we said we would. So those things that we said we would invest in have to do, of course, with BI, which has been a significant investment. I didn't mention that, I think, on the call, but we probably have between BI and debt collections 700 people at the end of the quarter. I mean, that's a very significant increase from, I would say, the 50 people or so we had four or five years ago. We're investing in the technology that relates to this area. We're investing in the data. We're investing in the sales origination for the insurance business and in the technology in general because that's where I think the game is moving slowly but surely. Actually, not so slowly. So we're really completely aligned with our plan. There's no surprise in these numbers. I just think there's not going to be a better time to invest. I mean, the environment is what it is. There's no reason to slow down the investment because I think we are also delivering on growth in these areas. And we're creating something that has value for the future and which is differentiating in the market. And the more we invest in data and technology, the more we learn about what this, the power that it has and the value that it can have, both in terms of new revenues, risk-free revenues, but also in making our insurance business better. That's pretty much what I would have to say. Okay.

Thank you very much.

Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star 1 1 on your telephone keypad and wait for your name to be announced. Now we're going to take our next question. And it comes from the line of Michael Hartner from Berenberg. Your line is open. Please ask your question.

Fantastic. Thank you for this second opportunity. I had three. One is Q2. What have you seen most recently? Has there been any Because the tariffs came in after the end of Q1. The second is on tax. I think in tax, from memory, Q4, you put a big amount aside, kind of thinking about what might happen going forward. And now the tax seems to normalize again. Is there anything to say here? Have you been too prudent or has the tax issue now settled? And the last one is on the... Oh, I've forgotten. It'll come back to me in a second. Sorry about that.

Well, maybe we start with the tax while you try to...

In Q4, tax rate was, and it used to be usually in Q4, we had a higher tax rate, but last year, if you would collect, we booked some impact related to the worldwide 15% tax for Pillar 2, and it has an impact of 2 million, was booked in Q4. I think this year in Q1, we're just going through the normal computation. What needs to be highlighted, too, is the fact that, of course, you know, our tax composition is depending on the results and the level of income tax of all our geography. As we have passing on less results to our reinsurers, I think, of course, the reinsurance company they were having in Switzerland taxed at 50% is driven now. average tax rate down compared to last year. So it's really a matter of geography of results that drives the tax impact.

Yeah, and as pertains to your first question on Q2, I mean, there's really nothing to add here. All the comments I made pertain to where we are today, right? Excellent. Thank you.

Yes, the question was exactly on what Falah said, the reduction in the cost of reinsurance from $30 million to $20 million. Is there anything particular here?

Well, no, because it's just, you know, you can see it's just the fact that we are passing on more claims to our reinsurers as it's reflecting the increase on our loss ratio. Nothing... unusual, I would say, and this is where our tax treaty is playing its role.

And would that be, does it depend on the pattern of claims? In other words, would reinsurance cover you better if you had more smaller claims or fewer big claims? Is there some kind of difference here?

No. Remember, our reinsurance schemes, we have three level where you have the proportion of the quota share, 26%, that has not changed for years now. And then you have, of course, stop loss and excess of loss. As far as I know, there's no stop loss, excess of loss that has occurred for years now. So it's really the quota share that's playing its role.

And the last, if I may, the number which... I mean, all your numbers are actually, given the environment, very strong. The number which appears particularly strong, given the current environment, is what I call reserve release, the 40-odd million. Is there anything here to say? Is that more related to past students, or is it just the quality of your reserving reflects some change?

I don't know. The higher development is just... Again, I think that our reserving police has not changed. So, of course, just reflecting what we used to do and what we're doing. Nothing in particular to be highlighted, Michael.

We remain very consistent. And actually, that number hasn't moved now. You can see it on the page, right, for literally years, right?

Exactly, yeah. No, that's outstanding. Excellent. Okay, thank you.

Thank you. Now we're going to take our next question. And it comes from Pierre Chedville from CIC. Your line is open. Please ask your question.

Yes, thank you. Apparently I was not in the line of questions. So I don't have a lot of questions left. Maybe a general comment, because you said a lot of things regarding the evolution of the economic climate, et cetera. But I am a little bit surprised. By your tone, if I may say, you seem a little bit more, I wouldn't say optimistic, but positive compared to your traditional stance on outlook, which is quite conservative, and we can see this conservative in your targets, notably your targets on the cost-income ratio, combined ratio, sorry. So what would you say regarding your outlook? You're quite optimistic or pessimistic? And my second question is a follow-up on reinsurance. Do you see any increase in premiums of reinsurance due to the current environment and what you said? And could it change a little bit or marginally your policy in this area? Thank you.

Well, I think that, frankly, the two questions kind of participate in the same underlying question, which is what's going to happen. And I think nobody knows. I mean, frankly, if you have a clue, let us know, because as I said before, with such high numbers being mentioned of where the tariffs are going to land, it could be anything. So I don't know if I can be positive or negative. I think we just don't know. And we're going to have to see where the dust settles, and then we're going to have to do the work of going line by line and figuring out who's impacted and who's not. I mean, for me, it's not about being optimistic or pessimistic. It's about taking whatever the world is going to decide for us and dealing with it. And the only thing I can tell you is this business has been, over the years, investing in its people and its process and its technology and this and this and that. I think we're in as good a shape as we've been, but the environment is what it's going to be, and there's not much I can do about it. So I tend to try to worry about things I control and less about things I don't control, I think is probably the way to think about it. And as far as the reinsurance, I think it's the same thing. The question is, where is that going to be? I think at the end of the year is when we renegotiate our insurance contracts. And I think in the next nine months or eight months, we're going to know a lot more about what's going on in the world. So that will, again, not be for me to decide, but we'll have to take whatever the market's going to give us.

Okay, thank you.

Thank you. Now we're going to take another question. And it comes to the line of Michael Hartner from Berenberg. Your line is open. Please ask your question.

Thank you. This is the last one. Sorry. Demand versus volume. Which way do you think the coin settles? Is it up or down?

Demand versus volume.

What do you mean? So you've got your clients asking for more cover or being more worried, but the underlying world trade environment being more challenging.

It's hard to say because I think on one hand, it can be very different by sector, by area. I mean, increased inflation in the U.S. will drive activity in the U.S., but it's not our biggest region. I would say a slowdown in the economy drives activity. lower activity. I would say, in general, the commodities going lower is not helping our activity, so that's never been a great thing for us. General uncertainty drives demand. For smaller clients who start to struggle, sometimes it also means they can't pay their premiums or they don't want to pay their premiums or whatever. So, I mean, it's a mixed set of things.

And even on volume, Michael, I think volume is driven by, first, of course, the volume of activity of our customers that might decrease if the GDP is going down, but inflation is pushing up the volume. Because at the end of the day, I don't even know where it's going. It's really the $1 million question.

A lot of unknowns here. A lot of unknowns. A lot of unknowns. All I can say is, in light of unknowns, the numbers look really good. Thank you.

At least you know what the consequences are, but we don't know what the cause is going to be. Absolutely. Thank you very much.

Thank you. Dear participants, as a last reminder, if you would like to ask a question, please press star 1 1 on your telephone keypad. Dear speakers, there are no further questions. I would now like to hand the conference over to Xavier Durand for any closing remarks.

Well, thank you very much. I mean, for all of you who have been listening in and have been asking questions. I mean, we didn't mean to close this early, but I mean, I guess it's a good thing. Let's see. We will be speaking again, I think, on the 31st of July for the Q2 first half results. The General Assembly of COFAS takes place on the 14th of May and so I guess to all of those questions about what the environment holds, I think we'll probably know a little bit more, but who knows, we'll see. Thank you for calling in and looking forward to speaking with you soon.

This concludes today's conference call. Thank you for participating. You may now disconnect. Have a nice day.