Euler Hermes Group 2015 Registration Document Risk Management ı Credit Insurance Debt collection ı Bonding EULER HERMES GROUP 2015 Registration Document I Table of contents Euler Hermes Group overview 2 6 Parent company financial statements 217 Letter from the Chairman 6.1 Balance sheet as at December 31, 2015 218 of the Board of Management 4 6.2 Income statement 219 6.3 Notes to the parent company Message from the Chairman financial statements 220 of the Supervisory Board 8 6.4 Table of subsidiaries and participating interests 230 6.5 Table of Company results over the last five years 232 6.6 Other information: breakdown of trade payables 233 1 Presentation of the Group 11 6.7 Statutory Auditors’ report 1.1 History and development of the Group 12 on the financial statements 234 1.2 Overview of the Group’s activities 13 1.3 Shareholding structure as at December 31, 2015 22 7 Information on the Company 1.4 Summary of Group structure 23 1.5 Corporate responsibility 24 and its capital 235 7.1 General information about the Company 236 7.2 Articles of Association of the Company 237 2 Corporate governance 39 7.3 General information 2.1 Board of Management 40 about the Company’s share capital 242 2.2 Supervisory Board 44 7.4 Distribution of capital and voting rights 243 2.3 Compensation and benefits in kind 7.5 Factors likely to have an impact received by corporate officers 50 on a public tender offer 246 2.4 Report of the Chairman of the Supervisory 7.6 Equity interests of the Company Board to the Shareholders’ Meeting outside the Group 247 on corporate governance and the internal control and risk management procedures established by the Company 65 8 Shareholders' Meeting 249 2.5 Statutory Auditors’ report, prepared 8.1 Board of Management's report on the resolutions in accordance with Article L. 225-235 to be submitted for approval to the combined of the French Commercial Code Ordinary and Extraordinary Shareholders‘ on the report prepared by the Chairman Meeting of May 25, 2016 250 of the Supervisory Board 91 8.2 Comments by the Supervisory Board meeting of February 17, 2016 , on the Board of Management’s report 3 Analysis of the financial information and on the 2015 financial statements 264 as of December 31, 2015 93 8.3 Special report of the Statutory Auditors 3.1 Business environment 94 on regulated agreements and commitments 265 3.2 Selected financial information 95 8.4 Resolutions submitted to the vote 3.3 Key events 95 of the Combined Shareholders‘ Meeting 3.4 Activity of Euler Hermes Group SA 97 of May 25, 2016 270 3.5 Euler Hermes Group Consolidated results 98 8.5 Description of the share buyback program 281 3.6 Performance of the Group’s main geographic regions 105 9 Additional information 285 3.7 Cash and capital 112 9.1 Person responsible 3.8 Financing 112 for the Registration Document 286 3.9 Consolidated shareholders’ equity 113 9.2 Declaration of person responsible 286 3.10 Creation of value for the shareholder 114 9.3 Independent auditors 286 3.11 Outlook 117 9.4 Documents available to the public 287 9.5 Glossary 288 4 Major risk factors and their management 9.6 Cross-reference tables 291 within the Group 121 4.1 Risk factors 122 4.2 Quantitative and qualitative notes relating to risk factors 129 5 Consolidated financial statements 143 5.1 Consolidated statement of financial position 145 5.2 Consolidated income statement 146 5.3 Consolidated statement of other comprehensive income 147 5.4 Consolidated statement of cash flows 148 5.5 Consolidated statement of changes in equity 150 5.6 Notes to the consolidated financial statements 152 5.7 Statutory Auditors’ report on the consolidated financial statements 215 This Registration Document was filed with the Autorité des Marchés Financiers (AMF) on April 15, 2016, under filing number D. 16-0343, pursuant to Article 212-13 of the AMF General Regulation. It may be used to support a financial transaction if completed by a transaction note approved by the AMF. This document was prepared by the issuer and is the responsibility of its signatories. Copies of this Registration Document are available free of charge at Euler Hermes Group’s registered office. The Registration Document can be consulted and downloaded from the website www.eulerhermes.com EULER HERMES GROUP 2015 Registration Document 1 Euler Hermes Group overview Profile Supporting business growth for companies wordlwide Euler Hermes Group, the global leader in trade credit insurance and a recognized specialist in the areas of bonding, guarantees and collections, helps customers worldwide to trade wisely and developp their business safely. Its financial solidity, risk analysis and integrated global structure enable the Group to provide companies of all sizes with the domestic and export market knowledge and support they need to successfully manage their trade receivables in changing economic environments. 2,638.4 M€ + 6,400 Turnover Employees 94% of which hold 80.1% permanent contracts Net combined ratio 11 years 41 years 302.5 M€ Average length of service Average age Net income, Group share 11.4% 52% 48% Return on equity * Number of women Number of men (1) Calculated on the basis of net income, Group share relative to average of shareholders equity (excluding minority interests) Group share between end-December 2014 and end-December 2015. 2 EULER HERMES GROUP 2015 Registration Document Key figures BREAKDOWN OF TURNOVER BY REGION Northern Europe 2015: 21.1% 2014: 21.8% 2013*: 22.2% France 2015: 14.8% Americas 2014: 15.8% 2015: 12.4% 2013*: 16.0% 2014: 10.5% 2013*: 9.9% Germany, Austria & Switzerland 2015: 28.5% Asia Pacific 2014: 30.1% 2015: 5.4% 2013*: 31.9% 2014: 4.3% 2013*: 3.7% Group Mediterranean Reinsurance countries, & Others Middle East 2015: 4.7% & Africa 2014: 4.7% 2013*: 3.9% 2015: 13.0% 2014: 12.8% 2013*: 12.4% (*) Pro forma with Mexican, Columbian and Chilean activities transfered from Americas to Group Reinsurance & Others; and the activity of Euler Hermes Collection North America shifted from Americas to Group Reinsurance & Others. BREAKDOWN OF TURNOVER BY LINE OF BUSINESS − AT 31 DECEMBER 2015 − AT 31 DECEMBER 2014 − AT 31 DECEMBER 2013 6.3% 5.7% 7.0% 5.8% 6.3% 5.9% 88.0% 87.1% 87.8% Credit insurance & debt collection Credit insurance & debt collection Credit insurance & debt collection Bonding & guarantees Bonding & guarantees Bonding & guarantees Other services Other services Other services EULER HERMES GROUP 2015 Registration Document 3 Letter from the Chairman of the Board of Management Wilfried Verstraete Chairman of the Board of Management In 2015 we delivered strong results and maintained overall profitability, demonstrating resilience in a difficult environment. 4 EULER HERMES GROUP 2015 Registration Document A review of 2015 and an overview of the Company’s 2016 strategic focus from the Chairman of the Euler Hermes Board of Management. 2015 review ◾ Turnover reached €2.6 billion, up +4.4% at actual exchange rates (+0.9% at constant exchange rates), supported by markets outside We began the year 2015 anticipating flat growth at best in our traditional Europe and non- traditional business lines. markets and lower rates in most growth markets. But a sharp reversing of gears occurred in growth markets in the second half of the year, ◾ Operating income increased 1.0%, to €417.4 million, including resulting in increased insolvencies and claims. Collapsed commodity benefits from a strong increase in service revenues and positive prices and growth deceleration in emerging markets formed the foreign exchange result. backdrop by year-end. And unexpected socio-political events created ◾ Net income Group share remained stable at €302.5 million. volatility and dampened GDP growth in even the most stable markets. ◾ The net loss ratio reached 53.3%, 4.5 points higher year-on-year, Four key insolvency markers emerged by year end: following increased claims in the last two quarters in emerging ◾ Reflecting the global economic slowdown in 2015, the Euler Hermes markets and the US. Europe further improved its loss ratio in 2015. Global Insolvency Index decreased by only 5%, vs a 14% decline in ◾ Our average ROE for the past 5 years stands at 13.0%. 2014. The Index remained higher by 5% than its 2007 level. We aimed to sustain our market leadership in 2015* through a continued ◾ Worldwide insolvencies stabilized at approximately 300,000 cases, focus on our three strategic growth drivers, in which we recorded a mixed signaling the end of the post-financial crisis adjustment trend and six balance of successes and market challenges. consecutive years of decline. Geographically, we continued our targeted expansion, opening offices in ◾ A strong decrease in bankruptcies in the US and Western Europe Bulgaria and South Africa, and in Latin America to Panama, Peru and offset turmoil in Asia and Latin America. However companies in Asia Uruguay through our Solunion joint venture with MAPFRE. In Europe, Pacific faced an 11% rise in insolvencies – the first increase since while the low insured turnover volumes trend persisted in France, 2008 – largely due to high corporate debt levels, disinflation and Germany began to improve modestly versus previous quarters. The disruption. In China alone, insolvencies increased by 25%. Americas and APAC were positively impacted by foreign exchange. ◾ The average global “days sales outstanding” (DSO) index for trade Growth remained steady in most of the Mediterranean Countries, Middle invoice payments continued to increase one day per year post-crisis East and Africa (MMEA) region, with the exception of Turkey in the second (2015: 66 days).