Content
Management Report ........................................................................................................................................................ 3
Consolidated financial statements ............................................................................................................................. 14

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

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Management Report3All amounts in thousands of Euro, unless otherwise stated

Economic Environment
Major downturn due to Covid-19
The impact of Covid-19 continues to permeate all aspects of society – often with unclear potential outcomes. The global
economic impact has already been severe, but it is expected that the world is not over the peak yet. This results in abusiness environment full of uncertainties, but we are confident that especially in these trying times we can support
our customers, partners, employees, and shareholders with our strong proposition.
The global economy is expected to recover to relatively high levels in 2021, as vaccination rates against Covid-19
increase and lockdown measures are relaxed. Emerging markets are forecast to benefit to a larger degree, which isskewed by a projected strong Chinese growth due to pent up demand and an effective pandemic response. Latin
America and Eastern Europe are expected to grow slightly slower, also as a result of the lack, or reduction of fiscal
measures. Advanced economies are projected to recover to a growth of 3.9%, with the Eurozone experiencing a longer
recovery due to extended lockdowns.
Bankruptcies are expected to increase in almost all economies, as government measures against insolvencies run out.
The economic damage of the pandemic will take years to recover, but the beginnings are expected in 2021.
As the governmental support in the economy will continue in 2021 and some countries will extend their governmental
schemes, we are confident that also our risk management actions will continue to be balanced and customer focussed.

Advanced Markets
A sharp economic downturn occurred in all advanced markets in 2020. There was a big decline in output in the second
quarter of 2020, following containment measures to limit the spread of Covid-19. There was some mechanicalrecovery in GDP over the third quarter, followed by a setback in the fourth quarter as many countries tightened curbs
during the second wave.
The United States still registers one of the highest rates of infections in the world. While the economy has made someheadway towards recovery in recent months, we estimate a 3.5% contraction of GDP in 2020. Consumer spending(which typically accounts for 70% of US GDP) and fixed investment account for the decline. The US government hasreacted with a massive fiscal stimulus programme (amounting to around USD 2.3 trillion, or 11% of GDP), addressing
every segment of the economy, and another USD 900 billion stimulus bill was approved in December.
The eurozone witnessed a second wave of infections towards the end of 2020, leading to tighter restrictions andclouding the economic outlook. GDP decreased by 7.1% in 2020. Domestic demand was under pressure as employment
and household incomes declined. The unemployment rate is rising, but still understates the true effect of thecoronavirus crisis as young people in particular retreat from the labour market. The unemployment rate rose from alow of 7.2% in April to 8.3% in November.
In a bid to contain the market fallout caused by the pandemic, central banks across advanced markets further
loosened monetary policy. The European Central Bank (ECB) announced the purchase of an extra EUR 1.85 trillion ofbonds under the Pandemic Emergency Purchase Programme (PEPP). The Federal Reserve lowered the policy rate by acumulative 1.5 percentage points to 0.25%. Both the ECB and the Federal Reserve have also taken liquidity enhancing
measures. Despite the loosening of monetary policy, credit conditions have deteriorated as banks brace for a rise in
bad loans due to the pandemic. Central bank surveys in both the eurozone and the United States point to a tighteningof credit standards for businesses and households.

Emerging Markets
Many emerging market economies are still at a critical stage in the public health crisis. There is a sharp downward
effect on economic growth from stringent lockdowns and indirect negative effects from lower world trade. Moreover,the plunge in tourism income and commodity prices negatively impact markets that are dependent on these sectors.
GDP of emerging markets as a group declined 1.9% in 2020.
Prospects for China are much stronger than for most other countries in the emerging markets group. The Covid-19
virus emerged in the Chinese city of Wuhan towards the end of 2019. While it initially spread throughout the country,
the government was able to suppress the virus in Q1 2020 with a stringent lockdown and to keep it under control sincethen. Economic activity rebounded again in Q2 2020 and full-year growth is forecast at 1.8%. Growth was supported by

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Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

monetary policy and fiscal stimulus. India has been struggling to contain Covid-19 infections. GDP contracted strongly
in 2020 owing to harsh measures to control the virus and limited fiscal support.
Countries in Latin America remain severely affected by the pandemic and the government response has often beenslow or ineffective. Two of the region’s largest economies, Mexico and Argentina, were in deep recession in 2020. In
Brazil, the recession was less deep due to substantial government support. Argentina faced the combined impact of aconfidence crisis and the negative spill over effects from the pandemic. Mexico also witnessed a deep recession in
2020, driven by steep contractions in consumption and investment, and with the government only providing modest
support. The automobile sector, Mexico’s leading source of exports, suffered from a sharp fall in external demand andsevere supply-chain disruptions. In Eastern Europe, the Russian economy faced a double blow from lower oil prices
and weakened demand due to domestic lockdown measures. In Turkey, the economy managed to avoid recession, as
domestic demand was helped by a strong credit push.

Global insolvencies: calm before the storm
Despite the sharp economic downturn, corporate insolvencies declined in many markets in 2020. We witness thisdecline in all major regions, especially in Europe and Asia. Two types of policies are responsible for this. First, many
countries amended their insolvency regimes to protect companies from going bankrupt. This includes temporary
suspensions of insolvency applications in bankruptcy courts. Second, governments provided fiscal support tocompanies whose revenues came under pressure as a result of the crisis. In the eurozone, France, Austria and Belgium
stand out as the countries with the strongest decline in insolvencies. These countries have sizeable fiscal stimulus
programmes in combination with temporary adjustments to insolvency procedures.
For Italy and Spain we forecast a milder decline in insolvencies due to weaker government support, but they do have
temporary insolvency suspensions. Germany is expecting a minor insolvency decrease due to its fiscal package aswell as institutional reasons that make business failures less responsive to GDP changes compared to other European
countries. Despite these measures, we expect to see an uptick in insolvencies in the final quarter of 2020 compared to
the relatively low levels in the first three quarters. This is because the changes to insolvency regimes are only
temporary and fiscal support will be gradually phased out.
United States business insolvencies are expected to show a mild increase in 2020. The United States did not makeadjustment to its bankruptcy court proceedings and insolvencies have a high responsiveness to economic growth. The
virus plunged the United States economy into recession, while growth was already decelerating last year due to the
US-Sino trade war, which has weakened Chinese imports and tourism, and caused disruptions in global supply chains.
The United Kingdom witnessed a decline in insolvencies. UK companies benefitted from strong government support,
amidst a severe economic downturn driven by stringent lockdown measures as well as Brexit-related uncertainty.
Several advanced markets in Asia, such as Japan, Singapore and South Korea, also witnessed a decline in insolvencies.
Emerging economies had a more challenging insolvency environment, as they generally had more limited
government support schemes. Of all major emerging economies, Russia and Turkey are forecast to have an increase in
insolvencies, while the number of insolvency registrations declined in Brazil. Even though Brazil was in deep
recession in 2020, several government measures including fiscal stimulus prevented an increase in bankruptcies.

Financial strength
AM Best has affirmed our financial strength rating as A (Excellent) and our Long-Term Issuer Credit Rating of a+, also
confirming the outlook as stable.
Moody’s has affirmed our A2 financial strength rating with a stable outlook since February 2021 (after a temporary
reduction to negative outlook in March 2020 reflecting market uncertainty).
In the current circumstances, where most of the World economies have been plunged into recession added to a rising
insolvencies environment, the reaffirmation of our rating is an endorsement of our financial strength, approach to
managing risks and resilience to cope with the market uncertainty caused by the Covid-19 pandemic.
The ratings reflect the strength of our balance sheet, which AM Best categorises as very strong, as well as our strong
operating performance, favourable business profile and appropriate enterprise risk management.

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All amounts in thousands of Euro, unless otherwise stated

Our 2020 performance at a glance-

Insurance premium revenue decreased by 1.8%.
The result for the year decreased to EUR 84.9 million.
Our prudent investment portfolio contributed EUR 11.0 million, in a difficult environment with low or negativeinterest rates and volatile equity markets.
ACyC achieved a solid 58.7% claims ratio in a challenging and uncertain risk environment
The expense ratio for the year maintained a stable trend, at 34.1%, reflecting Atradius’ commitment to efficiency.
The combined ratio ended at 92.8%.
Our shareholder’s equity decreased by 3,7% to 1,187.9 million.

Financial performance review
Credit insurance is our core product, comprising traditional credit insurance for both domestic and export trade and thestructured credit and political risk business of our Special Products team. The credit insurance business has continued its
good performance in 2020 with an operating segment result of EUR 93.9 million. We offer a wide variety of bonding
products designed for different roles and tailored to customer needs in Belgium, France, Germany, Italy, Luxembourg, theNetherlands, the Nordic region, Spain and Portugal. The bonding business has shown a positive operating segment resultof EUR 21.6 million in 2020.

Insurance revenue
The insurance revenue performed well in this challenging economic scenario with a decrease of 1.8%. Bonding business’s
revenue showed stability with EUR 123.8 million in 2020.

Claims development
Gross claims costs ended at EUR 892 million. The claims ratio ended at 58.7% over insurance revenue.

Operating expenses
Gross operating expenses in 2020 amounted to EUR 519.1 million. Direct brokerage costs increased by 0.7%. The expensedevelopment resulted in a stable gross insurance expense ratio of 34.1%.

Reinsurance Result
Part of our premium and claims expenses are ceded to reinsurers who participated in ACyC’s results with EUR -3 million.
In view of the Covid-19 pandemic crisis affecting the world economy, as a support to the national economy, 10 main
countries where the Group operates have supported the business of credit insurance in the form of specific government
reinsurance schemes with high cession rates, impacting negatively in the reinsurance result of the Company by EUR 44.9
million.

Net investment result
The net investment result ended at EUR 11.0 million.

Risk and capital management
Risk management
We refer to the description of the main risk and uncertainties and how these are managed to Note 4 Risk and capitalmanagement of the consolidated financial statements.

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Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

Capital management
ACyC seeks to maintain a strong capital position. This helps us to support the evolution of our insurance business,withstand financial stress in adverse business and financial markets, meet our financial obligations and ultimately
deliver shareholder value.

Shareholder funds and capitalisation
Shareholder funds at the end of 2020: EUR 1,143.7 million decreased by 3.7% from EUR 1,187.9 million at year end 2019.
Shareholder funds are expected to grow in 2021 and beyond.

Solvency II
Solvency II is the regulatory framework for (re-)insurance undertakings and groups domiciled in the EU; it became
effective on 1 January 2016. It replaced the former regulatory regime of 14 directives which were commonly known as“Solvency I”.
In the course of 2017 Grupo Catalana Occidente in-house “Partial Internal Model” for calculating regulatory capital under
Solvency II was approved by the College of Regulators. This reinforced our risk management and risk quantification.
ACyC is subject to Solvency II and currently applies partial internal capital model for calculating their regulatory capitalrequirements. Under Solvency II guidelines Group supervision takes place at the ultimate parent Grupo Catalana
Occidente S.A.
The solvency position of ACyC is strong, being able to meet their financial obligations efficiently and to comply with local
legal and regulatory requirements.
Under Solvency II, ACyC is comfortably capitalised. We apply our internal capital model after regulatory approval.

Our People
As one Atradius, we have risen to the many challenges that this pandemic has brought us, and the world. It was essentialthat we acted promptly to ensure that our employees and customers around the world remained safe and well during theoutbreak of Covid-19. As a result, we immediately activated our Group Incident Management Team, as well as the IncidentManagement Teams for every location. These teams have been taking action, and offering local guidance, in line with thedirectives of their local public health authorities’.
When the outbreak occurred, we asked all of our employees to work from home. However, we recognised that some
employees, because of the nature of their job, had to continue to work from the office. Therefore, we ensured that our
offices were adapted in such a way that these employees could continue to work safely. This work has also enabled us to
put in place the necessary safety measures for the phased return to the office of other employees.
Even with the pandemic’s many downsides, we became closer as an Atradius family both with our customers, and withour colleagues around the world. The launch of a variety of collaboration tools group-wide helped us all to stay connected.
We saw each other’s lives at home through our computer cameras, and could support each other through the challenges
that the different waves of the pandemic brought us.
The wellbeing of our employees is paramount. In addition, the continuation of their working network needed to besupported. To help with both elements, many initiatives were put in place to stay connected, engaged and motivated atboth group and local level. For example, we have promoted several virtual sessions, like virtual coffee meetings andvirtual team off-sites. We set up a private LinkedIn group, which enabled people to share experiences and advice. We
published regular newsletters with practical tips for how to deal with the challenges our employees were facing. Our
Management Board and Atradius Leadership Teams held webinars in which they updated all our employees on the latest
position and made themselves available to answer questions.
For more detail about the number of employees of ACyC, see Note 31 of the financial statements.

7All amounts in thousands of Euro, unless otherwise statedRethinking the way we work
What is becoming clear is that the changes brought by the pandemic will have a long-term impact on how we work. With
many lessons learned, we started answering the question “How to facilitate a hybrid workplace?”. We set up a project toconsider the future of our workplace. The project is looking at different components such as the home set-up of ouremployees, the joint workplace in the office, the legislation that we should take into account, and how we can maintainour culture and customer service excellence. In November, we conducted a survey to invite employees to share theirneeds and ideas. Our goal with this project is to ensure that, when the pandemic ends and everyone can return to theoffice, ourworkplace has adapted to everything we have learned during the pandemic.

Atradius Business transformation - Shaping Tomorrow Together
To support the Atradius Business Transformation, in 2019 we started the ongoing initiative Shaping Tomorrow Together;a call to action for our employees. In 2020, we continued emphasising the importance of demonstrating a growthmindset, being part of the transformation by developing yourself and the need to embrace new technologies.
In this challenging year we demonstrated the potential we have to adapt quickly to new situations and to embrace newtechnologies to deliver our promise to our customers to provide customer service excellence.

Evolving our Culture
To help the company during these challenging and fast changing times we strengthened our culture via evolve+, ourmulti-year cultural programme. Evolve+ supports the ongoing Atradius business transformation by progressively
developing our culture. The Evolve+ team organised webinars with an impressive number of participants; over 1,800
employees participated in the webinars, one of which was held with the Management Board. Additionally, the Evolve+
team looked at the most optimal structure of using Microsoft Teams as a collaborative tool. We started a managers team,
where Atradius managers from all over the world have the opportunity to share and connect with each other andexchange their views on managing during these challenging times. This new environment also includes a toolbox to help
managers in their job.

Development of our people
This year our employees showed their flexibility and adaptability. Working from home brought a great number ofdevelopment opportunities. By the successful launch of Microsoft Teams, we saw that our employees are flexible andwilling to adapt to new systems.
The Atradius Academy supports this process. By creating weekly newsletters that covered topics such as vitality, working
remotely and happiness in challenging times, we strove to create an environment where learning and development isseen as business as usual. We invested in people by offering a wide choice of digital development opportunities. Due toworking remotely and not being able to have face-to-face sessions, we adapted and offered all the activities we planned
virtually.
All employees did two mandatory e-learning courses “Refresher of the Code of Conduct” and “Sanctions”. Besides that, allemployees have the possibility to have access to all (15,000) courses of LinkedIn Learning. Our face-to-face management
development programs could not take place. Instead, we were able to transform the program into different virtual
sessions focussed on how to deal with the current challenges. Last but not least – we are very proud of our people, we feelthat we stayed connected, engaged and motivated and lived our values in order to serve our customers in the best way.

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Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

Remuneration
Remuneration policy
The remuneration policy lays down the principles and key elements of sound and controlled remuneration of all
employees. The remuneration policy supports our business strategy, objectives, values and long-term interest and isaligned with the size, organisational set-up, nature and complexity of the business activities. The remuneration policy isdesigned to improve the performance and the value of ACyC, to motivate, retain and attract qualified employees and tocontribute to sound and efficient risk management and not to encourage the taking of more risk than is acceptable.

Design principles of the remuneration policy
The design principles underlying the remuneration policy applicable to our staff consist of, amongst others:− Fixed and variable remuneration shall be used to align individual performance with both short and long-term
corporate strategy and objectives;− Remuneration shall reward according to performance at company/entity and individual level as appropriate.
− Individual objectives shall include a combination of financial and non-financial targets as appropriate to the role,
taking into account ethical behaviour and corporate responsibility; and− Performance criteria for employees will be objective, measurable and linked to individual, department and company
performance as appropriate.

Other information
Operations with own shares
The Company has not carried out operations with own shares or shares of the Parent Company during fiscal years 2020
and 2019, nor has it own shares at the end of the fiscal year.

Average payment term
The average payment term to the Company's suppliers for operations in Spain does not exceed the legal maximum
applicable in fiscal year 2019 which, according to Law 3/2004, of December 29, through which measures are taken tocombat the late payment in commercial operations is established within 30 days, unless a different payment term is agreed
with the supplier, which in no case will exceed the maximum legal term of 60 days.
During 2020 the average payment term has been 15.68 days (22.20 days in 2019). For more detail, see Note 20 of thefinancial statements.

Subsequent events
The Company describes the significant events that have occurred after December 31, 2020 in Note 34 of the financial
statements.

Non-financial information
The Company is exempt from including the non-financial information indicated in Law 11/2018, of December 28, because
it is included in the Consolidated Management Report of Grupo Catalana Occidente, S.A., of which the Company is part ofthe consolidation scope. The Consolidated Annual Accounts of Grupo Catalana Occidente, S.A., together with its Consolidated
Management Report, will be deposited in the Mercantile Registry of Madrid.

9All amounts in thousands of Euro, unless otherwise statedResearch and development
Even in these challenging times, we are committed to further evolving through technology and digitalisation. The current
crisis has only accelerated the underlying developments for working, connecting and transacting digitally. Hence, we areglad to say that we are on track in our plans to modernise our core systems, both in credit insurance and bonding, to further
develop our customer portal Atrium, and to prepare ourselves for compliance with relevant upcoming regulations, such as
IFRS17.
2020 also saw the first implementation phase of our new system Arcade in some key commercial processes as well as thelaunch of our new product management functionality.
We have further expanded our capabilities, not only in connecting with our customers through APIs, but also inparticipating in new trading opportunities through platforms, such as our very own B2BSafe marketplace in Spain.
Also for our other business lines, we are exploring new means of improving the customer experience. Examples include
the development of a new online comparison platform for insured consumer credits by ICP, and our online collections portal
Agora.

Outlook for 2021
In 2021, growth of the world economy is likely to rebound to 5.0%. This relatively high growth rate is partly a ‘technical’
rebound from a relatively low base in 2020. As the vaccination process is underway, we assume that social distancing
measures will be gradually reduced in 2021. We expect that a large part of the developed world will be vaccinated by thesummer of 2021. While economic activity is expanding, costs of the crisis in terms of bankruptcies and unemployment
remains high.
Emerging markets as a group are forecast to grow by 6.3% in 2021, sufficient to more than recover lost GDP in 2020.
However, the picture is biased by strong Chinese growth in 2021 (8.8%). China has been able to avoid a second wave of
infections, and the economy will receive a temporary boost in 2021 from pent-up demand, with GDP growth returning tonormal levels in later years. Without China, emerging markets are expected to expand by ‘only’ 4.8% in 2021. In Latin
America, limited fiscal policy options and an uncertain health situation hinder recovery prospects. In Eastern Europe, thelow oil price and the government’s plan to roll back fiscal stimulus slows the recovery in Russia. In Turkey, authorities
started to tighten financial conditions recently, which will slow the recovery in 2021.
Growth in the advanced economies is projected to strengthen to 3.9%, leaving GDP some 1.2% below what it was in 2019.
Based on an expected additional fiscal stimulus under US president Joe Biden, the United States is expected to regain
most of the lost value in GDP in 2021, but the costs to the economy in terms of unemployment and bankruptcies remainhigh. The eurozone faces a more protracted recovery as many economies remain in stringent lockdowns in Q1 2021. The
outlook will continue to be dominated by the evolution of the pandemic and the size of fiscal policy responses. Economic
activity is not expected to return to its pre-crisis levels in 2021.
We expect a rise in bankruptcies in virtually all markets as the measures that helped to suppress insolvency growth in2020 are gradually unwound. There remains a wide dispersion of insolvency projections between countries. Insolvency
growth will be high in European countries like Spain, France and Belgium, that made drastic adjustments to insolvency
procedures in 2020. It will also be high in Australia, the United Kingdom, and the United States. In the United Kingdom,
the deep recession of 2020 will have a delayed upward effect on bankruptcies in 2021. The trade deal that was signedwith the EU in December 2020 will increase trade barriers between the two economic blocs, though much less so thanunder a no-deal scenario.
It will take years for economies to recover from the damage caused by the coronavirus. The first steps will be taken in
2021, but it will not be enough to bring GDP back to pre-corona crisis levels, let alone reverse the economic damage tobusinesses and households.

10Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

Overview of subsidiaries, associated companies and minority
shareholdings
The following table sets forth, as at 31 December 2020, the name and jurisdiction of establishment of the subsidiaries,
branches, associated companies and minority shareholdings of Atradius Crédito y Caución S.A. de Seguros y
Reaseguros. All companies are, directly or indirectly, wholly owned unless otherwise indicated. The companies arelisted in alphabetical order.
Name
Atradius Crédito y Caución S.A. de Seguros y Reaseguros
Australia branch

Country
Spain
Australia

Bulgaria branch
Austria branch

Bulgaria
Austria

Belgium branch

Belgium

Canada branch

CanadaCzech Republic branch

Czech Republic

Denmark branch

Denmark

Finland branchFrance branch

FinlandFranceGermany branch

Germany

Greece branch

GreeceHong Kong branch

Hong Kong

Hungary branch

Hungary

Ireland branch
Italy branch

Ireland
Italy

Japan branch

Japan

Luxembourg branch

Luxembourg

Netherlands branch

Netherlands

New Zealand branch

New Zealand

Norway branch
Poland branch

NorwayPolandPortugal branch

Portugal

Romania branch

Romania

Singapore branch

Singapore

Slovakia branch

Slovakia

Sweden branch
Switzerland branch

SwedenSwitzerland

Turkey branch

TurkeyUnited Kingdom branch

United Kingdom

Atradius Crédito y Caución Seguradora S.A.

BrazilCrédito y Caución do Brasil Gestao de Riscos de Crédito e Serviços LTDA

BrazilGestifatura S.A.

Portugal

Iberinform Internacional S.A.U.

Spain

Iberinmobiliaria, S.A.U.

Spain

B2B SAFE, S.A.

Spain

Nederlandse Financieringsmaatschappij voor Ontwikkelingslanden N.V.

Netherlands

0.50%

Verenigde Assurantiebedrijven Nederland N.V.

Netherlands

0.65%

DAP Holding N.V., Netherlands (2.37% share), was dissolved on 31 December 2020.

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Ownership

All amounts in thousands of Euro, unless otherwise stated12Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

Consolidated financial statements 2020
Contents
Consolidated financial statements.............................................................................................................................. 14
Notes to the consolidated financial statements
1
General information .............................................................................................................................................. 18
2
Summary of significant accounting policies ................................................................................................... 19
3
Critical accounting estimates and judgements in applying accounting policies .................................. 36
4
Risk and capital management ............................................................................................................................ 38
5
Segment information............................................................................................................................................ 60
6Intangible assets .................................................................................................................................................... 63
7
Property, plant and equipment and Investment property ......................................................................... 65
8
Subsidiaries............................................................................................................................................................. 68
9
Financial investments .......................................................................................................................................... 68
10 Receivables ............................................................................................................................................................. 69
11 Deferred acquisition costs ................................................................................................................................... 70
12 Miscellaneous assets and accruals .................................................................................................................... 70
13 Cash and cash equivalents ................................................................................................................................... 71
14 Capital and reserves............................................................................................................................................... 71
15 Employee benefit assets and liabilities ............................................................................................................72
16 Insurance contracts............................................................................................................................................... 78
17 Provisions ................................................................................................................................................................ 83
18 Deferred and current income tax ...................................................................................................................... 83
19 Payables ................................................................................................................................................................... 86
20 Other liabilities ....................................................................................................................................................... 86
21 Net premium earned ............................................................................................................................................. 87
22 Service and other income .................................................................................................................................... 88
23 Net income from investments ............................................................................................................................ 88
24 Insurance claims .................................................................................................................................................... 89
25 Net operating expenses........................................................................................................................................ 90
26 Finance expenses .................................................................................................................................................. 90
27 Income tax ................................................................................................................................................................ 91
28 Dividends per share ............................................................................................................................................... 91
29 Assets not freely disposable................................................................................................................................. 91
30 Capital commitments and contingencies ......................................................................................................... 91
31 Personnel ................................................................................................................................................................. 92
32 Related party transactions .................................................................................................................................. 93
33 Auditors fees ........................................................................................................................................................... 94
34 Events after the reporting period ...................................................................................................................... 94

13

All amounts in thousands of Euro, unless otherwise stated

Consolidated financial statements
Consolidated statement of financial position
AssetsNote

31.12.2020

31.12.2019

Intangible Assets

6

151,134

148,446

Property, plant and equipment

7

143,406

140,555

Investment property

7

2,595

1,914

Financial investments

9

1,471,479

1,384,412

Reinsurance contracts

16

1,013,353

812,067

Deferred income tax assets

18

35,63027,266

Current income tax assets

18

16,07523,696

Receivables

10

294,511

297,087

Accounts receivable on insurance and reinsurance business

184,593

188,118

Other accounts receivable

109,918

108,969

Other assets

420,965

486,594

29,56033,316

Deferred acquisition costs

11

Other assets and accruals

12391,405453,278

Cash and cash equivalents

13

225,565

181,754

3,774,713

3,503,791

1,143,666

1,187,892--

1,143,666

1,187,892

Total
EquityCapital and reserves attributable to the owners of the Company

14

Non-controlling interests
Total
Liabilities
Employee benefit liabilities

15

137,173

123,524

Insurance contracts

16

1,397,951

1,247,729

Other provisions

17

2,781

2,620

Deferred income tax liabilities

18

67,565

81,205Current income tax liabilities

18

36,23427,816

Payables19

393,357

200,799

Accounts payable on insurance and reinsurance business

324,499

121,888

Trade and other accounts payable

68,85878,911595,986

632,206

Total

2,631,047

2,315,899

Total equity and liabilities

3,774,713

3,503,791

Other liabilities

20

14

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

Consolidated income statement
Note

2020

2019

Insurance premium revenue

21

1,470,817

1,496,424

Insurance premium ceded to reinsurers

21(1,038,126)(910,206)

432,691

586,218

Net premium earned
Service and other income

22

59,907

61,913

Net income from investments

23

10,977

14,107

503,575

662,239

Insurance claims and loss adjustment expenses

24(892,054)(772,794)

Insurance claims and loss adjustment expenses recovered from reinsurers

24

631,516

478,131(260,538)(294,663)

Total income after reinsurance

Net insurance claims
Net operating expenses(122,249)(106,477)

Total expenses after reinsurance

25(382,787)(401,140)

Operating result before finance costs

120,788

261,099

1,950

1,801

Finance income
Finance expenses

26

Result for the year before tax
Income tax expense

27

Result for the year

(7,493)(4,696)115,245258,204(30,321)(77,031)84,924

181,173

2020

2019

84,924

181,173(10,587)(20,353)

5,467

4,623

52,208

Consolidated statement of comprehensive income
Note
Result for the year
Other comprehensive income:Items that will not be reclassified to the income statement:
Actuarial gains/(losses) on defined benefit pension plans

14.5

Income tax relating to items that will not be reclassified
Items that may be subsequently reclassified to the income statement:
Net fair value gains/(losses) on available-for-sale financial investments

14.3(8,406)

Exchange gains/(losses) on translating foreign operations

14.4(13,031)

5,907

Income tax relating to items that may be reclassified

266(9,747)

Other comprehensive income for the year, net of tax(26,292)

32,637

Total comprehensive income for the year

58,633

213,81058,633

213,810--58,633

213,810Attributable to:
The owners of the company
Non-controlling interests
Total comprehensive income for the year15

All amounts in thousands of Euro, unless otherwise stated

Consolidated statement of changes in equity

Note

Attributable to the owners of the Company
Revaluation
Currency
PensionRetainedreservetranslation
reserveearnings
reserve

Share capital

Share
premium
reserve

24,87024,192

24,598(31,402)(147,270)

-

-

-

-

Acquisitions

-

-

-

Total comprehensive income for the year--

Appropriation of prior year result-

Result for the year-

Balance at 1 January 2019
Dividends

14

Result for the
year

Total

Noncontrollinginterests

Total
equity1,004,948

165,894

1,065,830

33

1,065,863-(91,782)-(91,782)-(91,782)

-

-

33

-

33

(33)

-

43,038

5,329(15,730)

165,894

15,279213,810-

213,810

-

-

-

-

165,894(165,894)

-

-

-

-

-

-

-

-

181,173

181,173-

181,173

Other comprehensive income--

43,038

5,329(15,730)--

32,637-32,637

Balance at 31 December 201924,87024,192

67,636(26,073)(163,000)

1,079,093

181,173

1,187,892-

1,187,892

Balance at 1 January 2020

24,87024,192

67,636(26,073)(163,000)

1,079,093

181,173

1,187,892-

1,187,892

-

-

-

-

-

(102,859)-(102,859)-(102,859)

Acquisitions

-

-

-

-

-

-

-

-

-

-

Total comprehensive income for the year--

(9,884)(11,287)(5,121)

181,173(96,249)

58,633-58,633

Appropriation of prior year result

-

-

-

-

-

181,173(181,173)---

Result for the year

-

-

-

-

-

-

84,92484,924-84,924

Other comprehensive income--(9,884)(11,287)(5,121)--(26,292)-(26,292)

Balance at 31 December 2020

24,87024,19257,752(37,360)(168,121)

1,157,408

84,924

1,143,666-

1,143,666

Dividends

1416

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

Consolidated statement of cash flows
Note

2020

2019

115,245258,204(4,094)(6,138)19,374(1,254)(6,750)7,079

I. Cash flows from operating activities
Result for the year before tax
Adjustments for:Realised capital (gains)/losses on investments
Dividends received from financial investments
Impairment Loss
Depreciation, impairment and amortisation

31,43043,670Net interest income(15,861)(16,700)

Other non-cash items

20,816

13,84917150,222

61,399

Reinsurance contracts

17(201,286)(33,428)

Deferred acquisition costs

12

3,756

(1,563)

Accounts receivable and payable on insurance and reinsurance business

206,136(61,792)

Changes in other assets and liabilities

32,68028,808Changes in operational assets and liabilities:
Insurance contracts

Pensions and other long-term employee benefit net contributions(24,108)(28,649)

Cash generated from operations

328,172

262,874

Income tax paid

(33,973)(73,296)

Interest paid

(1,036)(1,384)

293,163

188,194

Net cash (used in)/generated by operating activities
II. Cash flows from investing activities
Investments and acquisitions (cash outflows):
Short-term investments(113,789)(286,463)(514,117)(423,098)

Property, plant and equipment and intangible assets(49,711)(50,217)

Divestments, redemptions and disposals (cash inflows):
Investment property
Short-term investments

263
123,899882
339,457

389,195

218,570

Financial investments available-for-sale

10

Financial investments available-for-sale

10

Property, plant and equipment and intangible assets
Dividends received from financial investments
Interest received
Net cash (used in)/generated by investing activities
III. Cash flows from financing activities
Dividend paid

29

Other Loans
Net cash (used in)/generated by financing activities
Changes in cash and cash equivalents (I + II + III)
Cash and cash equivalents at the beginning of the year

14

Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year
The cash and cash equivalents are presented net of bank overdrafts (see Note 13).

17

65

54

6,138

6,750

17,29817,184(140,759)(176,881)(102,859)(91,782)--(102,859)(91,782)

49,546(80,469)

181,754261,731(5,735)492

225,565

181,754

All amounts in thousands of Euro, unless otherwise statedNotes to the consolidated financial statements
1

General information

Atradius Crédito y Caución S.A. de Seguros y Reaseguros (‘ACyC’), with its office at Paseo de la Castellana 4, Madrid,
Spain, and its subsidiaries is a global credit insurer and aims to support its customers’ growth by strengthening their
credit and cash management through a wide range of credit insurance management products and services. These
services include credit insurance, bonding, instalment credit protection and information services.
The Company is registered in the Commercial Registry of the province of Madrid in Volume 10836 of Section 8, Page 1,
Sheet M-171,144, Entry 308, with Legal Entity ID Code number 9598002U9BK2VP1RTG14 issued by the Registry; it isalso registered in the Administrative Registry of Insurance Companies of the General Direction for Insurance andPension Funds, under reference C-0046, and is authorized to operate in the following industries: Credit (commercial
risks in the domestic and foreign markets) and Sureties.
The main shareholder of ACyC is Atradius Insurance Holding N.V. The parent company of Atradius Insurance Holding
N.V. is Atradius N.V. (together with its subsidiaries referred to as Atradius), which is a company incorporated anddomiciled in Amsterdam, the Netherlands. The parent is Grupo Compañía Española de Crédito y Caución, S.L., whichowns 64.23% (2019: the same) of the shares in Atradius N.V. The ultimate parent and the ultimate controlling party ofAtradius is Grupo Catalana Occidente, S.A., which holds 73.84% of the shares in Grupo Compañía Española de Crédito y
Caución, S.L. and 35.77% (2019: the same) of the shares in Atradius N.V. The financial statements of Atradius N.V. areconsolidated within Grupo Catalana Occidente, S.A., which is a listed company in Spain and has its Consolidated
Accounts deposited in the Commercial Registry of the province of Madrid.
ACyC has decided to voluntarily prepare consolidated IFRS financial statements. The ACyC accounting principles are
fully aligned with the accounting principles that are applied at Atradius. For more detail we refer to Note 2 and Note 3.
The ACyC consolidated financial statements have been approved by the Board of Directors on 3 March 2021 andsubjected to the approval of the General Shareholders Meeting.

18

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

2

Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all financial years presented, unless otherwise stated.

2.1

Basis of preparation

The ACyC consolidated financial statements are prepared in accordance with International Financial ReportingStandards (IFRS) as adopted by the European Union. These have been prepared under the historical cost convention as
modified by the revaluation of available-for-sale financial investments.
The financial statements have been prepared in accordance of the following local regulation:-

Code of Commerce (Código de Comercio).
Royal Decree 1060/2015, dated 20th of November, for Ordering, Supervising and Solvency of Insurance andReinsurance Companies (ROSSEAR).
Law 20/2015, dated 14th of July, for Ordering, Supervising and Solvency of Insurance and Reinsurance
Companies
The applicable regulatory framework includes the various requirements established in Spanish legislation,
including those specific to the insurance activity. In particular, for the preparation of these consolidated annual
accounts, the provisions of the Framework Document of the General Directorate of Insurance and Pension
Funds on the accounting regime of insurance entities relating to IFRS 4, published on December 22, 2004.

-

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying ACyC accounting policies.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the consolidated financial statements are disclosed in Note 3.
All amounts in the notes are shown in thousands of Euro (EUR), rounded to the nearest thousand, unless otherwise
stated. Due to rounding, numbers presented throughout this and other documents, may not add up precisely to thetotals provided.

2.2

New and revised standards

All changes in the accounting policies have been made in accordance with the transitional provisions in the respective
standards. All standards and amendments adopted by ACyC require retrospective application.

2.2.1

Standards, amendments and interpretations effective in 2020

The following relevant standards, amendments and interpretations have been adopted in 2020, but have had nomaterial effect on the consolidated financial statements:
-

-

-

-

Amendments to IFRS 9, IAS 39 and IFRS 7 relating to the Interest Rate Benchmark Reform (effective 1 January2020). The amendments provide temporary relief for hedge relationships and its accounting during the
replacement process of benchmark interest rates (phase 1). Remaining issues will be addressed once the existing
interest rates have been replaced. These amendments have no material impact on the consolidated financial
statements.
Amendments to IAS 1 and IAS 8; Definition of Material (effective 1 January 2020) clarifies the definition ofmaterial and what should be considered when the definition of materiality is applied. It is expected that theseamendments have no material impact on the consolidated financial statements.
Amendments to IFRS 3 Business Combinations (effective 1 January 2020). The amendments clarify the definitionof a business, with the objective of assisting entities to determine whether a transaction should be accounted for
as a business combination or as an asset acquisition. This standard has no material impact on the consolidated
financial statements.
Amendment to IFRS 16 for Covid-19-related rent concessions. The amendment permits lessees, as a practical
expedient, not to assess whether particular covid-19-related rent concessions are lease modifications. Instead,lessees that apply the practical expedient may account for those rent concessions as if they were not leasemodifications. This amendment has no material impact on the consolidated financial statements.
19All amounts in thousands of Euro, unless otherwise stated

2.2.2

Standards, amendments and interpretations not yet adopted

The following relevant standards and amendments are effective for annual periods beginning after 31 December 2020and have not been early adopted by ACyC:---IFRS 9 Financial Instruments (effective 1 January 2018) replaces the existing guidance in IAS 39 Financial
Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification andmeasurement, impairment of financial instruments and the new general hedge accounting requirements. In
September 2016, the IASB issued amendments to IFRS 4 to address issues arising from the different effective
dates of IFRS 9 and the forthcoming new insurance contracts standard (IFRS 17). The amendments introduce twoalternative options for entities that issue insurance contracts within the scope of IFRS 4: a temporary exemption
from applying IFRS 9 and an overlay approach. The temporary exemption is available for entities whose activities
are predominantly connected with insurance.
ACyC performed an assessment of the amendments to IFRS 4 and concluded that its activities are predominantly
connected with insurance as at 31 December 2015 based on the assessment that the predominance ratio i.e. ratio
total carrying amount of its liabilities connected with insurance compared with total carrying amount of liabilities
criteria was greater than 90%. ACyC decided to apply the temporary exemption in its reporting period starting on 1
January 2018 and expects to adopt IFRS 9 in combination with the adoption of IFRS 17 Insurance contracts on 1
January 2023. In case of a significant change in operating activities, ACyC will reassess whether its activities are
predominantly connected with insurance. Please refer to the ‘Temporary exemption from IFRS 9’ section includedin Risk and Capital management for the related disclosures.
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2 (effective 1
January 2021). The amendments ensure that companies will not have to derecognise or adjust carrying amountsof financial instruments for changes required by the reform, will not have to discontinue existing hedge
relationships solely because it makes changes required by the reform and will be required to disclose information
about new risks arising from the reform and how it manages transition to alternative benchmark rates. In theabsence of any hedge relationships it is expected that these amendments will not have a material impact on the
consolidated financial statements.

The European Union has not yet endorsed the following relevant standards and amendments and as such these havenot been adopted by ACyC:---IFRS 17 Insurance contracts (effective 1 January 2023). In November 2018, the IASB agreed to start the process toamend IFRS 17 to defer the mandatory effective date of IFRS 17 (original effective date was January 1, 2021).
Subject to IASB due process, entities will be required to apply IFRS 17 for annual periods beginning on or afterJanuary 1, 2023. The standard replaces the existing guidance in IFRS 4 Insurance contracts. IFRS 17 aims toprovide a more useful and consistent accounting model among entities issuing insurance contracts. Under IFRS
17, the general model requires entities to measure an insurance contract at initial recognition at the total of thefulfilment cash flows (comprising the estimated future cash flows, an adjustment to reflect the time value ofmoney and an explicit risk adjustment for non-financial risk) and the contractual service margin. The fulfilment
cash flows are remeasured on a current basis each reporting period. The unearned profit (contractual service
margin) is recognised over the coverage period. Aside from this general model, the standard provides, as asimplification, the premium allocation approach. This simplified approach is applicable for certain types ofcontract, including those with a coverage period of one year or less. For insurance contracts with direct
participation features, the variable fee approach applies, however this is not applicable for ACyC as these types ofcontracts are not underwritten. ACyC is currently assessing the impact of the standard on the consolidated
financial statements, including which measurement model should be applied to which products, credit insurance,
bonding, instalment credit protection (ICP), assumed business and reinsurance held and how the requirementswith regards to the level of aggregation should be applied. The impact assessment also includes the transition
requirements. The standard can be applied retrospectively in accordance with IAS 8, but it also contains a‘modified retrospective approach’ and a ‘fair value approach’ for transition depending on the availability of data.
ACyC will most likely apply a blend of transition approaches. Although the impact on the consolidated financial
statements is expected to be material in terms of recognition, measurement and on the presentation anddisclosures in the consolidated financial statements, no further details can be provided yet.
Amendments to IFRS 3 Business Combinations (effective 1 January 2022). The IASB has updated references in
IFRS 3 to the Conceptual Framework without changing any of the accounting requirements. These amendments
will not have a material impact on the consolidated financial statements.
Amendments to IAS 16 Property, Plant and Equipment (effective 1 January 2022). The amendments prohibit

20Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros--

deducting from cost of property, plant and equipment amounts received from selling items produced while thecompany is preparing the asset for its intended use and requires it to recognise the amounts received as sales
proceeds and related costs in profit or loss. It is expected that these amendments will not have a material impact
on the consolidated financial statements.
Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets (effective 1 January 2022). These
amendments require a company to include both incremental costs as well as an allocation of other costs offulfilling a contract when assessing whether that contract will be loss-making. It is not expected that theseamendments will have a material impact on the consolidated financial statements.
Annual Improvements 2018-2020 (effective 1 January 2022). The annual improvements make minor
amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial
Instruments, IAS 41 Agriculture and the Illustrative Examples accompanying IFRS 16 Leases. These amendments
will have no material impact on the consolidated financial statements.

2.3

Consolidation

The following principles of consolidation and measurement are applied to the financial statements:

2.3.1

Subsidiaries

Subsidiaries are all entities over which ACyC has control. ACyC controls an entity when it is exposed to, or has rights tovariable returns from its involvement with the entity and has the ability to affect those returns through its power overthe entity. Subsidiaries are fully consolidated from the date on which control is transferred to ACyC. They are deconsolidated from the date on which control ceases.
Intragroup transactions, balances and unrealised gains on intragroup transactions are eliminated. Unrealised losses
are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Subsidiaries’
accounting policies are changed where necessary to ensure consistency with the policies adopted by ACyC except for
the accounting for insurance contracts (see Note 2.16).
When the group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any
related NCI and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest
retained in the former subsidiary is measured at fair value when control is lost.

2.3.2

Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a businesscombination is measured at fair value, which is calculated as the sum of fair values of the assets (at the acquisitiondate) transferred to ACyC, liabilities incurred by ACyC to the former owners of the acquiree and the equity interests
issued by ACyC in exchange for control of the acquiree. Acquisition-related costs are generally recognised in theincome statement as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value atthe acquisition date, except that the deferred tax assets or liabilities and assets or liabilities related to employee
benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits respectively.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controllinginterests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any)over the net amount of the identifiable assets acquired and the liabilities assumed. If the net amount of the identifiable
assets acquired and the liabilities assumed exceed the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree and the fair value of ACyC’ previously held equity interest in the acquiree (if any),
then the excess is recognised immediately in profit or loss as a bargain purchase.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of theentity’s net assets in the event of liquidation, may be initially measured either at fair value or at the non-controllinginterests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice ofmeasurement method is made on a transaction-by-transaction basis. Other types of non-controlling interests aremeasured at fair value or, when applicable, on the basis specified in another IFRS.

21

All amounts in thousands of Euro, unless otherwise statedWhen the consideration transferred by ACyC in a business combination includes assets or liabilities resulting from acontingent consideration arrangement, the contingent consideration is measured at the fair value and included in theconsideration transferred in a business combination. Changes in the fair value of the contingent consideration that
qualify as measurement period adjustments, are adjusted retrospectively, with a corresponding adjustment togoodwill. Measurement period adjustments are adjustments that arise from additional information obtained during
the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstancesthat existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as
measurement period adjustments depends on how the contingent consideration is classified. A contingent
consideration that is classified as equity is not re-measured at subsequent reporting dates and its subsequent
settlement is accounted for within equity. A contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39 Financial Instruments: Recognition andMeasurement or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with thecorresponding gain or loss being recognised in profit or loss.
When a business combination is achieved in stages, ACyC’ previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e., the date when ACyC obtains control) and the resulting gain or loss, ifany, is recognised in the income statement. Amounts arising from interests in the acquiree before the acquisition datethat have previously been recognised in other comprehensive income are reclassified to profit or loss where suchtreatment would be appropriate if that interest were disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, ACyC reports provisional amounts for the items for which the accounting is incomplete. Those
provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities arerecognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that,
if known, would have affected the amounts recognised at that date.

2.4

Segment reporting

IFRS 8 requires operating segments to be identified on the basis on which the Board of Directors regularly reviews
components of ACyC in order to allocate resources to the segments and to assess their performance. Operating
segments are reported in a manner consistent with the internal reporting provided to the Board of Directors. For more
information related segment please see note 5.

2.5

Foreign currencies

2.5.1

Functional and presentation currency

Items included in the financial statements of each of ACyC’ entities/branches are measured using the currency of the
primary environment in which these entities/branches operate (the ‘functional currency’).
All amounts in the notes are shown in thousands of Euro (EUR).

2.5.2

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at thedates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions andfrom the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in the income statement. A monetary item that forms part of a net investment in a foreign operation forwhich settlement is neither planned nor likely to occur in the foreseeable future is, in substance, part of the net
investment in that foreign operation. In the consolidated financial statements the related exchange gains and losseson these monetary items are recognised in other comprehensive income.
Translation differences on non-monetary items, such as equities classified as available-for-sale financial investments,
are included in the revaluation reserve through other comprehensive income.

22

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

2.5.3

Group companies and branches

The results and financial position of all ACyC entities that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:--

assets and liabilities for each statement of financial position presented are translated at the closing
exchange rate at the date of that statement of financial position;
income and expenses for each income statement presented are translated at monthly average exchange
rates unless this average is not a reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and expenses are translated at exchange rates
at the dates of the transactions; andall resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities and ofborrowings are taken to other comprehensive income. When a foreign operation is sold, such exchange differences arerecognised in the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as the foreign entity’s
assets and liabilities and are translated at the closing rate.
The exchange rates of the most relevant functional currencies for ACyC are presented below:

Currency

End rate

Average rate

GBP

USD

AUD

GBP

USD

AUD

At 31 December 2020

1.11230.81490.6291

1.11300.83470.6155

At 31 December 2019

1.17540.89020.6252

1.17300.91100.6160

2.6

Goodwill and other intangible assets

2.6.1

Goodwill

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controllinginterests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any)over the net amount of the identifiable assets acquired and the liabilities assumed. If the net amount of the identifiable
assets acquired and the liabilities assumed exceed the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree and the fair value of ACyC’ previously held equity interest in the acquiree (if any),
then the excess is recognised immediately in profit or loss as a bargain purchase. Goodwill arising on an acquisition ofa business is carried at cost as established at the date of acquisition of the business (see Note 2.3.2) less accumulated
impairment losses, if any. On disposal of a subsidiary, the attributable amount of goodwill is included in thedetermination of the profit or loss on disposal.
For the purpose of impairment testing, goodwill is allocated to ACyC’ relevant cash-generating units. The CGU’s where
Goodwill is allocated are the lowest identifiable level possible. Cash-generating units to which goodwill has been
allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be
impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, theimpairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to theother assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. An impairment loss
recognised for goodwill is not reversed in a subsequent period.
For more information related intangibles please see note 6.

23All amounts in thousands of Euro, unless otherwise stated

2.6.2

SoftwareAcquired computer software licenses are capitalised on the basis of costs incurred to acquire and to bring to use thespecific software. These assets are amortised on the basis of the expected useful life: which is between three and five
years. Computer software is stated at cost less accumulated amortisation and any accumulated impairment losses.
Costs that are directly associated with the production of identifiable and unique software products controlled by ACyC,
and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible
assets. Direct costs include the software development team’s employee costs and an appropriate portion of relevant
overhead. All other costs associated with developing or maintaining computer software programmes are recognised as
an expense as incurred. Computer software development costs recognised as assets are amortised using the straightline amortisation method over its estimated economic useful lives: in general, not exceeding a period of five years.
Majority of capitalised software developed for strategic business developments has a useful life of 10 years.
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic
benefits embedded in the specific assets to which it relates. All other expenditure is expensed as incurred.

2.6.3

Other intangible assets

Other intangible assets are recognised at fair value at the acquisition date. Amortisation charges are included in net
operating expenses and are calculated using the straight-line method over the expected life of the asset which isestimated to be between 5 and 15 years. Other intangible assets relate to agent networks, non-patented technology,
trade names and insurance.
For more information related intangibles please see note 6.

2.7

Property, plant and equipment

2.7.1 Owned property, plant and equipment
Land and buildings comprise offices occupied by ACyC (‘property for own use’). Land and buildings are stated at thecost of acquisition or construction, less any subsequent accumulated depreciation and subsequent accumulated
impairment losses. For analysis of the residual value, the fair value is assessed based on active market prices, adjusted
if necessary, for any difference in the nature, location or condition. All other property, plant and equipment are statedat historical cost less accumulated depreciation and subsequent impairment losses.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to ACyC and the cost of the item
can be reliably measured. All other repairs and maintenance are recognised as an expense in the income statement
during the financial period in which they are incurred.
Some of ACyC’ properties comprise a part that is held as investment property to earn rentals or for capital appreciation
and another part that is held for own use. If these parts could be sold separately or leased out separately under afinancial lease, ACyC accounts for the parts separately as investment property and property for own use, respectively.
The depreciation period is based on the estimated economic useful life of the asset. Leasehold improvements are
depreciated over the shorter of the estimated useful life of the improvements and the respective lease terms. Land is
not depreciated. All other assets are depreciated using the straight-line depreciation method over the estimatedeconomic useful lives: buildings over 50 years, fixtures and fittings over 3-10 years and information systems
hardware over 3-5 years.
2.7.2 Leased property, plant and equipment
At inception of a contract, ACyC assesses whether it is a lease. A contract is a lease if it involves the use of an identified
asset and conveys the right to control the use the asset for a period of time in exchange for consideration – i.e. ACyC
has the rights to obtain substantially all of the economic benefits from using the asset, and direct the use of the asset.

24Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

As a lessee
A right of use (ROU) asset and a lease liability are recognised at the commencement date of the lease. The ROU asset isinitially measured at cost, which comprises the amount of the lease liability, any lease payments made at or before thecommencement date, any initial direct costs incurred and an estimate of the costs to remove the underlying asset or to
restore the site on which it is located, less any lease incentives received. The lease liability is initially measured at thepresent value of the lease payments to be paid, discounted using the interest rate implicit in the lease or, if that cannot
be readily determined, the Group’s incremental borrowing rate. ACyC generally uses its incremental borrowing rate as
the discount rate that applies to the lease.
Subsequently, the ROU asset is depreciated using the straight-line depreciation method over the shorter of the asset’s
useful life and the lease term. The lease liability is subsequently measured at amortised cost using the effective
interest method. The depreciation expense on the ROU asset and the interest expense on the lease liability areseparately recognised in the income statement.
ACyC presents its ROU assets in ‘property plant and equipment’ and lease liabilities in ‘other liabilities’ in thestatement of financial position.
The Group has chosen to implement IFRS 16, applying the modified retrospective approach. As such, the comparative
information of 2018 is no longer applicable. ACyC has elected not to recognise ROU assets and lease liabilities for
short-term-leases that have a lease term of 12 months or less and leases of low-value assets. The lease payments
associated with these leases are recognised as an expense on a straight-line basis in the income statement.
As a lessor
The Group classifies all leases for which it is a lessor as operating leases, because none of these leases transfer
substantially all of the risks and rewards incidental to ownership of the underlying asset.
Lease payments from operating leases are recognised as income on a straight-line basis over the lease term and areincluded in ‘net investment income’.

2.8

Investment property

Property held for long-term rental yields that is not occupied by one of the companies of ACyC is classified as
investment property.
Investment property comprises freehold land and buildings. It is stated at the cost of acquisition or construction, lessany subsequent accumulated depreciation and subsequent impairment losses. Buildings are depreciated using thestraight-line depreciation method over the estimated economic useful life of the property: 50 years.

2.9

Fair value measurements

For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree towhich the inputs to the fair value measurements are observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
Level 1: Quoted prices in active markets. This category includes financial instruments for which the fair value isdetermined directly by reference to published quotes in an active market. A financial instrument is regarded as quoted
in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry
group, pricing service or regulatory agency and those prices represent actual and regularly occurring market
transactions on an arm’s length basis;
Level 2: Valuation techniques based on observable market data. This category includes financial instruments forwhich the fair value is determined using a valuation technique (a valuation model), where inputs in the valuation
model are taken from an active market or are market observable. If certain inputs in the model are not market
observable, but all significant inputs are, the instrument is still classified in this category, provided that the impact of
those elements on the overall valuation is insignificant. Included in this category are items whose value is derived
from quoted prices of similar instruments, but for which the prices are (more than insignificantly) modified based onother market observable external data;
Level 3: Valuation techniques incorporating information other than observable market data. This category includes
financial investments for which the fair value is determined using a valuation technique for which a significant level25

All amounts in thousands of Euro, unless otherwise statedof the input is not supported by a current observable market transaction. This category also includes the financial
investments for which the fair value is based on brokers quotes or pricing services. These valuations are for 100% of
the fair value verified with an external independent valuation company.
The fair values of financial instruments traded in active markets are based on quoted market prices at the end of thereporting period. The quoted market price used for financial investments held by ACyC is the current bid price.
Transaction costs on initial recognition of financial investments are expensed as incurred.
The fair values of financial instruments in markets that are not active are determined using valuation techniques.
ACyC uses a variety of methods and assumptions that are based on market conditions existing at the end of thereporting period.
The fair values of property for own use and investment property are determined, every two years, by independent realestate valuators registered in the relevant countries and who have appropriate qualifications and experience in thevaluation of properties.
See Note 4.4.1.1 for further details regarding the determination of the fair value of financial investments.

2.10

Recognition and derecognition of financial investments

All purchases and sales of financial investments that require delivery within the time frame established by regulationor market convention (‘regular way’ purchases and sales) are recognised at trade date, i.e. the date that ACyC commits
to purchase or sell the asset. Loans and receivables are recognised and derecognised at settlement date, the date ACyC
receives or delivers the asset.
Financial investments are derecognised when the rights to receive cash flows from the financial investments have
expired or where ACyC has transferred substantially all the risks and rewards of ownership. If ACyC neither transfers
nor retains substantially all the risks and rewards of ownership of a financial investment and does not retain control
over the investment, it derecognises the financial investment. In transfers where control over the asset is retained,
ACyC continues to recognise the asset to the extent of its continuing involvement. The extent of continuing
involvement is determined by the extent to which ACyC is exposed to changes in the value of the asset.

2.11

Classification of financial investments

ACyC classifies its financial investments into two categories: investments available-for-sale and loans and receivables.
The classification depends on the purpose for which the investments were acquired. ACyC determines theclassification of its investments at initial recognition and re-evaluates this at the end of each reporting period.

2.11.1 Available-for-sale financial investments
Available-for-sale financial investments are non-derivative financial assets that are either designated in this categoryor not classified in other categories.
Financial investments are initially recognised at fair value plus transaction costs that are directly attributable to theiracquisitions. Unrealised gains and losses arising from changes in the fair value of financial investments classified asavailable-for-sale are recognised in other comprehensive income net of tax. When financial investments classified asavailable-for-sale are sold or impaired, the accumulated fair value adjustments are included in the income statement
as net gains or losses on financial investments.

2.11.2 Loans and receivables
Loans and receivables (including deposits) are non-derivative financial investments with fixed or determinable
payments that are not quoted on an active market, other than those that ACyC intends to sell in the short term, or thatit has designated as available-for-sale. Deposits withheld by ceding companies and receivables arising from insurance
contracts are also classified in this category. Loans and receivables are initially recognised at fair value plustransaction costs and subsequently measured at amortised cost using the effective interest method, less provision for
impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables
where the recognition of interest would be immaterial.

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Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

2.12

Impairment of assets

2.12.1 Financial assets - general
At the end of each reporting period ACyC assesses, whether there is objective evidence that a financial asset or groupof financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are
incurred only if there is objective evidence of impairment as a result of one or more events that have occurred after
the initial recognition of the asset (a ‘loss event’) and that loss event has a negative impact on the estimated future
cash flows of the financial asset or group of financial assets that can be reliably estimated.
ACyC first assesses whether objective evidence of impairment exists for financial assets that are individuallysignificant. If ACyC determines that no objective evidence of impairment exists for an individually assessed financial
asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk
characteristics and assesses them collectively for impairment. Assets that are individually assessed for impairment
and for which an impairment loss is or continues to be recognised are not included in a collective assessment of
impairment.

2.12.2 Financial investments - carried at amortised cost
ACyC assesses, at the end of each reporting period, whether there is objective evidence that a financial asset carried atamortised costs is impaired. Objective evidence that loans and receivables are impaired can include significant
financial difficulty of the counterparty, default or delinquency by a counterparty, restructuring of a loan or advance by
ACyC on terms that ACyC would not otherwise consider; indications that a counterparty will enter bankruptcy; or
economic conditions that correlate with defaults.
Where such evidence exists that an impairment loss has been incurred on loans and receivables, the amount of theloss is measured as the difference between the asset’s carrying amount and estimated future cash flows. The carrying
amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in theincome statement. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is thecurrent effective interest rate determined under contract. As a practical expedient, ACyC may measure impairment on
the basis of an instrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively toan event occurring after the impairment was recognised, the previously recognised impairment loss is reversed byadjusting the allowance account. The amount of the reversal is recognised in the income statement.

2.12.3 Financial investments - carried at fair value
ACyC assesses, at the end of each reporting period, whether there is objective evidence that an available-for-salefinancial investment is impaired. Objective evidence that available-for-sale financial investments (including debt andequity securities) are impaired can include default or delinquency by an issuer, indications that an issuer will enter
bankruptcy and/or the disappearance of an active market for a security. In addition, for an investment in an equity
security, management assesses whether there has been a significant or prolonged decline in its fair value below its
acquisition cost.
In this assessment, ACyC uses the following indications to decide whether a loss on an equity instrument position
qualifies for impairment:-

significant: The market value of the equity instrument dropped below 60% of its average historical cost price (i.e.
the unrealised loss is larger than 40% of the average historical cost price); or
prolonged: The market value of the equity instrument has been below its average historical cost price forconsecutive period of 18 months.

Where such evidence exists for available-for-sale financial investments, the cumulative net loss that has beenpreviously recognised directly in other comprehensive income is recycled from other comprehensive income (therevaluation reserve) and recognised in the income statement.

27

All amounts in thousands of Euro, unless otherwise statedIf, in a subsequent period, the fair value of debt securities classified as available-for-sale increases and the increase
can be objectively related to an event occurring after the impairment loss was recognised in the income statement, theimpairment loss is reversed through the income statement, but only to the amortised cost price. Subsequent increases
above the amortised cost price are credited against the revaluation reserve as a component of other comprehensive
income.
Impairment losses recognised in the income statement on equity securities cannot be reversed in subsequent periods.

2.12.4 Impairment of other non-financial assets
Assets that have an indefinite useful life, for example land, are not subject to amortisation or depreciation and aretested annually for impairment. Assets that are subject to amortisation and depreciation are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes ofassessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows(cash-generating units). Investment properties are not allocated to cash-generating units, but are tested for
impairment on an individual basis.
If in a subsequent period the amount of the impairment loss decreases and the decrease can be related objectively toan event occurring after the impairment loss was recognised in the income statement, the carrying amount of theasset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, provided that theincreased carrying amount does not exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset (or cash-generating unit) in previous years. The amount of the reversal
is recognised in the income statement. However, impairment losses recognised for goodwill are not reversed insubsequent periods.

2.13

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the statement of financial position only
when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net
basis, or to realise the asset and settle the liability simultaneously.

2.14

Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held on call with banks and other short-term highly liquid
investments with original maturities of three months or less that are subject to an insignificant risk of changes in theirfair value, and are used by ACyC in the management of its short-term commitments. Bank overdrafts which are
repayable on demand form an integral part of ACyC’ cash management and are included as a component of cash andcash equivalents for cash flow purposes. In the statement of financial position, bank overdrafts which do not meet thecriteria for offsetting, are presented separately as liabilities under borrowings.
Deposits pledged for regulatory and other purposes as well as cash held for investments are not available for use in
ACyC’ day-to-day operations and are therefore not included within cash and cash equivalents. These assets areincluded within financial investments.

2.15

Capital and reserves

2.15.1 Share capital
Share capital is the nominal value of issued shares. Incremental costs directly attributable to the issue of equity
instruments are shown in equity as a deduction from the proceeds, net of tax. Incremental costs directly attributable tothe issue of equity instruments as consideration for the acquisition of a business are included in the cost of acquisition.

2.15.2 Share premium reserve
Share premium reserve is the amount received by the Company in excess of the nominal value of the shares it has
issued.

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Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

2.15.3 Revaluation reserve
The revaluation reserve comprises the unrealised gains/losses of the securities available-for-sale after the deductionof income tax, except for impairments that are charged directly to the income statement.

2.15.4 Currency translation reserve
The net exchange difference, after the deduction of income tax that is recognised in the currency translation reserve ineach period represents the following:---in respect of revenue, expenses and capital transactions, the difference between translating these items at actual
or average exchange rates and using the exchange rate at the end of the reporting period, which is the case forrecognised assets and liabilities;
in respect of the net assets at the beginning of the reporting period, the difference between translating these items
at the rate used at the end of the previous reporting period and using the rate at the end of the current reporting
period; andin respect of the net assets acquired during the reporting period, the difference between translating these items at
the rate of acquisition date and using the rate at the end of the current reporting period.

2.15.5 Pension reserve
The pension reserve relates to the various defined benefit schemes and consists of:-actuarial gains and losses, after the deduction of income tax, that arise in calculating ACyC’ pension obligations
and fair value of the plan assets in respect of a defined benefit plan in the period in which they occur; andthe non-recognition of assets (‘asset ceiling’) that can occur when the plan assets are higher than the projected
benefit obligation and where ACyC cannot recover any surplus through refunds from the pension’s vehicle due tosolvency and/or control requirements.

2.15.6 Retained earnings
Retained earnings are the accumulated amount of profits or losses at the end of the reporting period, which have notbeen distributed to shareholders.

2.15.7 Non-controlling interests
Non-controlling interests represent the proportion of shareholders’ equity and of total comprehensive income
attributable to minority shareholders.
Non-controlling interest are initially measured on the net fair value of the acquiree’s identifiable assets, liabilities andcontingent liabilities at the date of the acquisition. The calculation of the percentage attributable to the non-controllinginterest includes any equity interest that is not held indirectly through subsidiaries.
Non-controlling interest is presented within equity separately from the equity attributable to the equity holders of theCompany. Similarly, the statement of recognised income and expenses presents total income and expenses for theperiod showing separately the amounts attributed to the equity holders of the Company and non-controlling interests.

2.16

Insurance contracts

An Insurance contract is a contract under which one party (the insurer) accepts significant insurance risk fromanother party (the policyholder) by agreeing to compensate the policyholder or its beneficiary if a specified uncertain
future event (the insured event) affects the policyholder.
The insurance contracts issued by ACyC can be classified into two main categories:-

credit insurance contracts: contracts that provide for specific payments to be made to reimburse the holder for the29All amounts in thousands of Euro, unless otherwise stated-loss it incurs because a specified debtor fails to make a payment when due under the original or modified terms ofthe contract between the debtor and ACyC’ insured customers; andbonding contracts: contracts that provide compensation to the beneficiary of the contract if ACyC’ bonding
customer fails to perform a contractual obligation relative to the beneficiary.

The company applies IFRS 4.25, which allows existing insurance accounting practices to continue. The maindifference relates to the accounting of local business in Spain and Portugal that applies existing earnings and related
provisioning practices. The differences in application lead to different allocations of unearned premium and provision
for outstanding claims. Further reference is made to specific information included in Note 4.3.6 and Note 16.

2.16.1 Deferred acquisition costs
Commission costs that vary with and are related to securing new contracts and renewing existing contracts arecapitalised as deferred acquisition costs. All other costs are recognised as expenses when incurred. The deferredacquisition costs are subsequently amortised over the life of the policies as premium is earned.

2.16.2 Provision for unearned premium
The recognition of unearned premium per product is set out in Note 4.3.6.1.

2.16.3 Provision for outstanding claims
Claims and loss adjustment expenses are charged to the income statement as incurred based on the estimated liability
for compensation owed to contract holders. They include direct and indirect claims settlement costs and arise from therisks ACyC has assumed up to the end of the reporting period. ACyC does not discount its liabilities (other than therecoveries on the Instalment Credit Protection (ICP) product) given the short-term nature of its liabilities. Liabilities
for unpaid claims are estimated using the input of assessments for individual cases reported to ACyC and statisticalanalyses for the claims incurred but not reported. When appropriate, deductions are made for salvage, subrogationand other expected recoveries from third parties. For reinsurance business the provisions are determined treaty-bytreaty, based on premium and loss information supplied by the ceding companies. Estimates of expected losses aredeveloped using historical claims experience, actual versus estimated claims experience and other known trends anddevelopments.
Additional information on the measurement of the provision for outstanding claims is provided in Note 4.3.6.

2.16.4 Liability adequacy test
At the end of each reporting period, a liability adequacy test is performed to ensure the overall adequacy of the total
insurance contract liabilities, net of related deferred acquisition costs. In performing this test, current best estimates of
future contractual cash flows and claims handling expenses are used. Any deficiency on consolidated level isimmediately charged to the income statement by first writing down the related deferred acquisition costs and then by
establishing a provision for losses arising from the liability adequacy test.

2.16.5 Reinsurance contracts
Contracts entered into by ACyC with reinsurers, under which ACyC is compensated for losses on one or more contracts
issued by ACyC and that meet the classification requirements for insurance contracts, are classified as reinsurance
contracts held. Contracts that do not meet the classification requirements are classified as financial assets. Insurance
contracts entered into by ACyC under which the contract holder is another insurer (reinsurance business) are included
in insurance contracts.
The benefits to which ACyC is entitled under its reinsurance contracts held are recognised as reinsurance assets. Theseassets consist of short-term balances due from reinsurers (classified within loans and receivables), as well as longer
term receivables (classified as reinsurance contracts) that are dependent on the expected claims and benefits arisingunder the related reinsurance contracts. Amounts recoverable from or due to reinsurers are measured consistently
with the amounts associated with the reinsured insurance contracts and in accordance with the terms of each30Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

reinsurance contract. Reinsurance liabilities are primarily premium payable for reinsurance contracts and arerecognised as an expense when due.
ACyC assesses its reinsurance assets for impairment on a quarterly basis. If there is objective evidence that thereinsurance asset is impaired, ACyC reduces the carrying amount of the reinsurance asset to its recoverable amountand recognises that impairment loss in the income statement. ACyC gathers the objective evidence that a reinsurance
asset is impaired by applying similar procedures adopted for financial assets held at amortised cost. The impairment
loss is calculated under similar method used for these financial assets.
Reinsurance commission related to ACyC’ quota share treaties is calculated and accounted for at a provisional rate but
reviewed against the development of the ultimate loss ratio as soon as an underwriting year matures. The sliding scalecommission (an additional income or expense on top of the provisional commission) is based on an estimate bymanagement of the ultimate loss ratio for an underwriting year.
ACyC recognises the gains and losses from reinsurance contracts directly in the income statement.

2.16.6 Receivables and payables related to insurance contracts
Receivables and payables are recognised when due. These include amounts due to and from agents, brokers andinsurance contract holders.
If there is objective evidence that the insurance receivable is impaired, ACyC reduces the carrying amount of theinsurance receivable accordingly and recognises that impairment loss in the income statement. ACyC gathers theobjective evidence that an insurance receivable is impaired by applying similar procedures adopted for loans andreceivables. The impairment loss is also calculated under similar method used for these financial assets.

2.16.7 Salvage and subrogation reimbursements
Some insurance contracts permit ACyC to sell goods acquired in settling a claim (i.e., salvage). ACyC may also have theright to pursue third parties for payment of some or all costs (i.e., subrogation).
Estimates of salvage recoveries and subrogation reimbursements are included as an allowance in the measurement of
the provision for claims. The allowance is the amount that can reasonably be expected to be recovered.

2.16.8 Insurance portfolios
Acquired insurance portfolios are initially recognised at fair value by estimating the net present value of future cash
flows related to the liability arising from insurance contracts, being the provision for unearned premium and theprovision for outstanding claims at the date of acquisition. The difference between the carrying value and the fairvalue of the insurance contracts is recognised as an intangible asset.
The Group subsequently amortises this asset based upon the duration of the underlying cash flows. The carrying
amount after initial recognition is adjusted for accumulated amortisation and any accumulated impairment losses.

2.17

Provisions

Provisions for restructuring, onerous contracts and litigation are recognised when ACyC has a present legal orconstructive obligation as a result of past events and it is more likely than not that an outflow of resources will be
required to settle the obligation and the amount has been reliably estimated.
Restructuring provisions include employees’ termination payments which are directly related to restructuring plans.
Provisions are not recognised for future operating losses. Where there are a number of similar obligations, thelikelihood that an outflow will be required in settlement is determined by considering the class of obligations as awhole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the sameclass of obligations may be small. Where the effect of the time value of money is material, the provision is measured as
the present value of the expenditure expected to be required to settle the obligation discounted using a pre-tax rate.

31

All amounts in thousands of Euro, unless otherwise stated

2.18

Deposits received from reinsurers

Deposits received from reinsurers represent amounts received from reinsurance companies in respect of ceded claims
and premium provisions and are stated at amortised cost using the effective interest method. Interest expense isrecognised on an effective yield basis, except for short-term deposits where the impact of interest would be
immaterial.

2.19

Employee benefits

2.19.1 Post-employment benefits
ACyC has a number of post-employment benefit plans. The obligations of these schemes are determined by periodic
actuarial calculations and are generally funded through payments to state plans, insurance companies or trusteeadministered funds. ACyC has both defined benefit plans and defined contribution plans.
Defined benefit plans
A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on
retirement, dependent on one or more factors such as age, years of service and compensation. In a defined benefit plan
ACyC may pay contributions into a separate entity or fund. ACyC, and in some cases the employees who areparticipating, fund a defined benefit plan and ACyC has a legal or constructive obligation to pay further contributions
if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current
and prior periods.
The amount recognised as a defined benefit liability is the net total of the present value of the defined benefit
obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (ifany) out of which the obligations are to be settled directly. The recognition of assets that arise by over-funding of thedefined benefit plan is limited to the ability to use the surplus to generate future benefits (the asset ceiling). The
defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The
present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using
interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid
and that have terms of maturity that approximate the terms of the related pension liability.
Remeasurement of the net defined benefit liability, which comprises actuarial gains and losses, the return on plan
assets (excluding net interest that is calculated by applying the discount rate) and the effect of the asset ceiling (if any,excluding interest), are recognised immediately in other comprehensive income. ACyC determines the net interest
expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used tomeasure the defined benefit obligation at the beginning of the annual period to the then net defined benefit liability(asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result ofcontributions and benefit payments. Net interest expense and other expenses related to defined benefit plans arerecognised in the income statement.
The non-recognition of assets (‘asset ceiling’) can occur when the plan assets are higher than the projected benefit
obligation and ACyC cannot recover any surplus through refunds from the pension vehicle due to solvency and/or
control requirements.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past
service or the gain or loss on curtailment is recognised immediately in the income statement. ACyC recognises gains
and losses on the settlement of a defined benefit plan when the settlement occurs.
Defined benefit costs are categorised as follows:-

service cost (including current service cost, past service cost, as well as gains and losses on curtailments andsettlements);
administration expenses;
net interest expense or income; andremeasurement.

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Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

The first two components of defined benefit costs are presented in the income statement under net operating
expenses. The net interest is presented under finance expenses. Curtailment gains and losses are accounted for as past
service costs. Remeasurements are recognised in other comprehensive income.
Defined contribution plans
Defined contribution plans are post-employment benefit plans under which ACyC pays fixed contributions into aseparate entity (a fund) and will have no legal or constructive obligation to pay further contributions if the fund does
not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.
For defined contribution plans, ACyC pays contributions to publicly or privately administered pension insurance plans
on a mandatory, contractual or voluntary basis. ACyC has no further payment obligations once the contributions havebeen paid. The contributions are recognised as employee benefit expenses when they are due. Prepaid contributions
are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. The
contributions to these plans are recognised as expenses in the income statement.

2.19.2 Other long-term employee benefits
ACyC has a number of other post-employment plans. The main plans are lump sum payment plans and pre-pension
plans. A lump sum payment plan is a plan where the employees are entitled to a lump sum payment at the date theiremployment is terminated. A pre-pension plan is a plan where the employees are entitled to receive payments if theystop working before their actual retirement date.
ACyC’ obligation in respect of long-term service benefits, other than pension plans, is the amount of future benefit that
employees have earned in return for their service in the current and prior periods. The obligation is calculated
annually by independent actuaries using actuarial techniques.

2.19.3 Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an
employee accepts voluntary redundancy in exchange for these benefits. ACyC recognises termination benefits when it
is committed to either terminating the employment of current employees according to a detailed formal plan without
possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary
redundancy. When termination benefits are related to an overall restructuring plan, the ACyC liability is included aspart of the provisions.

2.19.4 Profit sharing and bonus plans
ACyC recognises a liability and an expense for bonuses and profit sharing based on a formula that takes into
consideration, amongst other things, individual targets and the profit attributable to the owners of the Company. ACyC
recognises a liability where contractually obliged or where there is a past practice that has created a constructive
obligation.

2.20

Taxation

Income tax in the consolidated income statement for the year comprises current and deferred tax. Income tax isrecognised in the consolidated income statement except to the extent that it relates to items recognised in othercomprehensive income, in which case it is recognised in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income for the year, using tax rates enacted or
substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous
years.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income
tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of thereporting period and are expected to apply when the related deferred income tax asset is realised or the deferredincome tax liability is settled.

33

All amounts in thousands of Euro, unless otherwise statedDeferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised. Deferred tax assets and liabilities are offset when there is alegally enforceable right to set-off current tax assets against current tax liabilities and when they relate to income
taxes levied by the same tax authority and ACyC intends to settle its current tax assets and liabilities on a net basis. If
the deferred income tax arises from initial recognition of an asset or liability in a transaction other than a businesscombination that at the time of the transaction affects neither the accounting nor the taxable profit or loss, it is notaccounted for.

2.21

Consolidated income statement

2.21.1 Income
Revenue comprises the fair value for services, net of value added tax, after eliminating revenue within ACyC. Revenue
is recognised as follows:
Premium earned
Written premium includes both direct business and reinsurance business and is defined as all premium and policyrelated fees invoiced to third parties and reinsurance premium, excluding tax.
Written premium includes an estimate of premium not yet invoiced for which ACyC has already accepted thecontractual risk. Accruals for premium refunds and cancellations are charged against premium written. Premium
earned includes an adjustment for the unearned share of premium.
Premium ceded under reinsurance contracts is reported as a reduction of premium earned. Amounts for ceded
unearned premium under cession agreements are reported as assets in the consolidated statement of financial
position.
Service and other income
Service and other income includes the income from:credit information services, consisting of providing up-to-date credit information on buyers for which a customer
requires a credit limit application under the insurance policy. This performance obligation is satisfied over time
during the policy period. Revenue is recognised based on the credit limit applications requested by and invoiced
to the customer, against fixed prices stated in the contract. If a contract includes a separate charge for monitoring,
this element is recognised evenly over time;business information is provided online to customers on a subscription basis. Revenue is recognised evenly overtime based on the consideration in the contract, reflecting the constant effort required to acquire and prepare
business information.
Net income from investments
Investment income comprises interest income on funds invested (including available-for-sale financial investments),
dividend income, gains on the disposal of available-for-sale financial investments and rental income from investment
property that are recognised in the income statement. Interest income is recognised as it accrues in the income
statement, using the effective interest method. Dividend income is recognised in the income statement on the date that
ACyC’ right to receive payment is established, which in the case of quoted securities is the ex-dividend date.
Investment expenses comprise impairment losses recognised on financial investments and investment property.
Realised gains or losses on investment property recognised in the income statement represent the difference between
the net disposal proceeds and the carrying amount of the property.

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Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

2.21.2 Expenses
Net insurance claims
Claims charges include claims paid, the change in provision for outstanding claims, and the claims handling expenses.
Claims ceded under cession contracts are recorded as reductions of gross claims.
Net operating expenses
Net operating expenses comprise administrative expenses and commissions. Total administrative expenses are
expenses associated with selling and administrative activities after reallocation of claims handling expenses toinsurance claims.
Finance income and expenses
Finance income consists of interest received on loans, receivables and cash and cash equivalents.
Finance expenses includes interest, amortisation of discount on the subordinated debt, foreign exchange results andthe net interest on the net defined benefit liability (asset) related to defined benefit plans (see also Note 2.19). Foreign
currency gains and losses are reported on a net basis and consist of transaction and translation results.
Interest income and expenses are calculated using the effective interest rate method based on market rather than
nominal rates, at the date that the instrument is recognised initially or modified.

2.22

Consolidated statement of cash flows

The statement of cash flows is presented using the indirect method, whereby the result for the year before tax isadjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash
receipts or payments, and items of income or expense associated with investing or financing cash flows.
Some of the terminology used in the statement of cash flows is explained as follows:-

cash flows are inflows and outflows of cash and cash equivalents;
operating activities are the principal revenue-producing activities of ACyC and other activities that are notinvesting or financing activities;
investing activities are the acquisition and disposal of long-term assets and other investments not included in
cash equivalents; andfinancing activities are activities that result in changes in the size and composition of the contributed equity andborrowings of ACyC.

35

All amounts in thousands of Euro, unless otherwise stated

3 Critical accounting estimates and judgements in applying accounting
policies
ACyC makes estimates and assumptions that affect the reported assets and liabilities and contingent assets andliabilities. Estimates and judgements are continually evaluated. These are based on historical experience and otherfactors, including expectations of future events that are believed to be reasonable under the circumstances. The mostsignificant areas for which management is required to make judgements and estimates that affect reported amounts
and disclosures are detailed below.

3.1

Measurement of fair value

ACyC measures some of its financial instruments at fair value for financial reporting purposes. The fair value offinancial instruments that are not traded in an active market is determined by using valuation techniques. ACyC uses
its judgement to select a variety of methods and make assumptions that are mainly based on market conditions
existing at the end of each reporting period. Where Level 1 inputs are not available, ACyC engages an external
independent valuation company to perform the valuation. ACyC works together with the external independentvaluation company to establish the appropriate valuation techniques and inputs to the model.
Information about the valuation techniques and inputs used in determining the fair value of various instruments aredisclosed in Note 4.4.1.1 and Note 7.

3.2(Re-)insurance related estimates

The ultimate liability arising from claims made under insurance contracts
The estimate of the ultimate liability arising from claims including recoveries made, or to be made, under insurance
contracts is ACyC’s most critical accounting estimate. Although management has endeavoured to adequately take all
facts into account, by their very nature estimates remain uncertain and the eventual outcome may differ significantly
from the projected amount.

Pipeline premium
Pipeline premium relates to shipments made by ACyC’ policyholders for which AcyC is at risk but has not invoiced thepremium. Pipeline premium is estimated as the part of insurance premium earned but not yet invoiced at the end of
the reporting period. Although the calculation of the pipeline premium is derived from the core business systems andcalculated at policy level, considering all policy specific features that might impact the assessment, the calculation
does involve the use of management estimates. The main reason is that premiums for risks taken on depend on theamount of business insured during the reporting period, whereas at the end of the reporting period not all businesshas been declared yet. A secondary reason is that for part of the policies the final premium depends on claims related
to the policy. As the final performance of the policy is not known at reporting date, this also means that part of thepipeline premiums results from estimates. The assumptions are based on recent trends in insured business, client
specific information, knowledge of pending claims, and when relevant, macroeconomic information. It is this current
changing macroeconomic information, under an unprecedented pandemic, which requires a quantification of theadditional uncertainty over the business as usual process followed in the pipeline estimates, to ensure that potential
future developments of pipeline are not impacting negatively the financial statements in the coming years (See Note12). Historical positive development derived from this process shows that, any potential deviation on unknown
shipments under this unprecedented pandemic would be covered without significant impacts on insurance premium.

3.3

Impairment of available-for-sale equity financial investments

ACyC determines that an available-for-sale equity financial investment is impaired when there has been a significant(40% of the decrease) or prolonged decline (18 consecutive months) in the fair value below its cost. This determinationof what is significant or prolonged requires judgement.
Had all the declines in fair values below cost been considered significant or prolonged ACyC would have an additional
EUR 2.9 million loss before tax (2019: EUR 0.9 million), being the transfer of the total revaluation reserve forunrealised losses on equity financial investments to the income statement.

36

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

3.4

Estimated impairment of goodwill

In accordance with its accounting policy, ACyC annually tests whether goodwill of subsidiaries and associatedcompanies has suffered any impairment. The recoverable amounts of cash-generating units have been determinedbased on value in use calculations. These calculations require the use of estimates (see Note 6).
In order to test the value in use against the recognised goodwill, ACyC has stress-tested the main assumptions(discount rate, combined ratio of terminal value and Capital Requirement ratio) which have been applied when
determining the value in use for the related cash-generating units.
The discount rate used varies depending on the location and industry of the company to analyse, using customised
Risk-Free Rates, Market Betas and Country Risk Premiums. The terminal value is calculated based on the dividend
flow/free cash flow of the normalised period through a perpetuity, which applies a long-term growth rate of 2.0% andthe specific discount rate.
The projection period is 10 years, where the first 1-4 year projections are based on financial budgets and/or forecasts.
In the budgets and forecasts, the impact of the changed macroeconomic situation due to the Covid-19 pandemic
situation is taken into account. The remaining years are estimated using ratios and growth rates that converge
towards their normalised term value.

3.5

Pension and post-retirement benefits

The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis
using a number of assumptions. The main assumptions used in determining the net cost (income) for pensions
includes the discount rate and the inflation rate. Any change in these assumptions will impact the carrying amount ofpension obligations.
ACyC determines the appropriate discount rate at the end of each year. This is the interest rate that should be used todetermine the present value of estimated future cash outflows expected to be required to settle the pension
obligations. In determining the appropriate discount rate, ACyC considers the interest rates of high-quality corporate
bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity
approximating the terms of the related pension obligation. Other key assumptions for pension obligations are based inpart on current market conditions.
Additional information, including a sensitivity analysis for the main (actuarial) assumptions, is disclosed in Note 15.

37All amounts in thousands of Euro, unless otherwise stated

4

Risk and capital management

4.1

Integration in the Atradius risk management framework

ACyC is part of Atradius and relies for its risk and capital management on the Atradius risk management framework.
The information found in this note, therefore, is consistent, where relevant for ACyC, with the note on risk and capitalmanagement found in the 2020 annual report of Atradius N.V. The corporate bodies and committees as described in
Notes 4.2.2, 4.3.1 and 4.4.1 operate at Atradius level. The General Manager of ACyC, who is also the CEO and Chairmanof the Management Board of Atradius N.V., is participating in the Risk Strategy Management Board (RSMB), thehighest risk governance body of Atradius, as described in Note 4.2.2.

4.2

Risk management

As a global insurance provider, Atradius recognises the importance of risk management. Atradius maintains a strong
governance and associated internal control system within the organisation. As a self-learning organisation, and basedon additional regulatory requirements, Atradius continues to strengthen its risk management capabilities bybroadening risk management scope and enhancing existing risk management tools.
The relationship between risk and capital is fundamental for Atradius. Understanding how risk-taking consumes
capital allows management to steer Atradius and take strategic decisions with the interdependence of risk and capitalin mind. These decisions are substantially informed by the outcomes of Atradius’ economic capital model. This
internally developed model, which has received supervisory approval for use in calculating regulatory capitalrequirements, contributes to a multitude of risk assessment activities, as well as risk profile measurement, andenhances Atradius’ ability to monitor and manage risk levels within the organisation through the allocation of riskbased capital and the definition of an appropriate risk appetite.

4.2.1 The risk landscapeThe state of the global economy greatly influences the risks that Atradius faces. Economic deterioration may result inincreased insolvencies thereby causing more frequent and severe claims expenses. The return on our investment may
also deteriorate and defaults on our holdings of debt instruments may occur. A severe deterioration of all the abovementioned may affect the credit rating of Atradius. A downgrade of our credit rating could have a potential negative
impact on the number of customer policies held by Atradius and thereby lower revenues. Understanding of thislandscape, anticipating developments and preparation for mitigating actions is a key expertise of Atradius.
In addition to the risks arising from exposures under customer policies, which we refer to as underwriting risk,
Atradius’ risk landscape contains other types of risk. Atradius faces market risk related primarily to our assets, credit
risk from reinsurers and third-party receivables, and operational risks such as cyber risk and legal risks. In addition,
strategic risks exist, such as the rapidly changing technological environment, possible adverse impacts fromgeopolitical conflict, and uncertainty around the breakup of supranational entities. Atradius has structures, systems
and processes in place to identify, evaluate, monitor, and control or mitigate internal and external sources of material
risk in the landscape.
In 2020, the most significant developments in the risk landscape are related to the worldwide effects of the Covid-19
pandemic. The pandemic has affected all risk areas – from underwriting risk (impact on buyers (credit insurance) andcustomers (bonding)) to financial risk and operational risk (impact on Atradius’ ability to maintain its standard ofservice and to ensure that the needs of employees are adequately addressed). Atradius has taken the appropriate steps
to manage its exposure to the effects of the pandemic.
A key part of our underwriting strategy during the Covid-19 crisis has been supporting our customers in insuring theirreceivables, and, at the same time, protecting them against losses in a heightened risk environment in an explainable
and comprehensible way. While Covid-19 risks were spread broadly, the risks were not uniform across all countries,
sectors and portfolios. We analysed the nature and sources of the risks and how they constantly shifted, e.g. fromsupply chain to liquidity-related. We continually analysed all trade sectors for relevant risk factors, such as how theymight be influenced by governmental response and readiness, and changing infection rates in different countries andregions. Using segmentation tools, extensive data and analytics, dedicated Covid-19 response teams coordinated ourworldwide risk and commercial organisations to rigorously review and take action on portfolios. Most of ourunderwriting algorithms were re-parameterised in the Covid-19 environment. These continuous underwriting actions
were performed in alignment with commercial strategies on (re)pricing, policy restructuring and prudent sales,
underpinned by a deliberate and transparent communication with the market.

38

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

Covid-19 – Following the initial ‘lockdowns’ in most countries and travel bans, actions were taken to ensure humanresource and IT capabilities were sufficient to maintain the expected level of customer service and to manage the risk
exposure
Another notable development was Brexit. The UK left the EU on Friday 31 January 2020 enabled by the Withdrawal
Agreement agreed between the EU and the UK Government. Atradius’ activities are continuing without interruption
post-Brexit as it had prepared itself well for the regulatory changes. Atradius had applied to the UK’s Prudential
Regulatory Authority [PRA] for authorisation as a Third Country Branch [TCB] and is now operating ‘as if’ authorised
as a TCB, under the Bank of England’s Temporary Permissions Regime which may be in place for up to three years.
With branches across the EEA and in the UK, Atradius continues to issue policies in all EU27 countries and in the UK.

4.2.2 The risk management and internal control framework
The Board of Directors of ACyC has ultimate responsibility and accountability for risk management and internal
control within the company. Atradius N.V.’s Management Board owns, implements and oversees Atradius group-widerisk governance through the Risk Strategy Management Board (RSMB). The RSMB consists of all members of theManagement Board, as well as the Directors of Group Risk Management, Strategy and Corporate Development and
Finance. The RSMB’s responsibilities include the development of the framework to manage risk and the on-goingoverview of the largest risks. The RSMB establishes the internal risk control system by determining risk control
policies, risk boundaries and by prescribing risk mitigation activities. In addition, the RSMB ensures that there areprocesses and systems to review the effectiveness of risk management and the internal control system.
Atradius N.V.’s Supervisory Board is responsible for overseeing that the Management Board implements, amongst
other things, a suitable risk management and internal control system. In this respect, the Management Board,alongside its risk management functions, periodically presents results, developments and plans to the Supervisory
Board and relevant committees thereof. One of these committees, the Audit Committee, supervises, monitors andadvises the Management Board on the effectiveness of internal risk management and control systems. The Audit
Committee is assisted in this role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk
management controls and procedures, the results of which are reported to the Audit Committee.
Risk management policies are established to identify and analyse the risks faced by Atradius, to set appropriate risk
limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed
regularly to reflect changes in market conditions and the Atradius activities. Through its training and management
standards and procedures, Atradius has implemented and maintains a disciplined and constructive control
environment in which all employees understand their roles and responsibilities.
Central to the company’s system of governance is the Atradius risk governance structure. The risk governancestructure comprises a framework of committees (which support RSMB in specific risk areas), approval authorities,
roles and responsibilities, and risk boundaries, which combine to define the process by which Atradius decides what
risks it takes on and how it manages those risks.
By applying the Atradius risk governance structure, the company is able to:- communicate risk-related norms and values across the organisation;- provide clarity over the various responsibilities and accountabilities in the management of risk;- manage the company’s risk profile and development of the business over time;- ensure that the company adheres to an approved risk appetite;
ensure appropriate ownership of decisions; and- provide the Board of Directors with clear lines of sight into decision-making and risk-management
processes.

4.2.3 Risk classification
ACyC classifies its main risk types as insurance, financial and operational. Insurance risks are the risks of financial
loss as a direct result of providing insurance; these arise predominantly from the risk of default-related non-payment
by a buyer covered by a policy (credit insurance) or the risk of non-performance by a customer (bonding). Financial
risks include market risk, counterparty credit risk and liquidity risk. Operational risks arise from inadequate or failed
internal processes, people, systems, or from external events.

39All amounts in thousands of Euro, unless otherwise stated

4.3

Insurance risk

4.3.1 Insurance products, their characteristics, sensitivity to insurance risk, risk mitigation and controls
ACyC operates with two main direct insurance product lines: credit insurance and bonding. Credit insurance can bedivided into three subcategories: traditional credit Insurance, instalment credit protection and special products. Eachof these sub-categories has particular risk characteristics.
The starting point for the management of insurance risk is that all staff have well-defined authorities specifying thelevel of risk they can accept and that all risk acceptance must take place within the framework of the risk governancestructure described in Note 4.2.2. Furthermore, ACyC’s reinsurance structure imposes checks on the largest exposures.
Exposures beyond a certain threshold are subject to special acceptance by our leading reinsurers.

Traditional credit insurance and special products
In traditional credit insurance, ACyC insures its customers against the risk of non-payment of trade receivables. The
causes of loss covered differ by policy and usually include all forms of legal insolvency. Policies can also cover socalled ‘political’ causes of loss, which include but are not limited to, the risk of non-payment due to payment transfer
problems, cancellation of export/import licenses and contract frustration. Traditional credit insurance does not covernon-payment of trade receivables due to commercial disputes. Each policy stipulates a maximum credit period thatthe policyholder can offer to its buyers without prior approval from ACyC. ‘Buyers’ are the customers of the ACyC’s
insured customers, i.e., the parties that ACyC insures trade credit risk on. In order to mitigate the risk of adverse
selection, the traditional credit insurance products of ACyC usually cover the entire portfolio of buyers of apolicyholder.
For traditional credit insurance, there are two underwriting processes: policy underwriting and buyer underwriting.
Policy underwriting is the process by which ACyC decides which companies to accept as policyholders and the terms
and conditions of cover that are offered to those policyholders. Buyer underwriting is the process by which the ACyC
sets a risk capacity for each buyer and issues credit limits for buyers under existing policies. Policy underwriting andbuyer underwriting are carried out by Commercial and Risk Services units respectively.
Policies are issued for a fixed period: usually no longer than two years and with a break clause after one year. Within
traditional credit insurance, customers retain some of the risk for their own account to protect ACyC from the risk ofmoral hazard. That self-retention can take the form, for example, of an uninsured percentage, a deductible on eachclaim, an aggregate first loss amount or a combination of these. All policies stipulate ACyC’s maximum liability. A
customer is covered for the credit risk on a buyer after a credit limit on the buyer has been established. Most policies
allow customers to establish credit limits themselves for smaller amounts, under strict conditions specified in thepolicy. Larger credit limits must be issued by ACyC. Credit limits are an important risk management instrument for
ACyC as they cap the amount that ACyC would have to pay to a customer in the event of a claim. Moreover, ACyC can,in principle, withdraw the credit limit on a buyer at any time if circumstances demand. Credit limits may be subject tospecific conditions and ACyC can also set conditions for cover on a country or withdraw cover on a country altogether.
These are important tools in dynamically managing insurance risk exposure.
Staff in Commercial units have well-defined authorities specifying who can underwrite which policies. Authorities
typically require the approval of two people and conditions become stricter as the maximum liability under a policy
becomes larger, with the largest policies needing sign-off by both the Director of a Commercial unit and the
responsible Executive Committee member. The pricing of credit insurance policies (new, amended and renewed) isalso subject to governance and the models and methodologies used to establish a technical price require the approvalof the Quantitative Model Committee, a committee responsible for approving quantitative models used within ACyC.
Staff in Risk Services have well-defined authorities specifying who can set what capacity on a buyer and who canapprove what credit limits. As credit amounts grow, decisions require the approval of one or more cosignatories ofincreasing seniority. The largest credit amounts require the approval of a committee with the appropriate authority
level and, in some exceptional cases, the approval of the (leaders of the) reinsurance panel.
The special products business offers a range of bespoke policies to insure against various credit and political risks; thisproduct line includes policies that cover single transactions, single trade relationships and asset confiscation. A
distinguishing feature of special products policies is that, unlike traditional credit insurance, credit limits typicallycannot be readily withdrawn. The conditions of special products policies tend to place a greater onus on risk
monitoring and due diligence on the insured.
40

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

All policies are bound within clearly defined authorities issued to the policy underwriters who report ultimately to theChief Market Officer. All buyer risk is signed off by a dedicated Risk Services team which reports ultimately to theChief Risk Officer. In addition, a dedicated risk management team with a functional reporting line to the Group Risk
Management unit ensures adherence to the risk governance model monitors the portfolio risk and ensures compliancewith the terms of the reinsurance treaty.
Bonding
ACyC issues surety bonds for customers in a number of European countries including Italy, France, Spain, Portugal,
Germany and the Nordic and Benelux countries. Surety bonds insure beneficiaries against the risk of our customer not
meeting contractual, legal, or tax obligations. Beneficiaries include national, regional, local governments and tax
authorities as well as companies.
While our customer may fail to meet its obligations either because it is unable to perform to an agreed or required
level or because it is insolvent, there is also the risk that the customer may intentionally fail to meet its obligations.
Therefore, our assessment of both the customer’s financial strength and its ability to perform plays an important partin the underwriting process. Unlike traditional credit insurance, exposure related to issued bonds cannot be
unilaterally cancelled by ACyC.
When a bond is called by the beneficiary, ACyC mediates to resolve conflicts by working with both customer andbeneficiary. If, as a result of non-performance a payment is made by ACyC to the beneficiary, a recovery action istaken against the customer who remains ultimately liable. If ACyC does incur an irrecoverable loss it is almost always
because of the customer’s financial distress, making the triggers for loss similar to those of traditional credit
insurance.
The spread of customers over industry sectors varies by country as a result of differing legal and market
environments. The type of bonds issued include bid bonds, performance bonds, maintenance bonds, advance payment
bonds and various types of administrative bonds. These are issued with tenors ranging from a few weeks to years, but
only rarely in excess of five years.
All bonding facilities and individual bonds are underwritten by technical underwriters who are part of theCommercial units. Technical underwriters assess the risk of non-performance as well bonding wordings and othertechnical aspects. Financial underwriters, who are not part of the Commercial units, focus on the credit risk-related
aspects of customers; the must approve the acceptance of facilities and individual bonds over certain thresholds. Thereis an authority structure in which decisions are escalated depending on the amounts involved. The largest amounts
require the approval of a committee with the appropriate authority level.

Instalment Credit Protection (ICP)The ICP product line covers the medium- and long-term risks that financial and corporate policyholders face in theirmultiple instalment agreements with private individuals and businesses, and is available in Belgium andLuxembourg.
Policy underwriting is performed within the Commercial units. Policies are generally issued for a fixed period with
automatic renewal. The indemnification rate can rise to 100% and recoveries are for the benefit of ACyC.
Risk underwriting is performed by the risk underwriting teams. Credit decisions are made for each individual
operation based on an automated decision model. The model, without human intervention, can refer the case to anunderwriter for manual assessment. Authorities are granted to underwriters according to their seniority andexpertise. Cases are escalated according to pre-determined thresholds to the local ICP credit committees, then to the
ICP credit committee and finally to the Executive Committee member responsible for ICP.

4.3.2 Insurance risk management tools
ACyC monitors exposure across various dimensions such as counterparty, industry sector and geographic location. We
maintain records of all credit insurance policies, credit limits and buyers in various connected systems. These systems
enable ACyC to set system specific limits by buyer or buyer group. Management information derived from thesesystems enables ACyC to monitor aggregate exposure by country, customer industry sector and other dimensions.

41All amounts in thousands of Euro, unless otherwise stated

All buyers with significant exposure are reviewed at least annually. ACyC continually receives information on buyers
through on-line connections with business information providers and from customers reporting negative payment
experiences. Buyers are reviewed whenever pertinent new information is received. ACyC assigns an internal rating tobuyers and the review process takes into account exposure on a buyer through direct business, including exposure for
special products and bonding. The authority structure for approval of new exposure referred to in this note also
applies to buyer reviews.
The main system includes an integrated risk and cost-based pricing system. Most new policies and renewals are
priced starting from a price suggested by the pricing system.
For ICP, consumer credit risk underwriting relies on the databases of the relevant national authorities. In Belgium, theNational Bank of Belgium maintains two databases: a negative database, listing every credit non-payment incident,
and a positive database, listing every credit granted to any individual. In addition, ICP maintains and uses its own
internal consumer credit database.
Both Bonding and ICP have their own pricing systems and guidelines, which reflect the specifics of their businesses.

4.3.3 Reinsurance programme
Atradius transfers a significant portion of its insurance risk to external reinsurers, through a number of reinsurance
arrangements that include quota share and excess of loss treaties covering either the entire portfolio of Atradius or
specific risks. The reinsurance treaties are renewed annually, usually in December of the preceding year. However,during January 2019, Atradius decided to renew its reinsurance arrangements for 2020. This trend continued with therenewal of the reinsurance arrangements for 2021 in early 2020. On renewal, Atradius assesses the optimal structureof the treaties for the forthcoming period, including excess of loss, stop-loss and facultative treaties. A number of items
are taken into consideration during this review, including the forecast growth in the underlying business, economic
developments etc. In addition, the proposed structure is considered in the context of the Solvency II capitalrequirements and Atradius’ risk appetite based on economic capital and the solvency capital ratio as an outcome theretained business for 2021 will increase up to 52% (2020: 41%).
For the underwriting year 2020 one quota share reinsurance treaty was in place covering the majority of ACyC’s
business. In addition, ACyC had a single excess of loss programme, covering the retention under the quota sharetreaties, consisting of a series of excess of loss treaties (per buyer/buyer group).
The attachment point of the excess of loss treaties has been set such that the net retention for business ceded underthese treaty structures for any buyer group does not exceed EUR 26.25 million for ACyC. The top of the excess of loss
layers is chosen so that, in the judgement of management, there remains only a very remote possibility that failure ofany single buyer/buyer group will exceed the top end of the excess of loss coverage.
With regard to the reinsurance panel, it is Atradius’ policy to select only reinsurers that have a high rating. The normal
minimum requirement is an ‘A-’ level rating. The treaties also include a provision that if a reinsurer is downgraded
during the period of the reinsurance below an ‘A-‘ rating then security can be requested and if not provided thereinsurance agreement with that reinsurer can be terminated.

2020 Government Agreements
The Covid-19 pandemic crisis has strongly affected the world economy.
The GDP forecast made by the IMF went from +3.3% at the beginning of the year to -4.4% in October, updating it to 3.5% in its last published in January 2021.
In view of this situation and, as a support to the national economy, 10 main countries where the Group operates havesupported the business of credit insurance in the form of specific government reinsurance schemes with high cession
rates.
The government schemes are part of an overall package of measures and aim to ensure that sufficient liquidity isavailable in the market, to counteract the damage inflicted on companies affected by the outbreak and to preserve thecontinuity of economic activity during and after the outbreak. In particular, they aim to ensure that trade credit
insurance services continue to be available to businesses. All contracts apply to direct business (gross reinsurance).

42

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

Atradius entered into agreements with Germany, Denmark, Norway, Belgium, France, Luxemburg, the Netherlands,
United Kingdom, Italy and Spain. In general terms, all government schemes cover Credit Insurance with policyholders
from the country and buyers of everywhere (domestic and export credit). In Europe, all agreements previously wereapproved by the European Union. These agreements apply before private reinsurance in place with exception of Spainthat the agreement provides an additional cession (works in parallel current private cession to the market). All
government schemes are risk attaching and cession rate for premiums and claims depends on the country.
The table below details the impacts of the agreements in the consolidated statement of financial position (in thousand
euros):(EUR thousand)

Total

Balance Sheet:Technical Provision Ceded

217,781

Premiums Provision Ceded

6,452

Cash in Bank

(78,565)

Accounts Receivables/Payables(195,371)

Reinsurance commision

4,845

Income statement:
Insurance premium ceded(412,662)

Insurance claims recovered

266,688

Reinsurance commission

101,118

Government Scheme's Result(44,856)2021 Government Agreements
Due to the uncertainties for the coming future, Atradius has extended until 30 June 2021 the government schemes inGermany, Denmark, Norway, Belgium, Luxemburg, the Netherlands, United Kingdom, Italy and Spain.

4.3.4 Concentration risk
Atradius is exposed to concentration risk in a number of ways: primarily by buyer, buyer’s country or buyer’s
industry. The following tables illustrate the exposure at the end of 2020 and 2019 in terms of the sum of credit limits
registered by Atradius on individual buyers. This is referred to as total potential exposure or TPE.
TPE is an approximate upper boundary to real exposure, in the sense that a limit that Atradius has issued does notnecessarily give rise to underwriting risk at a specific point in time. Atradius normally does not know the real
outstanding exposure under its limits on any specific buyer. The ‘usage’ of limits is, on average, much smaller than theamount of the limit. At the portfolio level, real outstanding exposure tends to be in the range of 10% to 30% of TPE, on
top of which customers still have their own retention. In addition to the TPE, customers are often allowed to bring
exposure under the policy through discretionary limits and potential exposure resulting from a discretionary limit on
any buyer is not held on Atradius’ system. Each policy specifies the maximum discretionary limit allowed under thepolicy. For most policies this is no more than EUR 20 thousand per buyer. This illustrates that TPE is a crude measureof exposure and that, in aggregate, real exposure will be far lower.
To manage concentration risks in our portfolio during the Covid-19 pandemic, we prioritised our underwriting
strategy on countries and sectors first, and then reviewed our largest and most severe risks at a credit limit and buyer
exposure level, considering contagion impacts. Actions were taken based on credit reviews, and on timely available
information, as well as on the significantly reduced level of trading in the foreseeable future. During 2020, a
significant number of limits were withdrawn and reduced across all markets, with a focus on the most vulnerable
segments. As a result of these actions, our portfolio has shrunk and improved in overall quality, and concentration
risk has decreased.

43All amounts in thousands of Euro, unless otherwise stated

The TPE details below show TPE gross of reinsurance. Due to the non-linear nature of the excess of loss cover in
Atradius’ reinsurance programme, which has a finite number of reinstatements for each layer, there is no natural way
to show TPE net of reinsurance.
The following tables, show aggregated TPE for credit insurance (including special products and assumed reinsurance.
Buyer country

TPE 2020(EUR million)%

TPE 2019(EUR million)%

Spain, Portugal

78,89514.1%

98,313

16.3%

Germany

93,113

16.7%

92,226

15.3%

Central and Eastern Europe

58,916

10.5%

61,709

10.2%

France44,881

8.0%

47,956

8.0%

United Kingdom

41,388

7.4%

45,134

7.5%

Italy

40,636

7.3%

42,264

7.0%

The Netherlands

29,545

5.3%

29,9855.0%

Nordic28,0305.0%

28,8184.8%USA, Canada, Mexico and Central America

24,612

4.4%

28,396

4.7%

Other

118,848

21.6%

128,120

21.2%

Total

558,864100%

602,920100%

TPE 2020(EUR million)%

TPE 2019(EUR million)%

Chemicals

73,63813.2%

76,571

12.7%

Electronics

62,181

11.1%

66,641

11.1%

Consumer durables

61,736

11.0%

63,819

10.6%

Metals

55,66210.0%

64,919

10.8%

Food

59,10010.6%

59,4599.9%Transport

49,586

8.9%

56,833

9.4%

Construction

43,8987.9%

47,874

7.9%

Machines

37,337

6.7%

38,478

6.4%

Agriculture

28,196

5.0%

32,114

5.3%

Construction materials

27,586

4.9%

27,4144.5%

Services

21,672

3.9%

25,060

4.2%

Other

38,272

6.8%

43,738

7.3%

Total

558,864100%

602,920

100%

The following table shows the distribution of TPE over buyer industry sector.

Industry sector

44Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

The following table shows TPE aggregated by group of buyers. This is the method of aggregation that is relevant for
ACyC’s excess of loss treaties.
TPE Value band

TPE 2020(EUR million)%

TPE 2019(EUR million)%

0 - 20304,28354.4%

330,526

54.8%

20 - 100

95,02917.0%

106,032

17.6%

100 - 250

61,37711.0%

62,47910.4%

250 - 500

40,675

7.3%

44,2347.3%

500 - 1000

30,7845.5%

30,8555.1%1000 - and more

26,716

4.8%

28,793

4.8%

558,864100%

602,920100%(EUR million)

Total

Exposure for bonding and for instalment credit protection has different characteristics and therefore has not been
included in these tables. The bonding exposure is EUR 24.1 billion (2019: EUR 25.0 billion). Exposure for instalment
credit protection amounts to EUR 3 billion (2019: EUR 3 billion).

4.3.5 Factors affecting the frequency and severity of claims
The frequency and severity of claims are affected by several factors. These include all factors that affect credit risk ingeneral. Thus, the state of the economy is a major driver of the frequency and severity of claims. Its effect may vary bycountry and sector. For trade credit risk, the behaviour of customers may also affect the frequency and severity ofclaims, for instance through risks inherent to their business activities and their risk management practices. Specific
events (e.g. natural disasters) or structural changes in the economy (e.g. easier access to developed markets for
producers in low cost countries), may impact the frequency and severity of claims. What specific events or structuralchanges are relevant in this respect will vary over time. In addition, the political risk cover that Atradius provides has
its own dynamics of frequency and severity of claims.
As result of Covid-19, the state of the economy in the near future is significantly more uncertain than usual. This, inturn, impacts uncertainty related to the frequency and severity of claims. In light of Covid-19, governments all aroundthe world have taken measures to support the economy. The uncertainty with respect to the timing and speed withwhich those measures are roll out is also a factor.
The bonding business usually only incurs irrecoverable losses when, after a bond call, any payments to beneficiaries
cannot be reclaimed from the bonding customer, or its guarantors. This is usually due to either the insolvency orbankruptcy of the bonding customer. Thus, in the end, the frequency and severity of claims is affected by similar
factors as those affecting credit insurance.
All forms of credit insurance and bonding bear the risk that changes in legislation, in particular of insolvency law,
may affect the amount and timing of claims payments or recoveries.
Atradius’ business processes are designed to effectively manage the impact of the many risk factors that affect thefrequency and severity of claims. The business processes continually evolve in response to how Atradius views theserisk factors in the context of its overall business strategy.

4.3.6 Sources and assumptions
4.3.6.1

Sources of uncertainty in the estimation of future claims payments

The sources of uncertainty in the estimation of future claims payments include, but are not limited to, all the factorsthat affect the frequency and severity of claims in general, as described in Note 4.2.5.
The insurance liabilities that cover claims experience after the reporting period for risks that have been accepted
before the end of the reporting period consist of two elements: the provision for unearned premium (UPR) and theprovisions for claims ‘incurred but not reported’, the IBNR. The accounting policies and estimation methods for setting
UPR and IBNR vary by product and in part also by entity within ACyC:

45

All amounts in thousands of Euro, unless otherwise stated

-

-

-

for traditional credit insurance, premium is earned in full when the underlying shipment takes place. UPR
exclusively relates to the unearned part of premium invoiced in advance and to risks that have not started.
IBNR is Atradius’ estimate for future claims payments that will result from risks taken on, but for which noclaims notification has been received;for the local credit insurance business in Spain and Portugal, premium is earned pro rata over the period
between invoice date and due date of invoices for the insured shipments. Thus, part of UPR relates to risks
that have started, in the sense that the underlying insured shipment has taken place. IBNR is the local
business in Spain and Portugal’s estimate for future claims payments that will result from risks taken on, forwhich no claims notification has been received and for which the underlying invoices are overdue at the endof the reporting period;for bonding, instalment credit protection and reinsurance, the UPR relates to risk taken on; andfor special products, UPR is set on the same basis as for traditional credit insurance. With the exception of
single transactions, where the UPR relates to risk taken on.

As a consequence, the release of the provision for unearned premium should be taken into account for the local credit
insurance business in Spain and Portugal, bonding, instalment credit protection and reinsurance when interpretingthe claims development tables in Note 18 to evaluate the accuracy with which Atradius has historically estimatedfuture claims payments.
Estimates for future claims payments are made through a combination of case-by-case estimates and statisticalestimates. Provisions for reported claims are set on a case-by-case basis, taking into account statistical estimates for
expected recoveries and statistical estimates of claims incurred to payment ratios. The estimates for future claims
payments are produced per period during which policyholders brought risk under the cover of the policy (i.e., theperiod in which the insured shipment has taken place). Large cases are provisioned separately, at expected loss.
In the case of traditional credit insurance, the main sources of uncertainty for estimates of future claims payments
include:-the amounts that will be paid out as a percentage of the claim amount;the speed with which customers submit claims, as measured from the moment that the insured shipment
took place, the expected average claims payment and the expected percentage of cases that do not lead to apayment;
the expected number of claims for risks taken on during the most recent months since very few claims will
have been reported for the most recent four to six months (depending on the country of the customer);the inflow by number and size of large case; andthe estimation of the expected recovery percentages.

Estimates for future claims payments for bonding have a greater uncertainty than estimates for future claims
payments for credit insurance. Bonding is a ‘longer tail’ business; i.e., the time between issuance of the bond andreceipt of the bond call tends to be much longer than that of traditional short-term credit insurance. For example, mostcredit insurance covers credit periods up to 180 days, while around half the number of bonds written has tenors ofover two years. After receipt of a bond call, it usually takes longer to settle the claim and litigation is not uncommon,
either following the bond call or when trying to realise recoveries. Especially in Italy, litigation tends to be a lengthy
process. Outcomes of litigation cannot be predicted with certainty. For bonding, the provisions set on a case-by-casebasis are based on the amount called minus an amount to account for expected recoveries based on historicexperience or case specific information. For imminent large bond calls as well as for large customers in financial
difficulties, the Company may set an IBNR provision. Booked recovery provisions for bonding are periodicallyreviewed and adjusted to experience.

4.3.6.2

Assumptions, change in assumptions and sensitivity

The risks associated with credit insurance and bonding are subject to a number of influences that are not particularly
open to quantitative sensitivity analysis. This section describes the quantitative sensitivity analysis that is feasible.
Under normal circumstances, the most important assumption used in the main methods for reserving for traditional
credit insurance to set the estimate for the ultimate number of claims for the most recent months of risk would be thatthe claims inflow in early 2020 would be around 20% above the level of end 2019. The main methodologies for
estimating claims provisions for traditional credit insurance combined underpin 79% (2019: 83%) of the claims
provisions for traditional credit insurance.

46

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

In light of the increased uncertainty as result of the current circumstances, however, we take a different approach for2020 closing. During the second half of 2020, the number of reported claims dropped significantly compared to the firsthalf of the year. This partly relates to a drop of insured business as result of the lock-downs early 2020 and partly
because of government’s support for the economy. Provisions have been set based on the assumption that this drop is
temporary and imply a strong increase in expected claim received count early 2021 of 10%-40%, depending on the
country, above the level of the first half of 2020.
An indication of the sensitivity to projected ultimate number of claims would be the following: if the estimated ultimate
number of claims for the most recent six months of risk were to change by 10%, the claims provisions would change by
EUR 33 million, gross of reinsurance (2019: EUR 27 million). As in essence provisions for most recent months are set as
estimated number times estimated claims size, this also describes the sensitivity to assumed claims size. This sensitivity
is approximately linear. Unless noted otherwise, the same holds true for other sensitivities mentioned in this section.
By its nature, an estimate of the expected inflow of large cases is not easy to quantify. The order of magnitude of thissensitivity would, in the judgement of management, be similar to the sensitivity in the estimated number of claims forthe most recent months, although, as is inevitable with severity risk, it has a longer tail. From historic data it can be seenthat the correlation between the ultimate aggregate losses arising from large claims by underwriting year and theattritional losses is larger than 80%.
As such, supporting the plausibility of the management judgement. Provisions for large cases are in part based on
historic experience with large cases and in part on case by case reporting of ultimate loss estimates. The approach that
relies on historic experience sets an ultimate loss arising from large cases as a fraction of the total losses for the last two
risk years. If these fractions were chosen 10% higher, then the claims provisions for traditional credit insurance would
increase by EUR 69 million (2019: 37 million). The case by case estimates are specific to the individual facts andcircumstances of the case. As such, no meaningful overall insight to the sensitivity can be given.
Atradius is regularly reviewing how the Brexit might affect the defaults in the UK buyer portfolio. As result of the UK
economy having deteriorated significantly, the impact of which having been fully reflected in the provisions resulting
from the normal methodology for the UK, combined with the prudence included therein, Atradius has concluded thatthe specific and additional provision for a severe Brexit scenario (2019: EUR 29 million) was no longer needed. As such,it was released during 2020.
Claims provisions are presented net of recoveries from salvage and subrogation. Realised recoveries can deviate fromexpected recoveries. Expected recoveries amount to EUR 476 million (2019: EUR 427 million). The largest twocomponents of the expected recoveries are the recoveries for traditional credit insurance of EUR 211 million (2019: EUR
195 million), and for instalment credit protection of EUR 154 million (2019: EUR 149 million).
As recovery rates differ by country as well as product, moreover, that the development depends on the age of theunderwriting year, it is challenging to provide insight into sensitivity to assumptions by measuring the impact of a mere
parameter change. For traditional credit insurance, ultimate recoveries are first estimated using commonly usedprojection methods. These estimates are then reduced considering a margin for uncertainty, such that a favourable
development on these estimates is by far the most likely outcome. Nevertheless, the impact of setting the recovery
provisions lower by 10% is EUR 21 million (2019: EUR 20 million). For instalment credit protection, for which similar
margins for uncertainty are introduced, impact of setting recovery provisions lower by 10% is EUR 15 million (2019: 15
million).

4.4

Financial risk

ACyC is exposed to financial risk mainly through its financial assets, financial liabilities, reinsurance contracts andinsurance contracts. The core components of financial risk are market risk, credit risk and liquidity risk.
These risks arise mainly from interest rate sensitive positions, equity instruments, credit exposures, non-Eurocurrency exposures and cash flow patterns.

4.4.1 Market risk
Market risk is the risk that the fair value of assets and liabilities that are sensitive to movements in market prices,
decreases or increases due to adverse movements in equity prices, interest rates or currency exchange rates. ACyC
exposes itself to these risks by holding assets and liabilities which fair value is sensitive to movements in those prices.
To measure these risks, ACyC uses several risk metrics. The most important ones being the mismatch between assets
47

All amounts in thousands of Euro, unless otherwise statedand liabilities which fair value is denominated in foreign currency, value-at-risk, capital models from the credit
assessment institutions and interest rate duration.
Atradius uses a Solvency II available capital approach to define the Strategic Asset Allocation and to assess the impact
of investment decisions to ensure that sufficient Solvency II capital remains.

4.4.1.1

Fair values of financial assets and liabilities

The estimated fair values of ACyC’s financial assets and liabilities equal their carrying value.
The fair values correspond with the price, at our best estimate, that would be received to sell an asset or paid totransfer a liability in an orderly transaction between market participants at the measurement date. Wheneverpossible, the fair values are based on quoted market prices. If there is no quoted market price available, we use
valuation techniques which are based on market prices of comparable instruments or parameters from comparable
active markets (market observable data). If no observable market inputs are available, valuation models are used(non-market observable data). These valuation techniques are subjective in nature and involve various assumptions
about the relevant pricing factors. Changes in these assumptions could significantly affect the estimated fair values.
Consequently, the fair values presented may not be indicative of the net realisable value. In addition, the calculation of
the estimated fair value is based on market conditions at a specific point in time and may not be indicative of future
fair values.
The fair values are subject to a control framework designed to ensure that they are either determined or validated by afunction independent of the risk taker. To this end, ACyC establishes the accounting policies and processes governing
valuation and is responsible for ensuring that these comply with all relevant accounting pronouncements. Within thisgovernance structure, non-quoted investments or illiquid investments in which ACyC invests are valued by an
external independent valuation company. That company uses its own proprietary valuation systems to value thesecurities supported by economic and market assumptions from financial information providers. The valuations areprovided on a monthly basis and are reviewed and approved by ACyC.

Debt and equity securities available-for-sale
The fair value of debt and equity securities available-for-sale is based on quoted market prices, where available. For
those securities not actively traded, fair values are provided by an external independent valuation company.

Loans and short-term investments
For loans and other short-term investments, carrying amounts represent a reasonable estimate of their fair values.

Other financial assets
The carrying amount of other financial assets, including cash and cash equivalents, is not materially different to theirfair value, given their short-term nature.

Other financial liabilities and deposits received from reinsurers
The carrying amount of other financial liabilities and deposits received from reinsurers is not materially different totheir fair value, given their short-term nature.

48

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

The following tables present the fair values of the financial instruments carried at fair value:

Financial instruments measured at fair value
Quoted prices in active
markets Level 1

2020

Assets2019

Available-for-sale:
Equity securities

294,970

268,807

179,887

175,691

Debt securities:
Government bonds
Corporate bonds
Total

899,783

830,045

1,374,640

1,274,543

The company has at 31 December 2020 and respectively at 31 December 2019 only securities traded in active markets(level 1).

4.4.1.2

Equity price risk

Equity price risk is the risk that the fair value of the assets that are sensitive to movements in equity prices decreases
due to adverse movements in equity prices. ACyC exposes itself to equity price risk by investing in equity instruments
issued by corporations and equity instruments issued by investment funds. These risks are measured and analysed byusing value at risk techniques and capital models from the external credit assessment institutions. The value-at-riskmeasures the potential maximum loss on ACyC equity instruments due to adverse movements in equity prices in the
short-term while the capital models measures the potential maximum loss in the long-term, (see Note 4.4.1.4 for more
information). ACyC invests in a portfolio of diversified equity instruments to manage these risks to minimize theidiosyncratic risk of individual assets.

Individual equities instruments
ACyC invests in individual equities via a segregated mandate in which the asset manager has discretion to select theequity portfolio in accordance with investment restrictions set in the investment management agreement. This
diversified portfolio consists of EUR denominated large capitalization equities. Per the end of December 2020, themarket value of these equities is EUR 76.3 million (2019: EUR 69.4 million).

Investment funds
The investment funds in which ACyC invests are exposed to market risk, counterparty risk, liquidity risk and currency
risk (i.e. general investment fund risks). The risks of an investment fund are mainly driven by the nature of the assets
in which it invests. As investment funds are offered to multiple investors, the investment restrictions of a fund arestated in the fund’s prospectus. ACyC only selects investment funds that have similar investment restrictions stated intheir prospectus as stated in the Atradius Investment Policy.

Equity instruments issued by investment funds
The portfolio of equity instruments issued by investment funds are shown in the following table:
Weight in %Weight in %

2020

2019

Passive equities exchange traded funds

168,689

77.2%

179,727

90.2%

Active money market funds

26,991

12.3%

2,540

1.3%

Real estate funds

22,91010.5%

17,097

8.6%

Total

218,590

100.0%

199,364100.0%

49

All amounts in thousands of Euro, unless otherwise stated

Passive equities exchange traded funds
The portfolio of passive equities exchange traded funds mainly consists of an exchange traded fund which passively
tracks the Dow Jones Euro Stoxx 50 Index.

Active money market funds
The portfolio of active money market funds consists of money market fund denominated in British pound, US dollar
and Brazilian real.

Real estate funds
The portfolio of real estate funds consists of real estate funds denominated in EUR and in which the underlying asset
exposure is focussed on European real estate.

4.4.1.3

Interest rate risk

Interest rate risk is the risk that the fair value of assets and liabilities, that are sensitive to movements in interest rates,
decreases or increases due to adverse movements in interest rates. ACyC exposes itself to this risk by investing in debt
instruments and equity instruments issued by investment funds that invest in debt instruments.

ProfileAt the end of the reporting period the interest rate profile of ACyC interest-bearing financial instruments was:Fixed rate instruments carrying amountFinancial assets (1) (3)Financial liabilities(2) (4)

Total

Variable rate instruments
carrying amount

2020

2019

2020

2019

1,079,670

1,005,736

322,404

291,623--(66,016)(63,936)

1,079,670

1,005,736

256,388

227,6871) Fixed rate financial assets include debt securities;2)There are no financial liabilities at fixed rate;3) Variable rate financial assets include cash and cash equivalents, loans, short-term investments;
4) Variable rate financial liabilities include borrowings and deposits received from reinsurers.

Duration
Duration demonstrates the dependability of a bond’s market value to a change in the underlying discount rate of thatbond. The duration figure depicts the percentage change of the market value of a bond investment if the underlying
discount rate is parallel shifted by 100 basis point or 1.00%. The higher the duration figure, the more a bond is sensitive
to movements in the underlying discount rate.
ACyC uses the duration to assess its interest rate risk exposure and monitors whether the duration remains between
the minimum and maximum duration limit (between one to five years for government bonds and one to three years
for corporate bonds) as set in the Atradius Investment Policy. The duration is calculated as the weighted average of the
discounted future cash flows to be received measured in years. The duration as per 31 December 2020 is 2.9 years(2019: 2.6 years) and the average maturity for 2020 is 3.3 years (2019: 3.0 years).

4.4.1.4

Value-at-Risk

ACyC measures equity price and interest rates risk by analysing the value-at-risk (VaR) of its financial instruments.
This risk metric measures the potential maximum loss on those financial instruments due to adverse movements inequity prices and interest rates within a specified time frame and probability (confidence level). The VaR is based on
variance-covariance methodology that uses the historical volatility of the fair values of the financial instruments andthe correlation between these as main inputs. These volatilities and correlations are provided by financial information
providers or financial institutions.

50

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

The risk of using the variance-covariance methodology or any other historical methodology is that it may
underestimate the riskiness of the financial instruments. This is because these methodologies assume that thehistorical volatility of and correlation between the financial instruments will be repeated in the future. Therefore, it is
not intended to represent or to guarantee any future price movements but rather to be used as guidance for
information purposes and comparison of historical developments only.
The VaR provides insight into the maximum expected loss per asset category and on portfolio level. The fair values
and percentages presented are calculated with a given confidence level of 99% for a period of 12 months. This implies
that there is 1% probability of underestimating the potential maximum loss for the coming 12 months.
The following table shows the VaR of ACyC equity securities and debt securities on portfolio level.
Value-at-Risk

EUR million% of themarket value

2020

EUR million% of themarket value

2019

Equity securities:
Shares (including equity and real estate funds)

203.5

76.0%

90.1

33.8%

Government bonds

4.4

2.4%

3

1.7%

Corporate bonds

39.7

4.4%

13.3

1.6%

Total portfolio

201.7

13.5%

89.4

6.4%

Debt securities:

The classification of financial investments in the VaR table stated above are based on the actual financial risks that theindividual securities present in the investment portfolio carry. For instance, within debt securities a separation
between government bonds and corporate bonds is maintained to capture the actual exposure to corporate bonds thatcarry additional credit risk above the risks that government bonds bring along. When individual securities areclassified to the asset class that fits their actual risk profile, the volatility of that asset class is calculated using thevolatility to the financial markets of the underlying securities in that asset class. The volatility of each asset class as awhole serves as input for the VaR calculation of that asset class. In case of an investment fund, the volatility of thefund (driven by the characteristics of its underlying securities) serves as input for the calculation of the VaR on thatspecific investment fund and is subsequently included in the VaR calculation of the asset class. Total portfolio VaR isless than the sum of the VaR of the individual portfolio components because the correlation between thesecomponents is less than one and forms the basis of portfolio diversification. The VaR percentage increased from 6.4%
at the end of 2019 to 13.5% at the end of 2020 and the VaR value increased from EUR 89.4 million at the end of 2019 to
EUR 201.7 million at the end of 2020.The economies have been impacted in 2020 and there is an increased volatility
in the financial markets.

4.4.1.5

Currency risk

Movements in exchange rates may affect the value of consolidated shareholders’ equity, which is expressed in Euro.
Foreign exchange rate differences taken to other comprehensive income arise on the translation of the net investment
in foreign entities. During 2020, the Euro depreciated in value against some of the non-Euro functional currencies (seeNote 2.5.3) resulting in a foreign currency loss in other comprehensive income of EUR 11.3 million, net of tax (2019: again of EUR 5.3 million, net of tax).
However, the impact of these fluctuations is limited as revenue, expenses, assets and liabilities within our non-Euro
operations are generally denominated in the same currencies.
ACyC exposure to foreign currency exchange rate risk, arising from monetary financial assets and liabilities
denominated in non-functional currencies as at 31 December 2020 and 31 December 2019, is presented in thefollowing table, in EUR:

51

All amounts in thousands of Euro, unless otherwise stated

FinancialassetsFinancialliabilities

Net position

Financialassets2020

Financialliabilities

Net position

2019

EUR

248,219240,2018,018

231,617

216,773

14,844

GBP

3,852

110

3,742

3,950

1,522

2,428

USD

206,758

140,553

66,205145,523

97,74147,783

AUD

1,723

804

919

549

(5)

554

Other

24,273

41,583(17,310)18,01756,200(38,183)

Total

484,824

423,250

61,574

399,657

372,231

27,426

Sensitivity analysis
As an indication of the currency exposure, a 10% strengthening of these foreign currencies against the Euro as at theend of the reporting period would have increased/(decreased) the result for the year by an amount equal to the net
position as presented above, calculated against that 10%. This analysis assumes that all other variables, and inparticular interest rates, remain constant and is performed on the same basis as for 2019. A 10% weakening of theaforementioned foreign currencies against the Euro as at the end of the reporting period would have had an equal but
opposite effect.

4.4.2 Credit risk
Credit risk is the risk that customers or counterparties are unable to repay their debt towards ACyC in full when due.
ACyC exposes itself to credit risk mainly by reinsurance contracts and holding financial assets.
Reinsurance is used to manage insurance risk. This does not, however, discharge ACyC’s liability as primary insurer. If
a reinsurer fails to pay a claim for any reason, ACyC remains liable for the payment to the policyholder. ACyC’s policy
is to select only reinsurers that have a well-established investment grade credit rating. The normal minimum
requirement is an ‘A’ level rating, although there are some minor exceptions. In the event that the reinsurer’s rating isfound to be below this threshold, ACyC has the right to either terminate the reinsurance relationship during the courseof the reinsurance year or else seek collateral if the relationship is to continue.
Individual operating units maintain records of the payment history for significant contract holders with whom they
conduct regular business. The exposure to individual counterparties is also managed by other mechanisms, such as
the right of offset where counterparties are both debtors and creditors. Management information reported to ACyC
includes details of provisions for impairment on loans and receivables and subsequent write-offs.
Credit exposure to business partners, such as insured customers and brokers, is closely monitored. Potential
impairments on receivables are reviewed monthly and updated.
With regard to managing the credit risks of the financial investments, the investment policy of ACyC is to hold a,
principally Euro-centric, internationally diversified portfolio and to avoid large risk concentrations. From a Standard& Poor’s rating scale or comparable perspective, the minimum allowed average rating of the overall fixed income
portfolio is A-, whereas investments in individual fixed income securities are allowed a minimum issue rating of BBBat purchase. If a debt security in which ACyC has invested falls below the minimum credit rating or is not rated, itshould be reviewed by the Atradius Investment Committee to decide whether the debt security is still a suitable
investment. The maximum concentration limit per issuer and (per legal entity) is 5% of the market value of thefinancial investments of the legal entity. The concentration per issuer is evaluated by aggregating the exposure to asingle issuer through both debt investments and equity securities. The Atradius Investment Committee monitors thislimit and takes action if necessary.
As a result of the Covid-19 pandemic many companies around the world suffered a significant decrease in profitability,
which contributed to rating downgrades of securities. Atradius investment assets were not exempt from the impact
and observed mostly a one notch downgrade on 13.6% of the market value of its 2020 corporate bond portfolio. Despitedifficult market circumstances the fixed income portfolio remains healthy with its average credit rating of ‘A’ inStandard & Poor’s rating scale.

52

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

The main objectives of the investment portfolio concentrate on the capital preservation and liquidity, in order tosupport Atradius strategic and operational needs at any given moment in time. Despite the outbreak of the Covid-19
pandemic, the annual review of the investment policy did not lead to any changes in the concentration risk settings, as
the existing restrictions were considered to be sufficient. Atradius has no investment exposure to sectors directly
impacted by the pandemic, however as a precaution the Group Investment Committee closely monitored any
downgrades on the BBB-rated bonds and any major changes in the concentration exposure by issuer throughout theyear.
The counterparty ratings of receivables, short-term investments, claims, commissions and deposits arising fromreinsurance, cash and cash equivalents and the rating of debt securities as at 31 December 2020 and as at 31 December
2019, are presented in the following tables:
At 31 December 2020

AAA

AA

A

BBB

Other andNon-rated

Total

Receivables, claims and commissions arising fromreinsurance

62

248

435

27

26

798

Deposits received from reinsurers

-

(19)

(34)

(13)

-

(66)

Government bonds

64

101

5

2

8

180

Corporate bonds

11

87

438

357

6

900

(EUR million)
Receivables, claims, commissions and deposits
arising from reinsurance:

Debt securities:

Short-term investments:
Deposits withheld by ceding companies

-

3

-

-

-

3

Bank deposits under short-term investments

39

12

21

22

-

93

-

30

155

34

6

226

Total

176

462

1019

429

46

2133

At 31 December 2019

AAA

AA

A

BBB

Other andNon-rated

Total

Receivables, claims and commissions arising fromreinsurance

-

183

410

-

25

618

Deposits received from reinsurers

-

(3)

(59)

-

(3)

(64)

Government bonds

62

83

16

-

15

176

Corporate bonds

12

72

497

248

1

830

-

2

-

-

1

3

39

14

34

20

-

107

Cash and cash equivalents(EUR million)
Receivables, claims, commissions and deposits
arising from reinsurance:

Debt securities:

Short-term investments:
Deposits withheld by ceding companies
Bank deposits under short-term investments
Cash and cash equivalents
Total

-

18

119

40

4

181

113

369

1,017

308

43

1,851

The counterparty credit ratings and the credit rating of the debt instruments are predominantly based on Standard &Poor’s rating.

4.4.2.1 Disclosures about the temporary exemption from IFRS 9
ACyC has decided to apply the temporary exemption for the application of IFRS 9 to its financial assets (see Note 2.2.2‘Standards, amendment and interpretation not yet adopted’). The financial assets for financial year ending 31

53

All amounts in thousands of Euro, unless otherwise statedDecember 2020 are still classified and measured based on IAS 39 (see Note 10 ‘Financial investments’ and Note 2.2.2‘Standards, amendment and interpretation not yet adopted’). The disclosure below provides information required forthe application of the temporary exemption. IFRS 9 classification of financial assets is based on assessment of thebusiness model and the contractual cash flows of the instruments. Contractual cash flows are assessed to check if theasset gives rise to payments on specified dates that are solely payments of principal and interest (“SPPI”) on theprincipal amount outstanding.
Contractual cash flows that are SPPI on the principal amount outstanding are consistent with basic lending
arrangements. Interest is the consideration for the time value of money and the credit risk associated with theprincipal amount outstanding during a particular period of time. It can also include consideration for other basic risks(e.g. liquidity risk) and costs (e.g., administrative costs) associated with holding the financial assets for a particularperiod of time, and a profit margin that is consistent with a basic lending agreement.
The table below presents an overview of the fair values of financial assets based on SPPI criteria as at 31 December
2020, as well as the changes in the fair values during the year. The asset classes are divided into two categories:--

SPPI: Assets of which cash flows represent solely payment of principal and interest on an outstanding
principal amount, excluding any financial assets that meet the definition of held for trading in IFRS 9, or thatare managed and whose performance is evaluated on a fair value basis;other: all financial assets other than those specified in SPPI financial assets:-With contractual terms that do not give rise on specified dates to cash flows that are solely payment ofprincipal and interest on the principal amount outstanding;-That meet the definition of held for trading in IFRS9 or that are managed and whose performance are
evaluated on a fair value basis.

(EUR million)

Change in fair
value

Fair Value at
2020

2019

Debt securities:(Government bonds + Corporate bonds)

1,080

1,006

74

SPPI

1,076

1,002

74

Other

4

4

-

295

269

26

SPPI

-

-

-

Other

295

269

26

Short-term investments:

97

110

(13)

SPPI

97

110

(13)

Other

-

Equity securities:-

Cash and cash equivalents

226

182

44

SPPI

226

182

44

Other

-

-

-

Total

1,697

1,567

131

The credit ratings of the financial assets included the SPPI test (debt securities, bank deposits under short-term
investments and cash and cash equivalents) are included in the counter party rating table in section 4.4.2.
No impairment allowance was recorded for those financial assets as at 31 December 2020.
For information on credit exposure of ‘Other accounts receivables’, see Note 11.

4.4.3 Liquidity risk
ACyC is exposed to liquidity risk if there is insufficient cash available to meet its financial obligations, when due, at areasonable cost. For ACyC, liquidity risks may arise if large scale short-term fluctuations occur to cash flows, such as adecline in incoming cash or a rise in outgoing cash, or a combination of both.

54

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

Liquidity risk is managed at Atradius level, in close coordination with local operations. The Atradius policy is tomonitor and measure ongoing cash flow patterns and control liquidity by maintaining sufficient cash and highlymarketable securities to reduce liquidity risk to acceptably low levels. The investment policy states that ACyC should
only invest in financial instruments that can be liquidated in less than three business days. ACyC is able to accesscredit facilities to prevent certain liquidity shortages which may arise due to short-term cash flow variances. ACyC
maintains one uncommitted credit lines in excess of EUR 1 million. These are in the form of an overdraft facility for a
total amount of EUR 50 million (2019: EUR 50 million). The credit line provides liquidity to cover infrequent peaks inshort-term liquidity requirements while also permitting ACyC to reduce its cash balances and to benefit from a more
substantial and stable investment portfolio. Finally, ACyC has in place a simultaneous claims payment clause in themain reinsurance treaties. This clause allows ACyC to ask the reinsurers to anticipate the payment of a large claim
upon ACyC’s request instead of the usual payment terms agreed in the reinsurance treaties.
Liquidity and interest risk tables
The following tables indicate the estimated amount and timing of the main cash flows at the end of the reporting
period of interest and non-interest bearing liabilities and assets. The tables include both interest and principal cash
flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves
at the end of the reporting period. ACyC has considered the impact of the cross-border cash pooling arrangement inthis overview.
The tables have been drawn up based on the undiscounted contractual cash flows of financial liabilities based on theearliest contractual repayment date. When ACyC has a choice of when an amount is paid, the financial liability isallocated to the latest period in which ACyC can be required to pay. When the lender has a choice of when an amount ispaid, the financial liability is allocated to the earliest period in which ACyC can be required to pay.

55

All amounts in thousands of Euro, unless otherwise stated

At 31 December 2020

Contractual cash flows (undiscounted)
Weighted
averageeffective
interest
rate %

On demand

Less than 1
year

1 to 5 years> 5 years

Carrying
amountDeposits received fromreinsurers

0.17%

-

66,016--

66,016

Bankoverdraft

0.00%

-

-

-

-

-

-

66,016--

66,016

Insurance contracts-

973,554

340,087(26,532)

1,397,951

Payables-393,357--

393,357

Total-

1,366,911

340,087(26,532)

1,791,308

At 31 December 2019

Contractual cash flows (undiscounted)

Interest bearing liabilities

Total
Non-interest bearing liabilities

Weighted
averageeffective
interest
rate %

On demand

Less than 1
year

1 to 5 years> 5 years

Carrying
amountDeposits received fromreinsurers

0.46%

-

63,936--

63,936

Bankoverdraft

0.00%

-

-

-

-

-

-

63,936--

63,936

Insurance contracts-

918,371

340,477(34,842)

1,247,729

Payables-

200,800--

200,800

Total-

1,119,171

340,477(34,842)1,448,529

Interest bearing liabilities

Total
Non-interest bearing liabilities

56

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

At 31 December 2020

Contractual cash flows (undiscounted)
Weighted
averageeffective
interest
rate %

On demand

Less than 1
year

1 to 5 years> 5 years

Carrying
amountDebt securities
Investments: deposits and cash
held for investments-0.02%-

289,553

719,350

83,125

1,079,670

0.30%

11,65487,857--

96,839Cash: Cash and bank deposits-0.01%

223,370

2,195

-

-

225,565

235,024

379,605

719,350

83,125

1,402,074

Other financial assets-

294,894--

294,894

Reinsurance contracts-

766,488

267,754(20,889)

1,013,353

Receivables-

294,511--294,511

Total-

1,355,893

267,754(20,889)

1,602,758

At 31 December 2019

Contractual cash flows (undiscounted)

Interest bearing assets

Other financial assets
Total
Non-interest bearing assets

Weighted
averageeffective
interest
rate %

On demand

Less than 1
year

1 to 5 years> 5 years

Carrying
amountInterest bearing assets
Debt securities
Investments: deposits and cash
held for investments

0.15%

-

282,564

678,556

65,5981,005,736

0.67%

22,00488,058--109,861

Cash: Cash and bank deposits-0.04%

176,847

4,907

-

-

181,754

Other financial assets

0.00%

-

8

-

-

8

198,851

375,537

678,556

65,5981,297,359

Other financial assets-

268,732--

268,732

Reinsurance contracts-

609,294

225,890(23,116)

812,067

Receivables-

297,087--

297,087

Total-

1,175,113

225,890(23,116)

1,377,886

Total
Non-interest bearing assets

1)

It includes shares and investments in group non consilidated entities

4.5

Operational risk

4.5.1 Operational risk management
Operational risk means the risk of loss arising from inadequate or failed internal processes, personnel or systems, orfrom external events. This definition is in line with industry practice as well as with the European Solvency II
Directive. It is therefore present within all activities undertaken by Atradius, at all levels and across all locations.
The Operational Risk and Control (ORC) unit is part of the Atradius Risk Management department and is responsiblefor developing methods for the identification, assessment and response to risks, and for monitoring and further
enhancing the overall risk management and control framework. The ORC unit works closely with both Internal Audit

57

All amounts in thousands of Euro, unless otherwise stated

and the Legal and Compliance unit. At the highest level, operational risk is overseen by the Operational Risk
Committee, which has a reporting line through to the Chief Risk Officer.
The ORC unit uses a framework for management of operational risk, which is based on the Committee of Sponsoring
Organisations’ Enterprise Risk Management (COSO ERM) Integrated Framework. Identification and monitoring
activities continue to be developed and enhanced, including the maintenance of risk registers, facilitation of risk andcontrol self-assessments, capture of risk indicators and testing and review of business continuity plans. Additionally,risks and the related controls are discussed at all levels, locations and units across the business, including theManagement Board and Supervisory Board of Atradius N.V.. High-level information on crystallised risks has been
captured for several years, with separate records of information technology risk events stretching back even further.
To provide oversight and assurance in an auditable and efficient manner, the ORC unit employs a dedicatedgovernance, risk and compliance software platform (the ’GRC portal‘) that integrates existing risk management
activities across the business.
In respect of external fraud, the Fraud Control Group, composed of employees across various locations, monitors theactivity of customers and buyers to detect indications of fraud. Atradius also provides fraud awareness training andadvice to employees and customers to help identify fraudulent buyers. Internal fraud is addressed through manualand automated operational controls such as the segregation of duties, application of signing authorities and role-based
system privileges and authorities.
More details on certain operational risk management activities are provided below.

4.5.1.1

Risk registers and risk / control self-assessments

While the ORC unit is responsible for facilitating operational risk management within ACyC, the lines of business andfunctional areas are responsible for managing their operational risks. Atradius Leadership Team members, assisted by‘risk champions’, maintain risk registers for their respective units. The content of the registers provides input to local
management meetings and is also reviewed by an Operational Risk Committee and during meetings of theManagement Board of Atradius N.V.. This ensures that operational risks are evaluated from all management
perspectives.
While risk registers use a top-down approach to capturing risks, Atradius also uses a bottom-up approach of control
self-assessments to identify and assess risks and any control weaknesses inherent in business processes.
On a quarterly basis, Atradius conducts specific assessments of processes and controls covering financial reporting
risks, including reporting for Solvency II purposes; the resulting ‘in control’ sign-off process is overseen by acommittee with representatives from Group Risk Management, Finance and Internal Audit.

4.5.1.2

Business continuity management

ACyC recognises the importance of being able to recover its critical business processes in the event of any major
operational disruption. A Business Continuity Management (BCM) programme is embedded in the organisation toensure the continuity of the Business in the event of severe disruptions. The BCM programme is aligned with theInternational Standard ISO22301. The Group Business Continuity manager co-ordinates the documentation,
maintenance and continual testing of practical plans for recovering key business activities within acceptable
timeframes.
Covid-19 - Following the initial ‘lockdowns’ in most countries and travel bans, actions were taken to ensure humanresource and IT capabilities were sufficient to maintain the expected level of customer service and to manage the risk
exposure. Many staff are working remotely and will continue to do so as necessary. IT systems have remained stable
and collaboration tools have been enhancedfor the whole workforce. Overall service to customers and all othercounterparties is being maintained.
As subsequent lockdowns occur in various geographies, the arrangements established in the first half of the year
ensure that the Company is prepared for all eventualities. The Group Incident Management Team (comprised of theManagement Board and additional senior management from relevant departments) meets regularly, monitors thesituation globally and locally and takes action where required.

58

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

4.5.1.3

Compliance Framework

Compliance practices support our business, our reputation and our integrity. Complying with relevant laws, rules andregulations, and maintaining a high standard of ethics and integrity, leads to lower operational risk and more-stablebusiness processes. The Atradius Code of Conduct outlines the basic corporate, legal and ethical compliance principles
and guidelines that apply to all our employees and that govern the Atradius operations and business conduct.
Employees who have concerns about a (suspected) violation of the Code of Conduct are encouraged to speak up andshare their concerns. The Speak up Procedure or Policy on Whistle-blowing gives guidance on how to raise thesekinds of concerns in a confidential manner. Additional Compliance Policies address specific compliance areas in moredetail, and set out the requirements that Atradius’ employees must adhere to. These requirements are also included inexisting and new business procedures. For example, the Policy on Customer Due Diligence and Policy on Sanctions
address potential sanctions risks. Atradius has also implemented a Data Protection Framework, which includes
controls, policies and procedures to comply with the applicable data protection legislation.
The Compliance Function –led by the Group Compliance Function- supports the management of Atradius in meeting
its objective of being compliant with applicable laws, rules and external and internal regulations. The Group
Compliance Function that is responsible for the maintenance and overall effectiveness of the compliance frameworkand, the Local Compliance Function monitors regulatory and compliance developments at local country level.

4.5.1.4

BrexitBrexit affects, amongst others, regulations, including passporting rights and may also affect financial reporting. The
UK left the EU on Friday 31 January 2020 enabled by the Withdrawal Agreement agreed between the EU and the UK
Government. The structured withdrawal provided for a transition period (or ‘implementation period’) until 31
December 2020. Accordingly, from 1 January 2021, all legal and regulatory arrangements permitted under thetransition ceased – for financial services the passporting rights (Freedom of Services & Freedom of Establishment)
ended. To mitigate the impact of this change, Atradius applied to the UK’s Prudential Regulatory Authority [PRA] for
authorisation as a Third Country Branch [TCB] and dialogue with the PRA has been progressing positively. In themeantime, from 1 January 2021, Atradius has continued to operate ‘as if’ authorised as a TCB, under the Bank ofEngland’s Temporary Permissions Regime which will be in place for up to three years.
A customer contingency plan to minimise the impact of Brexit was developed and communicated to impacted
customers and brokers. During 2020, the UK underwriting teams implemented a reduction in risk appetite, notably
for those companies that are most vulnerable to the impacts of Brexit and took risk mitigation actions resulting in
avoidance of losses.
A Brexit Taskforce comprising Legal, Compliance, Commercial, Risk Services, IT and Collections representatives
continues to monitor the situation as it develops post-Brexit

4.5.1.5

Information regarding the environment

Given the activities that the Company dedicates itself to, it does not have environmental liabilities, expenses, assets orprovisions or contingencies that may be significant in relation to its equity, financial situation and profits or losses.
For this reason, specific breakdowns are not included in this Report.

4.6

Capital management

4.6.1 Guiding principles
Capital management is guided by the following principles:- to ensure that ACyC is sufficiently capitalised to have the ability to survive by maintaining sufficient available
capital after meeting its financial obligations;- to meet the local regulatory capital requirements of all ACyC entities, including branches and subsidiaries
worldwide;- to manage the capital adequacy of ACyC and its entities, taking into account the economic and accounting
views along with the external rating agencies and regulatory capital requirements;- to optimise capital structure by allocating funds across ACyC’s entities;- to minimise the overall cost of funding while preserving financial flexibility.

59All amounts in thousands of Euro, unless otherwise stated

4.6.2 Atradius's objectives, policies and processes with regard to capital
ACyC shows a robust capital and solvency position which is not expected to be materially impacted from further
economic downturns arising from the pandemic.
Per year-end 2020 the capital managed by ACyC includes shareholders’ funds of more than EUR 1 billion.
In addition to the internally developed capital model, ACyC considers the solvency calculation models of the relevant
regulatory authorities and credit rating agencies in its process of managing capital to ensure capital adequacy. In
order to ensure capital adequacy, a capital buffer above the regulatory solvency capital required is maintained, suchthat large loss events would not impair the ability of ACyC to carry on its normal course of business and the ambition
to maintain an ‘A’ rating level is sustained.
ACyC has embedded processes and procedures to ensure compliance with externally imposed regulations and internallyimposed requirements for capital adequacy. Such compliance is ensured by:- a regular assessment of solvency needs, taking into account the business strategy, resulting risk profile andapplied risk appetite levels;- incorporating a view on expected future investments in new businesses, revenues, claims, reinsurance
expectations and dividends as these impact both available and required capital;- monitoring duration of assets and liabilities; and- taking into consideration capital market expectations such as expected returns, volatilities and correlations
as these may impact earnings and the shareholder equity reserves.

4.6.3 Regulatory capital requirements
In each country in which ACyC has insurance companies established according to local laws, and as well whereprescribed for branches as well, the local insurance regulator specifies the minimum amount and type of capital thatmust be held by each of the subsidiaries or branches. The minimum required capital must be maintained at all times
throughout the year. In addition, the local insurance regulators have the discretionary right to impose additional
capital requirements in excess of the required minimum.
In 2020, the capital of ACyC has been managed according to the Atradius guidelines and in close cooperation with theunits involved in managing the different factors related to capital. ACyC entities were able to meet their financial
obligations efficiently and to comply with local legal and regulatory requirements.

4.6.4 Solvency II
Solvency II is the regulatory framework for (re-)insurance undertakings and groups domiciled in the EU.
ACyC is one of the two regulated entities of Atradius, which is subject to Solvency II regulation. Under Solvency II
guidelines Atradius Group supervision takes place at the ultimate parent Grupo Catalana Occidente S.A..
ACyC applies a Partial Internal Model to calculate its regulatory capital requirements. An internal model, whichreflects our business better than the regulatory “standard formula”, is used to calculate capital requirements for
Underwriting Risk. We still use the standard formula for Market, Counterparty Default and Operational Risk, as thecharacteristics of these risk types do not warrant an internal model approach. Approval for use of our Partial Internal
Model was received during 2017.
As per year end 2020 the eligible own funds under Solvency II for the Company amounts to EUR 1,270 million (2019:
EUR 1,263 million).

60

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

5

Segment information

Operating segments are identified on the basis of internal reports about components of ACyC that are regularly
reviewed by the Executive Committee in order to allocate resources to the segment and to assess its performance. The
company has identified two operating segments, insurance and services. Within the insurance segment there aredifferent business activities Credit insurance, Instalment credit protection (ICP) and Bonding. The segment Services
includes other service related business. The corporate costs relate to corporate operations, after cost allocations to theother business segments.
The accounting policies of the reportable segments are the same as described in Note 2.
ACYC revenue has no dependency on any large customer.

61

All amounts in thousands of Euro, unless otherwise statedInformation regarding these segments is presented in the following tables:
Business segment

Creditinsurance

Bonding

Total
insurancebusiness

Services

Group costs

Total

Insurance premium revenue

1,346,987

123,830

1,470,817--

1,470,817

Service and other income

49,898-49,89810,009-59,907

Total revenue

1,396,885

123,830

1,520,715

10,009-1,530,724

Insurance premium ceded to reinsurers(962,699)(75,427)(1,038,126)--(1,038,126)

Total segment income after reinsurance

434,186

48,403

482,589

10,009-492,598

Insurance claims and loss adjustment
expenses(853,858)(38,196)(892,054)--(892,054)

Insurance claims and loss adjustment
expenses recovered from reinsurers

608,439

23,077

631,516--

631,516

Net insurance claims(245,419)(15,119)(260,538)--(260,538)

Gross operating expenses(467,070)(43,111)(510,181)(7,215)(8,421)(525,817)

Commission received for business ceded
to reinsurers

372,183

31,386

403,569--

403,569

Net operating expenses(94,887)(11,725)(106,612)(7,215)(8,421)(122,249)

Operating segment result

93,88021,559115,439

2,794(8,421)

109,8112020

Share of income of associated companies-

Net income from investments

10,977

Finance income

1,950

Finance expenses(7,493)Result for the year before tax

115,245

Income tax expense(30,321)

Result for the year

84,924

Business segment

Creditinsurance

Bonding

Total
insurancebusiness

Services

Intersegment
elimination

Total

Reinsurance contracts

805,213208,140

1,013,353--

1,013,353

Receivables

270,582

21,280291,8625,664(3,015)294,5112020

Unallocated assets

2,466,849

Total assets

1,075,795

229,4201,305,215

5,664(3,015)

3,774,713

Insurance contracts

1,075,278

322,673

1,397,951--

1,397,951

Payables

358,255

32,841

391,096

15,730(13,469)

393,357

-

-

-

-

-

839,739

1,433,533

355,514

1,789,047

15,730(13,469)

2,631,047

2,334

143

2,477

241

-

2,718

Unallocated liabilities
Total liabilities
Total year end number of
employees (full-time equivalent)62Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

Business segment

Creditinsurance

Bonding

Total
insurancebusiness

Services

Group costs

Total

Insurance premium revenue

1,373,513

122,911

1,496,424--

1,496,424

Service and other income

51,980-51,9809,933-

61,913

Total revenue

1,425,493

122,911

1,548,404

9,933

-

1,558,337

Insurance premium ceded toreinsurers(832,237)(77,969)(910,206)--(910,206)

Total segment income after
reinsurance

593,256

44,942

638,198

9,933-

648,131

Insurance claims and loss
adjustment expenses(725,756)(47,038)(772,794)--(772,794)

2019

Insurance claims and loss
adjustment expenses recoveredfrom reinsurers

449,258

28,873478,131--

478,131

Net insurance claims(276,498)(18,165)(294,663)--(294,663)

Gross operating expenses(472,936)(51,966)(524,902)(9,007)(7,601)(541,510)

Commission received for businessceded to reinsurers

402,237

32,797435,034--

435,034

Net operating expenses(70,699)(19,169) -(89,868)(9,007)(7,601)(106,476)

Operating segment result

246,059

7,608

253,667926(7,601)

246,992

Share of income of associatedcompanies-

Net income from investments

14,107

Finance income

1,801

Finance expenses(4,696)

Result for the year before tax

258,204

Income tax expense(77,031)

Result for the year

181,173

Business segment

Creditinsurance

Bonding

Total
insurancebusiness

Services

Intersegment
elimination

Total

Reinsurance contracts

594,505

217,562

812,067--

812,067

Receivables

273,106

20,678

293,784

6,643(3,340)297,087

2019

Unallocated assets

-

-

-

-

-

2,394,637

Total assets

867,611238,240

1,105,851

6,643(3,340)3,503,791

Insurance contracts

918,315

329,414

1,247,729--

1,247,729

Payables

165,227

33,240

198,467

18,363(16,031)200,799

-

-

-

-

-

867,371

1,083,542

362,654

1,446,196

18,363(16,031)2,315,899

2,370

148

2,518

224

-

2,742

Unallocated liabilities
Total liabilities
Total year end number of employees(full-time equivalent)63All amounts in thousands of Euro, unless otherwise stated6

Intangible assets

2020

Goodwill

SoftwareInsurance
portfolios

Total

At cost at 1 January

78,196

273,527

17,060368,783

Additions-

33,924-33,924

Disposals-(5,253)-(5,253)

Effect of movements in foreign exchange rates(4)(5,976)(92)(6,072)

At cost at 31 December

78,192296,222

16,968391,382

Accumulated amortisation and impairments at 1 January(30,209)(173,068)(17,060)(220,337)

Amortisation charge for the year-

(12,700)-(12,700)

Disposals

-

4,949

-

4,949

Impairment-(16,559)-(16,559)(30,209)

4,307(193,071)

92(16,968)

4,399(240,248)

Balance at 1 January

47,987

100,459-

148,446

Balance at 31 December

47,983103,151-

151,134

2019

Goodwill

SoftwareInsurance
portfolios

Total

At cost at 1 January

Effect of movements in foreign exchange rates
Accumulated amortisation and impairments at 31 December

78,050232,594

17,032

327,676

Additions146

42,713-42,859

Disposals-(6,885)-(6,885)

Effect of movements in foreign exchange rates

-

5,105

28

5,133

At cost at 31 December

78,196

273,527

17,060368,783

Accumulated amortisation and impairments at 1 January(30,209)(144,910)(17,032)(192,151)

Amortisation charge for the year-

(24,418)-(24,418)

Disposals

-

6,885

-

6,885

Impairment-(7,079)-(7,079)Effect of movements in foreign exchange rates
Accumulated amortisation and impairments at 31 December(30,209)(3,546)(173,068)(28)(17,060)(3,574)(220,337)

Balance at 1 January

47,841

87,684-

135,525

Balance at 31 December

47,987

100,459-

148,44664

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

Goodwill
If applicable, impairment of goodwill is recognised as a separate item in the income statement. During 2020 there was
no impairment charge (2019: no impairment charge).
The goodwill allocated to the main cash-generating units or groups of units (CGU’s) is presented in the following table:
Cash-Generating Units

2020

2019

ACyC branch France

9,003

9,003

1)

2,556

2,560

ACyC branch Germany

31,02631,026

ACyC branch Switzerland

3,243

3,243

ACyC other 2)

2,155

2,155

Total

47,98347,987

ACyC branch Nordic

1) The Nordic Bonding unit includes Atradius’s bonding business in Denmark, Norway, Sweden and Finland.

2) Including Iberinform Portugal S.A and Gestifatura

The value in use of an individual CGU is determined using a dividend discounted model (DDM). The dividend flows are
estimated using a projection period and a normalised period. The projection period is 10 years towards covering athrough-the-economic cycle performance, where the first 1-4 year projections are based on financial budgets and/or
forecasts. In the budgets are forecasts the impact of the changed macro-economic situation due to the pandemic
situation is taken into account. The remaining years are estimated using ratios and growth rates that converge
towards their normalised term value. The discount rate used varies depending on the Risk-Free Rate and the Country
Risk Premium of the country where the CGU is located. For the main portion of the goodwill the discount rate used is:
3.70% (2019: 3.75%); the terminal value is calculated based on the dividend flows of the normalised period through aperpetuity which applies a long-term growth rate of 2.0% (2019: 2.0%) and the specific discount rate. Any profits, after
fulfilling minimum capital requirements, are assumed to be distributable dividends. Minimum capital requirements
are calculated based on the Solvency II Partial Internal Model and minimum shareholders equity required (nondistributable).
CGU are defined by line of business according to the way we manage and steer the operational business.
An approximation of the sensitivity of the following assumptions would impact the CGU market values by thepercentages shown below (other CGU not included due to inmaterial goodwills):

Cash-Generating Units
2020

Discount rate
+50bp -50bp

Growth rate
+50bp -50bp

Combined ratio+50bp -50bp

Solvency ratio 1)
+50bp
-50bp

ACyC branch France-17.6%

28.3%

23.4%

-14.5%

-6.5%

6.5%

-3.0%

14.3%

ACyC branch Nordic-13.6%

21.6%

17.5%

-10.8%

-5.0%

5.0%

-2.9%

2.8%

ACyC branch Germany-32.4%

59.8%

51.9%

-28.3%

-2.4%

2.4%

0.0%

0.0%

ACyC branch Switzerland-22.6%

47.1%

41.3%

-19.7%

-6.2%

6.2%

-1.7%

36.3%

Cash-Generating Units
2019

Discount rate
+50bp -50bp

Growth rate
+50bp -50bp

ACyC branch France-15.2%

24.8%

25.3%

-15.5%

-5.7%

5.7%

0.0%

0.0%

ACyC branch Nordic

-7.7%

12.0%

12.3%

-7.9%

-4.2%

4.2%

-4.0%

3.5%

ACyC branch Germany-15.6%

28.0%

28.5%

-15.8%

-8.1%

5.4%

0.0%

0.0%

ACyC branch Switzerland-20.1%

43.9%

44.5% -20.4%

-6.2%

6.2%

-1.8%

1.8%

1)

Combined ratio+50bp -50bp

Solvency ratio 1)
+50bp
-50bp

With the same required capital.

No sensitivity analysis mentioned above would assume that the carrying amount of the GCUs would exceed theirmarket value.

65

All amounts in thousands of Euro, unless otherwise stated

Software
ACyC assessed all capitalised software to determine if the criteria for capitalisation are being met (see note 6.2.6).
Based on this assessment ACyC decided to impair EUR 16.6 million (2019 EUR 7.1 million) of self-developed software
since it did not satisfy all set requirements. During 2020 ACyC has capitalised EUR 31.0 million mainly due to
Atradius Business Transformation project (2019: EUR 38.7 million).

Insurance portfolios
Amortisation charges of insurance portfolios are included in the insurance premium revenue and insurance claims
and loss adjustment expenses for which the allocation is based on the discounted impact related to the provision forunearned premium and the provision for outstanding claims.

7

Property, plant and equipment & Investment property

2020

Land &
buildings

Fixtures &fittings

Total
property,plant &
equipment

Investment
property

At cost at 1 January

58,37854,471

43,59987,786244,233

4,481

Additions

365

6,647

6,848

20,42034,280-

Disposals-(1,705)(2,725)(2,630)(7,060)(65)

Reclassification
Effect of movements in foreignexchange rates(2,726)---(2,726)

2,726

(19)

(741)

(1,257)(1,786)(3,803)-

At cost at 31 December

55,99858,672

46,464

103,790

264,925

7,142

Accumulated depreciation andimpairments at 1 January(15,967)(36,217)(33,599)(17,896)(103,678)(2,567)

Depreciation charge for the year(678)

(3,849)(5,344)(18,107)(27,978)

(73)

-

1,615

2,648

1,903

6,166

52

Disposals
Impairment / reversal impairment

IT hardware Right of Use
assets

13

-

-

-

13

27

1,986

-

-

-

1,986

(1,986)

5

639

907

421

1,971

-

(14,642)(37,812)(35,388)(33,679)(121,520)(4,546)

Balance at 1 January

42,411

18,253

10,00069,891

140,555

1,914

Balance at 31 December

41,356

20,86011,077

70,112

143,406

2,595

Reclassification
Effect of movements in foreignexchange rates
Accumulated depreciation andimpairments at 31 December

66Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

2019Land &
buildings

Fixtures & IT hardware
fittings

Right of Use
assetsTotalproperty,plant &
equipment

Investment
property

At cost at 1 JanuaryFirst time adoption as per 1st
January 201959,50852,34940,376-

152,233

4,483

-

-

-

82,67582,675-Additions

-

4,182

3,176

4,645

12,003-

Disposals-(2,606)

(897)

(603)

(4,106)(1,135)

Reclassification
Effect of movements in foreignexchange rates(1,133)---(1,133)

1,133

3

546

944

1,069

2,562

-

At cost at 31 December

58,37854,471

43,599 -87,786244,233

4,481

Accumulated depreciation andimpairments at 1 January(15,972)(34,564)(28,790)-(79,326)(2,371)

Depreciation charge for the year

(700)

(3,743)(5,039)(17,963)(27,445)

(59)

-

2,559

888

176

3,623

457

Impairment / reversal impairment

69

-

-

-

69

42

Reclasification
Effect of movements in foreignexchange rates
Accumulated depreciation andimpairments at 31 December

636

-

-

-

636

(636)

(1)

(469)

(659)

(108)

(1,237)-(15,967)(36,217)(33,599)(17,895)(103,678)(2,567)

Balance at 1 January

43,536

17,785

11,586-

72,9082,112

Balance at 31 December

42,411

18,253

10,00069,891

140,555

1,914

Disposals

The depreciation charge on property for own use is reported as part of net operating expenses. The depreciation
charge on investment property is reported as part of net income from investments.
Atradius has adopted IFRS16 “leases” as of January 1 2019. For further information on the transition, please refer tonote 2.2.1.
The fair value of land and buildings for own use and of investment property is presented in the following table:
Property own use

Investment property

2020

2019

2020

2019

Spain

77,79689,024

21,25912,713

Italy

20,65021,020

681

681

Other

1,064

1,001

-

-

Total

99,510111,045

21,94013,394

Fair value measurement
Land and buildings are independently appraised by real estate valuers, which are registered in the relevant
countries and have appropriate qualifications and experience in the valuation of properties. ACyC usually revalues
land and buildings every two years.
All significant inputs used in the measurement are market observable and the fair value is therefore classified in
Level 2 in the fair value hierarchy (as in 2019). Valuation techniques used are: Market (comparison) approach,
Income approach (discounted cash flow method) and Cost approach. Significant valuation inputs used to determine
the fair value measurements based on techniques used are construction features, location (and/or conditions) andtransport utilities.

67

All amounts in thousands of Euro, unless otherwise stated

The estimated fair value of the properties is directly dependant on the changes of the inputs used. There has been
no change in the valuation techniques used compared to prior year.
The investment property can be classified as follows: 100% office (2019: 100%).
There are not direct operating expenses (including repairs and maintenance) arising from investment property(2019: EUR 48 thousand). During the year an amount of EUR 293 thousand (2019: EUR 354 thousand) has beenrecognised as rental income from investment property for lease contracts. These contracts have remaining terms of
between 1 and 10 years. Expected rental income arising from these contracts for next year is EUR 310 thousand for
non-cancellable contracts (In 2019, expected rental income for next year was EUR 416 thousand for non-cancellable
contracts).
Leases: Right of Use Assets
Right of Use assets consist of office space (95%) (in 2019: 90%), including parking and vehicles under a number ofoperating lease agreements. The most significant lease contracts relate to the offices in our locations in Western
Europe. The remaining terms of these office rentals vary between 2 to 12 years (in 2019: between 2 to 12 years) andmost of the contracts contain extension options. The extension options are taken into account in the measurement oflease liabilities when the Group is reasonably certain to exercise these options.
Further information about the leases for which ACyC is a lessee is presented below:
2020

2019

70,83669,716

Interest expenses on lease liabilities(1,733)(2,026)

Expenses relating to short-term leases

(509)

(82)

Expenses relating to low-value assets

(94)

(71)

21,003

12,650

Lease liability included in statement of financial position at 31 December (see Note 20)
Amounts recognised in income statement :Amounts recognised in the statement of cash flows :Total cash outflow for leases

68Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

8

Subsidiaries

The following table sets forth as at 31 December 2020, the name and country of incorporation of the main subsidiaries of
ACyC.
All companies are, directly or indirectly, wholly owned unless otherwise indicated.
Country ofincorporation% interest
heldType of business

Crédito y Caución do Brasil Gestao de Riscos de Crédito e Servicos LTDA

Brazil100% Information services

Atradius Crédito y Caución Seguradora S.A.

Brazil100%

Credit insurance

Portugal

100%

Collections

Gestifatura S.A.
Iberinform Internacional S.A.U.

Spain

100% Information services

Iberinmobiliaria S.A.U.

Spain

100%

Real estate

B2B SAFE S.A.

Spain

100%

Advisory services

9 Financial investments
Financial investments classified
by measurement category andnatureAvailable-for-sale
2020

Loans and receivables 1)

Total

2019

2020

2019

2020

2019

Equity securities

294,970

268,807--294,970

268,807

Debt securities

1,079,670

1,005,736--

1,079,670

1,005,736

Loans

-

-

-

8

-

8

Short-term investments--

88,643

91,13588,643

91,135

Cash held for investments

-

-

8,196

18,726

8,196

18,726

1,374,640

1,274,543

96,839109,869

1,471,479

1,384,412

Total1) There are not bank deposits tacitly renewable in 2020 and 2019

Movements in available-for-salefinancial investments

Equity securities

Debt securities

Total

2020

2019

2020

2019

2020

2019

268,807

176,027

1,005,736

847,653

1,274,543

1,023,680

Additions

97,68753,419416,430

369,679

514,117423,098

Disposals(56,041)(5,344)(333,154)(213,226)(389,195)(218,570)

Balance at 1 January

Amortisation charge for the year
Revaluations through othercomprehensive income andincome statement--(8,786)(9,711)(8,786)(9,711)(14,884)

44,756

7,466

8,194

(7,418)52,950Effect of movements in foreignexchange rates

(599)

(51)

(8,022)

3,147(8,621)

3,096

294,970

268,8071,079,670

1,005,736

1,374,640

1,274,543

Balance at 31 December

For disclosures about the temporary exemption from IFRS 9, please refer to Note 4.4.2

69

All amounts in thousands of Euro, unless otherwise stated

10 Receivables
2020

2019

Accounts receivable on insurance and reinsurance business

184,593

188,118

Amounts owed by policyholders and direct insurance operations

119,542

121,666

Receivables arising out of reinsurance

65,051

66,452Other account receivables

109,918

108,969

Total

294,511

297,087

The outstanding receivables are substantially all current and consequently their fair values do not materially differ
from their carrying amounts.
There is no concentration of credit risk in respect of receivables as ACyC has a large number of internationallydispersed debtors (see Note 4.4.2).
An amount of EUR 65.2 million (2019: EUR 61 million) relates to past due receivables on insurance and reinsurance
business for which no impairment loss has been recognised, 90.5% (2019: 90.9%) relates to receivables ageing lessthan three months.
All receivables are considered for impairment testing. As of 31 December 2020, receivables of EUR 25.3 million (2019:
EUR 27.2 million) were considered to be partially impaired. The amount of the impairment taken related to thesereceivables was EUR 10.9 million (2019: EUR 11.6 million), of which EUR 1.2 million is related receivables coming frominformation activities. This balance takes into account that a portion of the impaired receivables will be recovered.
ACyC does not hold any collateral over these balances.
The ‘Other accounts receivable’ are short term balances which consist of individually immaterial balances. The
provision for impaired ‘Other accounts receivable’ for 2020 is EUR 1.2 million (2019: EUR 1.5 million)
Movements on the provision for impairment of receivables are presented in the following table:
2020

2019

Balance at 1 January

11,634

10,860

Impairment of receivables

8,203

7,848

Receivables written off during the year as uncollectable(8,500)(6,468)

Unused amounts reversed

(449)

(606)

Balance at 31 December

10,888

11,634The movement in the provision for impaired receivables for the insurance business is accounted for on the premiumline. Amounts charged to the allowance account are generally written off when there is no expectation of recovery.
For disclosures about the temporary exemption from IFRS 9, please refer to Note 4.4.2

70

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

11 Deferred acquisition costs
2020

2019

Balance at 1 January

33,31631,753

Deferred in the year

1,328

4,630

Amortisation change for the year

(4,015)(2,861)

Effect of movements in foreign exchange rates(1,069)(206)

Balance at 31 December

29,56033,316

Current
Non-current

18,043
11,517

21,408
11,9082020

2019

303,520

360,013

Prepayments and accrued interest

17,096

22,598Net plan pension asset

53,66753,393

Reimbursement rights

8,408

9,721

Other

8,714

7,552

Total

391,405453,278

12 Other assets and accruals

Pipeline and ceded return premium

Pipeline premium relates to shipments made by ACyC’s policyholders for which ACyC is at risk but has not invoiced
the premium.
Prepayments and accrued interest, relate to payments in advance for which the Company has received and invoice for
future services or goods, and interest of financial investments for which Atradius is entitled but has not received yet.
The other assets and accruals are substantially all current and consequently the fair values of these assets do notmaterially differ from their carrying amounts.
The reimbursement rights relate to the Spanish pension plans. Since the related policies do not qualify as an insurance
policy under IAS 19, the fair value cannot be netted with the related pension liability (see Note 15).
The net plan pension asset concerns the surplus of the pension plan in the UK as per 31 December 2020 is EUR 53.7
(2019: EUR 53.4 million) (see Note 15).

71

All amounts in thousands of Euro, unless otherwise stated

13 Cash and cash equivalents
2020

2019

Cash at bank and on hand

223,370

176,847

Short-term bank deposits

2,195

4,907

Cash and cash equivalents

225,565

181,754

Cash and cash equivalents

225,565

181,754

Cash and cash equivalents in the statement of cash flows

225,565

181,754

ACyC manages the cash by using a cross-border cash pooling agreement. This provides for a notional pool structurewith interest compensation per currency. The cash pool arrangement allows for offsetting of cash balances ofbranches within a legal entity. However, it does not allow offsetting between different legal entities.

14 Capital and reserves
14.1

Share capital

The authorised share capital of ACyC amounts to EUR 24,869,770.65 and is divided into 4,138,065 nominal shares witha par value of EUR 6.01 each (2019: the same). The nominal shares were all issued and fully paid, with identical
economic and voting rights (2019: the same).

14.2

Share premium reserve
2020

2019

24,192
24,192

24,192
24,192

2020

2019

Balance at 1 January

67,636

24,598Change in revaluation reserve - gross(4,563)53,258Change in revaluation reserve - tax(2,381)(9,421)

Net (gains)/losses transferred to net profit on disposal - gross(3,843)(1,050)Net (gains)/losses transferred to net profit on disposal - tax

903

252

57,752

67,6362020

2019

Balance at 1 January(26,073)(31,402)

Change in currency translation reserve - gross(13,031)

5,907

Change in currency translation reserve - tax

1,744

(577)

(37,360)(26,073)

Balance at 1 January
Balance at 31 December

14.3

Revaluation reserve

Balance at 31 December

14.4

Currency translation reserve

Balance at 31 December
ACyC’s significant foreign currencies and sensitivity to fluctuations are set out in Note 4.4.

72

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

14.5

Pension reserve
2020

2019

(163,000)(147,270)

Recognised actuarial gains/(losses)(5,120)(15,730)

Change in pension reserve - grossChange in pension reserve - tax(10,587)
5,467(20,353)
4,623

Balance at 31 December(168,121)(163,000)

2020

2019

1,079,093

1,004,948

181,173

165,894-

33

Dividends(102,859)(91,782)

Balance at 31 December

1,157,408

1,079,093

Balance at 1 January

14.6

Retained earnings

Balance at 1 January
Appropriation of prior year result
Acquisitions

14.7

Dividend distribution

ACyC and its subsidiaries are subject to legal restrictions regarding the amount of dividends they can pay to theirshareholders. Dividends can only be paid up to an amount equal to the excess of the Company’s shareholders' equity
and reserves required by law. The Spanish Civil Code contains the restriction that dividends can only be paid up to an
amount equal to the excess of the Company’s shareholders’ equity and reserves required by law. Additionally, certain
subsidiaries are subject to restrictions on the amount of funds they may distribute in the form of dividends orotherwise and also in respect of minimum capital requirements that are imposed by industry regulators in the
countries in which the subsidiaries operate.

15 Employee benefit assets and liabilities

Retirement benefits
Other long-term employee benefits
Total

15.1

2020

2019

130,498

117,531

6,675

5,993

137,173

123,524

Retirement benefits

The employee benefit assets and liabilities relate mainly to pension assets and liabilities for defined benefit plans. The
main defined benefit plans are in the United Kingdom, Germany and the Netherlands and these represent 91.6% (2019:90.8%) of the defined benefit obligation. The other plans relate to Spain, Italy, Switzerland, Sweden, Belgium, Norway
and France. The recognition of assets and liabilities is determined separately for each plan.
Within ACyC there are also defined contribution plans. The contributions to these plans are recognised as expenses in
the income statement. The total contributions amounted to EUR 9.3 million in 2020 (2019: EUR 9.1 million).
Pension assets and liabilities
The following table presents the change in the value of the net defined benefit liability:73All amounts in thousands of Euro, unless otherwise statedDefined benefit
obligation

Fair value of plan assets

Net defined benefit(asset) liability

2020

2019

2020

2019

2020

2019

929,503

813,667

811,972

719,246

117,531

94,421

-

-

-

-

-

-

Current service cost

14,25911,987--

14,25911,987

Past service cost

279

-

-

-

279

-

Interest cost / income

11,705

16,79011,714

16,586(9)204

Administration costs

630

580

-

-

630

580

-

-

-

-

-

-

2,547

(1,270)

(233)

822

2,780

(2,092)

29,42028,087

11,481

17,40817,93910,679- demographic assumptions(8,141)(11,421)--(8,141)(11,421)- financial assumptions

85,899109,432--

85,899109,432- experience adjustments
Return on plan assets excludinginterest income
Change in irrecoverable surplus
other than interest(7,508)610--(7,508)610--

61,14380,131(61,143)(80,131)---

Effect of movements in foreignexchange rates(19,252)

16,052(19,351)

16,17499(122)

Total included in OCI

50,998

114,673

41,79296,3059,206

18,368Contributions paid by theemployer(3,233)(3,363)

11,21915,887(14,452)(19,250)

Plan participants contributions

2,010

1,993

2,010

1,993

-

-

(20,762)(23,914)(20,762)(23,914)---(1,640)---(1,640)

-

-

(274)

(14,953)274

14,953

Total other(21,985)(26,924)(7,807)(20,987)(14,178)(5,937)

Balance at 31 December

987,936

929,503857,438

811,972

130,498

117,531

Balance at 1 January
Additions
Included in the income
statement:

Cost of Termination Benefits
Effect of movements in foreignexchange rates
Total included in the income
statement

Included in OCI:
Remeasurement loss (gain):
Actuarial loss (gain) arising
from:

-

Other:

Benefits paid
Settlement
Reclassification of surplus plan
assets

Thera has been a reclassification from Other long term employee benefits
Plan assets
ACyC has pension related assets which under IAS 19 do not meet the criteria to qualify as plan assets. In Germany, for
one of the plans, assets of EUR 14.3 million (2019: EUR 13.9 million) are classified as financial investments since in the74Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

event of bankruptcy, these assets are not fully secured for the members of the pension plan. In the UK, EUR 38.2 offinancial investments (2019: EUR 35.3 million) is on an escrow account to support the UK pension fund. In the event of
insolvency, the Trustee of the pension fund has the right to those investments, provided certain conditions are met.
The surplus of one of the UK pension plans as per 31 December 2020 is EUR 53.7 million (2019: EUR 53.4 million) is
disclosed as net plan pension assets as part of Note 12.
In Spain, the defined benefit plans are partially insured with Seguros Catalana Occidente S.A.. These insurance policies
do not qualify as insurance policies under IAS 19, therefore the fair value is treated as reimbursement rights, which
are recorded as part of other assets for an amount of EUR 7.7 million (2019: EUR 9.2 million). At the end of 2020, thedefined benefit obligation related to the reimbursement rights amounts to EUR 15.8 million (2019: EUR 19.6 million).
This same defined benefit obligation has in addition plan assets of EUR 13.8 million ((2019: EUR 14.6 million).

75

All amounts in thousands of Euro, unless otherwise stated

Characteristics of the main defined benefit plans
Characteristic
Entitlement

United Kingdom
Pension entitlements are basedon a percentage of final salary(closed to new employees).

Germany
Pension entitlements are basedon a percentage of the averagesalary of the last 10 years.

Number ofparticipants

114 active members (2019: 130
active members).
530 inactive members (2019: 520
inactive members).
EUR 297 million (2019: EUR 288
million).
EUR 351 million (2019: EUR 341
million).

436 active members (2019: 448
active members).
354 inactive members (2019: 342
inactive members).
EUR 138 million (2019: EUR 131.6
million).
EUR 66 million (2019: EUR 66
million). Assets of EUR 14 million(2019: EUR 14 million) arerecognised as part of the financial
investments.
EUR 6.1 million - loss (2019: EUR
10.3 million - loss).

Defined benefit
obligation
Plan assets

Remeasurement
gain (loss) through
OCI
Fundingarrangement

EUR 3.3 million - gain (2019: EUR
6.0 million - gain).

Employeecontributions

In 2020 contributions amounted
to 7.1 % (2019: 7.1%) of theeligible salary.
A Cash Driven Investment
portfolio has been implemented
that combines Buy & Maintain
Credit with a Liability Driven
Investment, to provide
contractual income that aligns
with the timing of the pension
liability cash flow payments
together with a 100% interest
rate and inflation rate liability
hedge to maintain Self-sufficiency

ALM-strategy

Regulatory
Framework

The basis of the funding
agreement lies in the Trust Deed
and Rules. The pension fundperforms triennial actuarial
valuations to determine employer
contributions.

The UK pension plan is subject toUK pensions legislation andguidance issued by the Pensions
Regulator in the UK

A Contractual Trust Agreement isestablished as a financing vehicle
to cover part of the pension
liabilities. There is no specificfunding arrangement although
the assets must exceed theinitially funded amount of EUR 30
million.
None; all contributions are madeby the employer.
The investment objectives andpolicies are developed based on
an ALM-study.
The investment policy limits theinterest rate risk by restricting theinvestment in bonds to fixed ratebonds. Equity price risk iscontrolled by investing according
to the Dow Jones Euro Stoxx 50
Index.
The German pension plan issubject to German pensions
legislation and guidance issued by
the Pensions Regulator in
Germany76

The Netherlands
Pension entitlements are basedon a percentage of the averagesalary (maximum of EUR 0.1
million - closed to new
employees).
275 active members (2019:289 active members).
1,364 inactive members (2019:
1,361 inactive members).
EUR 452 million (2019: EUR
407 million).
EUR 420 million (2019: EUR
382 million).

EUR 7.4 million – loss (2019:
EUR 8.6 million - gain).
The employer pays a yearlybase premium as a percentageof the total sum of eligible
salaries of all active participants
which cannot be below thecost-effective premium for thatyear.
In (2020 contributions
amounted to 7.5% ((2019: 7.5%)of the eligible salary.
At least once every three years
an ALM-study is performed inwhich the impact of thestrategic investment policies
are analysed.
The interest rate risk is partiallyhedged within the investment
portfolio by the use of debt
instruments in combination
with liability driven investment
funds.
The Dutch pension plan issubject to The Netherlands
pensions legislation andguidance issued by thePensions Regulator in The
Netherlands

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

Fair value of plan assets
The fair value of plan assets at the end of the reporting period is analysed in the following table:

Plan assets 2020
Belgium
FranceCash and cash
equivalents

Equityinstruments-

Debt
instruments-

Investment
funds

Insurance
contractsRealestate

Total

-

-

36,052-

36,052

-

-

-

-

-

-

-

Germany

1,491

23,182

41,271---

65,944

Norway

-

-

-

-

3,416

-

3,416

Spain

-

-

-

-

13,781-

13,781

Sweden

-

381

1,670

527

-

351

2,929

Switzerland

-

-

-

-

3,359

-

3,359

The Netherlands

6,575

152,544-260,751--

419,870

United Kingdom

8,213

-

278,412

13,038-12,424

312,087

Total

16,279176,107

321,353274,316

56,608

12,775

857,438

Debt
instruments

Investment
funds

Insurance
contracts

Plan assets 2019

Cash and cash
equivalents

Equityinstruments

Belgium

-

-

-

-

Germany

1,772

23,53740,245

Norway

-

-

-

Spain

-

-

Sweden-SwitzerlandRealestateTotal

35,989-35,989---65,554

-

3,663

-

3,663

-

-

14,573-

14,573

369

1,761

370

341

2,841

-

-

-

-

3,141

-

3,141

The Netherlands

2,574

154,413-225,249--

382,236

United Kingdom

10,064-

266,521

13,858-13,532

303,975

Total

14,410178,319

308,527

239,477

57,366

13,873

811,972

All equity and debt securities have quoted prices in active markets. The plan assets do not include any of ACyC’s own
financial instruments, nor any property occupied or other assets used by ACyC.
The return on plan assets is determined by multiplying the fair value of the plan assets by the discount rate as
determined at the start of the annual reporting period, taking account of any changes in the plan assets held during theperiod as a result of contributions and benefit payments. The actual return on plan assets (including reimbursement
rights) was EUR 71.5 million gain (2019: EUR 94.9 million gain).

77All amounts in thousands of Euro, unless otherwise stated

Actuarial assumptions
The principal assumptions used for the purpose of the actuarial valuations of the three main defined benefit plans arepresented in the following table:
Principal actuarial assumptions

United Kingdom

Germany

The Netherlands

2020

2019

2020

2019

2020

2019

Discount rate

1.50%

2.00%

0.75%

1.00%

1.00%

1.00%

Price inflation rate

2.75%

3.00%

1.75%

1.75%

1.75%

1.75%

2.50%

2.25%

2.30%

2.30%

1.75%

1.75%

2.67%

2.85%
CMI 2018(1.5% LTR)

1.50%
Heubeck
Richttafeln
2018 G

1.50%

CMI 2019(1.5% LTR)

1.50%
Heubeck
Richttafeln
2018 G

0.88%
Prognosetafel
AG2018+ adjusted
experience

20

20

16

17

Expected increase of futuresalaries
Expected increase of future
benefit levels
Mortality table

Duration in years

Prognosetafel
AG2020+ adjusted
experience21

21

An approximation of the sensitivity of the relevant actuarial assumptions, holding other assumptions constant, would
impact the total defined benefit obligation of the main pension plans by the amounts shown below:
Defined benefit obligation

2020

2019

Increase

Decrease

Increase

Decrease(163,212)

219,266(149,134)

199,153

Price inflation rate (1% movement)

91,499(67,870)

125,720(107,010)

Future salary growth (1% movement)

20,921(19,945)

20,010(19,071)

Future pension growth (1% movement)

172,741(136,062)

157,696(124,281)

Future mortality (+1 year)

38,293n/a

33,801n/aDiscount rate (1% movement)

15.2

Defined benefit costs

A total defined benefit cost of EUR 14.7 million (2019: EUR 12.7 million) is recognised in the income statement undernet operating expenses (see Note 25). EUR 14.4 million (2019: EUR 12.2 million) relates to pension plans and EUR 0.2
million (2019: EUR 0.1 million) to other long-term employee benefits.

78

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

16 Insurance contracts
Credit insurance

Gross

Reinsurance
asset
2020

Net

Gross

Reinsurance
asset
2019

Net

Claims reported and loss adjustment
expenses

142,179(164,235)(22,056)

163,403(160,986)

2,417

Claims incurred but not reported

692,975(495,655)

197,320494,842(303,308)

191,534

Claims provisions

835,154(659,890)

175,264

658,245(464,294)

193,951

Provision for unearned premium

240,123(145,322)

94,801

260,071(130,211)

129,860

Total

1,075,277(805,212)

270,065

918,316(594,505)

323,811Claims reported and loss adjustment
expenses

130,336(83,619)

46,717

122,725(78,986)

43,739Claims incurred but not reported

31,696(20,702)

10,99433,503(23,076)

10,427

Claims provisions

162,032(104,321)

57,711

156,228(102,062)

54,166

Provision for unearned premium

160,642(103,820)

56,822

173,185(115,500)

57,685

Total

322,674(208,141)

114,533

329,413(217,562)

111,851

Total insurance contracts

1,397,951(1,013,353)

384,598

1,247,729(812,067)

435,662

Current

992,290

766,488

1,758,778

936,812609,294

1,546,106

Non-current

405,661

246,865

652,526

310,917

202,774

513,691

Bonding

The liabilities for gross claims reported, loss adjustment expenses and claims incurred but not reported are net of
expected recoveries from salvage and subrogation and contain reinsurance business.
.

16.1

Claims development tables

The claims development tables provide an overview of how the Atradius’s recognised claims costs for underwriting
years 2011-2020 have changed at successive financial year-ends. This overview also provides a breakdown of theclaims provisions (claims reported and loss adjustment expenses and claims incurred but not reported) that are held
against each underwriting year as at 31 December 2020. Underwriting year here means the year in which the risks
were accepted (‘risk attachment’).

79All amounts in thousands of Euro, unless otherwise stated

Credit Insurance – Gross

Claims development per underwriting year – (EUR million)
Year when risk was taken

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

690.88766.06639.67702.91764.73688.66697.73765.52766.42882.42one year later

642.92704.34547.17644.43676.58603.38672.53798.54755.67-

two years later

618.75647.80502.12614.31

639.43575.40618.02727.55--three years later

613.22618.84488.27608.19614.20567.52611.56---four years later

598.90610.33486.37605.41607.57565.02----

five years later

594.39606.33479.74597.64612.62

-

-

-

-

-

six years later

588.26601.95472.98592.18

-

-

-

-

-

-

seven years later

582.32599.26474.91

-

-

-

-

-

-

-

eight years later

578.64596.78

-

-

-

-

-

-

-

-

nine years later

576.16

-

-

-

-

-

-

-

-

-

Current estimate of
cumulative claims

576.2

596.8

474.9

592.2

612.6

565.0

611.6

727.6

755.7

882.4

6,394.9

Cumulative payments to
date

576.8

596.7

481.7

585.0

623.8

599.2

626.8

712.4

602.6

159.0

5,563.9

(0.6)

0.1

(6.8)

7.2

(11.2)(34.2)(15.2)

15.2

153.1

723.4

830.9

Estimate of gross claims
incurred:at the end of the year
when risk was taken

Claims provision at 31
December 2020 in respectof 2011 - 2020
In respect of prior years(before 2011)

Total

4.2

Total

835.1

The table contains recognised claims costs only. It excludes the impact of losses from risks that have been accepted forwhich the premium has yet to be earned. The consequence of this is that the claims expense for a particularunderwriting year can increase in future financial years as both the premium and losses are recognised in the income
statement. This is relevant for the credit insurance business written in Spain. The premium earned for underwriting
years 2017-2019 in the current financial year for these blocks of business was EUR 84.1 million.
The claims development tables are presented on a gross basis. The effect of risk mitigation is in line with our quota
share treaties as included in Note 4.3, detailing further disclosures on insurance risk. The overall impact of risk
mitigation on claims provisions (for all underwriting years combined) is approximately 79.1%. Risk mitigation forgross claims incurred as shown in this table varies between 72% and 80% (2019: 59% and 76%). These differ from thequota share treaties due to the private instalment credit protection which are not ceded.
(1) 2019 claims development table includes a single large claim of 83.9m which was 100% reinsured and had zero impact on the net insurance ratio.

80Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

Bonding - Gross

Claims development per underwriting year – (EUR million)
Year when risk was taken
Estimate of gross claims
incurred:at the end of the year
when risk was taken

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Total

8.80

10.18

14.94

11.25

8.65

8.73

6.60

4.16

22.92

22.67

one year later

25.26

31.94

19.73

12.30

8.69

9.33

19.16

22.07

21.76

-

two years later

34.59

34.26

20.39

17.96

11.21

12.20

19.96

28.28

-

-

three years later

33.72

34.40

20.25

19.26

16.25

14.24

21.59

-

-

-

four years later

32.08

35.57

19.29

16.31

17.68

14.26

-

-

-

-

five years later

31.04

36.42

18.07

15.49

14.17

-

-

-

-

-

six years later

34.47

34.92

20.43

19.90

-

-

-

-

-

-

seven years later

34.94

35.38

23.34

-

-

-

-

-

-

-

eight years later

35.05

35.72

-

-

-

-

-

-

-

-

nine years later

37.50

-

-

-

-

-

-

-

-

-

Current estimate of
cumulative claims

37.50

35.72

23.34

19.90

14.17

14.26

21.59

28.28

21.76

22.67

239.20

Cumulative payments to
date

31.7

29.4

13.6

11.4

4.8

14.6

5.5

15.5

10.8

0.6

137.9

Claims provision at 31
December 2020 inrespect of 2011 - 2020

5.77

6.28

9.73

8.52

9.39

(0.36)

16.14

12.75

10.98

22.11

101.30In respect of prior years(before 2011)

60.7

Total

162.0

The claims costs do not include an estimate for future claim payments on cases where ACyC does not yet have adverse
information. This explains the increase in claims costs over time. For bonding, ACyC typically earns premium inproportion to the length of time involved, over the tenor of the bond, meaning that while an increase in the claims
incurred can be seen, premium will also be recognised and this cannot be seen in the table above. The premium
earned for underwriting years 2017-2019 in the current financial year was EUR 54.1 million.
The claims development tables are presented on a gross basis. The effect of risk mitigation is in line with our quota
share treaties as included in Note 4.3, detailing further disclosures on insurance risk. The overall impact of risk
mitigation on claims provisions (for all underwriting years combined) is approximately 64.4%. Risk mitigation forgross claims incurred as shown in this table varies between 57% and 59%. (2019: 59% and 66%). This is due to a
relatively higher retention in recent years.

81All amounts in thousands of Euro, unless otherwise stated

16.2

Insurance liabilities and reinsurance assets

16.2.1 Changes in insurance liabilities and reinsurance assets
Credit insurance

Gross

Reinsurance
asset
2020

Net

Gross

Reinsurance
asset
2019

Net

Balance at 1 January658,245(464,294)

193,951

652,537(473,198)

179,339

Claims paid in the year
Increase/(decrease) in liabilities
arising from claims
Foreign exchange rate and othermovements(616,740)

397,612(219,128)(689,515)

460,761(228,754)

816,690(608,439)

208,251

688,719(449,258)

239,462(23,040)

15,231(7,809)6,503(2,599)3,904

Balance at 31 December

835,154(659,890)

175,264

658,245(464,294)

193,951

Claims reported and loss adjustment
expenses

142,179(164,235)(22,056)

163,402(160,986)

2,416

Claims incurred but not reported

692,975(495,655)

197,320494,843(303,308)

191,535

Total

835,154(659,890)

175,264

658,245(464,294)

193,951

Balance at 1 January

156,228(102,062)

54,166

133,402(87,998)

45,404Claims paid in the year
Increase/(decrease) in liabilities
arising from claims
Foreign exchange rate and othermovements(30,615)

20,774(9,841)(22,683)

14,804(7,878)36,530(23,077)

13,45345,491(28,873)

16,618

(111)

44

(67)

18

5

23

Balance at 31 December

162,032(104,321)

57,711

156,228(102,062)

54,166Claims reported and loss adjustment
expenses

130,336(83,619)

46,717

122,725(78,986)

43,739Claims incurred but not reported

31,696(20,702)

10,99433,503(23,076)

10,427

Total

162,032(104,321)

57,711

156,228(102,062)

54,166Claims provisions

997,186(764,211)

232,975

814,473(566,356)

248,117

Bonding82

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

16.2.2 Provision for unearned premium
Credit Insurance

Gross

Reinsurance
asset
2020

Net

Gross

Reinsurance
asset
2019

Net

Balance at 1 January

260,071(130,211)

129,859

239,420(104,962)

134,457

Movement in the period
Foreign exchange rate and othermovements(11,879)(21,962)(33,841)

19,064(24,322)(5,258)(8,068)6,851(1,218)

1,587

(927)

660

Balance at 31 December

240,124(145,323)

94,800260,071(130,211)

129,859

Balance at 1 January

173,185(115,500)

57,685160,971(112,480)

48,491

Movement in the period
Foreign exchange rate and othermovements(12,138)

11,390(748)

12,153(2,995)

9,158

(406)

290

(116)

61

(25)

36

Balance at 31 December

160,641(103,820)

56,821

173,185(115,500)

57,685

Provision for unearned premium

400,765(249,142)

151,621433,256(245,712)

187,544

Bonding83

All amounts in thousands of Euro, unless otherwise stated

17 Other provisions
2020

Restructuring

Litigation

Total

Balance at 1 January

1,485

1,135

2,620

Additional provisions

297

173

470

Unused amounts reversed

-

(264)

(264)

Utilised

-

(45)

(45)

Balance at 31 December

1,782

999

2,781

Current

1,782

-

1,782

-

999

999

Restructuring

Litigation

Total

Balance at 1 January

580

1,299

1,879

Additional provisions

1,000

170

1,170

Non-current
2019

Unused amounts reversed

-

(283)

(283)

(95)

(50)

(145)

Balance at 31 December

1,485

1,135

2,620

Current

1,485

-

1,485

-

1,135

1,135

UtilisedNon-current

Restructuring
The restructuring provision is recognised when management has approved a detailed and formal restructuring plan,and the restructuring has either commenced or has been announced to the parties concerned. Costs relating to theongoing activities of Atradius are not provided for.

Litigation
The litigation provision is related to disputes with third parties that are not related to the insurance business of ACyC.
Insurance business related litigation provisions are included in the provisions for outstanding claims. The provision
relates to the estimated cost including the costs of legal proceedings of any non-insurance claims against ACyC. These
provisions have not been discounted to reflect present value since the effect of discounting is not material.

18 Deferred and current income tax
Current income tax
2020

2019

Current income tax assets

16,07523,696

Current income tax liabilities

36,23427,816

Net(20,159)(4,120)The current income tax assets consist mainly of advances paid for local income tax. The current income tax liabilities
consist mainly of income and other local taxes payable.
Atradius Crédito y Caución S.A. de Seguros y Reaseguros, Spanish branch, is included in the fiscal unity (nº173/01) for
corporate income tax in Spain, which includes Grupo Catalana Occidente, S.A. (as parent company) and other84Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

subsidiaries entities: (i) Atradius Collections, S.L.; (ii) Atradius Crédito y Caución S.A. de Seguros y Reaseguros; (iii)
Atradius Information Services BV Sucursal en España; (iv) Catalana Occidente Capital, Agencia de Valores, S.A.; (v)Cosalud Servicios, S.A.; (vi) Funeraria Merino Díez, S.L. (vii) GCO Gestora de Pensiones, EGFP, S.A.; (viii) GCO
Reaseguros, S.A.; (ix) Grupo Catalana Occidente Gestión de Activos, S.A. S.G.I.I.C.; (x) Iberinform Internacional, S.A.; (xi)
Iberinmobiliaria, S.A.; (xii) B2B SAFE, S.A.; (xiii) Nortehispana, de Seguros y Reaseguros, S.A.; (xiv) Plus Ultra, Seguros
Generales y Vida, S.A. de Seguros y Reaseguros; (xv) Seguros Catalana Occidente, S.A. de Seguros y Reaseguros; (xvi);
Sociedad Gestión Catalana Occidente, S.A.; (xvii) Tecniseguros, Sociedad de Agencia de Seguros, S.A.; y (xviii)
Nortehispana Mediación Agencia de Seguros, S.A. (xix) Atradius Participations Holding S.L..
All companies included in the fiscal unity are jointly and severally liable for the corporate income tax payable in Spainby the fiscal unity.
Deferred income tax
2020

2019

Deferred income tax assets before set-off

193,521147,140

Set-off of deferred tax positions(157,891)(119,874)

Net deferred tax assets as presented in the statement of financial position

35,63027,266

Deferred income tax liabilities before set-off

225,456

201,079

Set-off of deferred tax positions(157,891)(119,874)

Net deferred tax liabilities as presented in the statement of financial position

67,565

81,2052020

2019(53,940)(53,286)

Credit (charge) to other comprehensive income for the year

3,989

(4,547)

Charge to the income statement for the year

17,1683,356

Effect of movements in foreign exchange rates

847

537

(31,935)(53,940)

Recognised in
the income
statement for
the year

Effect ofmovements inforeignexchange

Balance at 31
December

The gross movement on the deferred income tax is presented in the following table:

Balance at 1 January

Balance at 31 December
The movement in the deferred tax assets and liabilities is presented in the following table:
2020

Balance at 1
January

Recognised inothercomprehensive
income for theyear

Tax losses carried forward

6,730

6,083

(49)

12,764

Technical balances

43,326

11,064(49)

54,340Pensions

31,971(2,728)668

35,377

Fiscal goodwill

3,071

(934)

(20)

2,117

Allowance accounts receivable

3,711

(539)

(9)

3,162

3,642

317

(17,454)

Financial investments(19,935)

Equalisation provisions

5,467(1,478)(108,251)

(720)

1

(108,970)

Property, plant and equipment(7,901)

8,066

(34)

130

Other

(6,661)(6,765)

23(13,403)

Total(53,940)

17,168847(31,935)

3,989

85

All amounts in thousands of Euro, unless otherwise stated2019

Balance at 1
January

Recognised inothercomprehensive
income for theyear

Recognised in
the income
statement for
the yearTax losses carried forward

11,193-(4,463)0

6,730

Technical balances

34,502

-

8,771

52

43,326

Pensions

21,760

4,623

5,901

(313)

31,971

Fiscal goodwill

4,571

-

(1,494)

(7)

3,071

Allowance accounts receivable

3,619

-

90

1

3,711

Financial investments(7,051)(9,170)(3,668)(46)(19,935)

Equalisation provisions(104,537)-(3,717)

3(108,251)

Property, plant and equipment

Effect ofmovements inforeignexchange

Balance at 31
December

326-(8,235)

8(7,901)

Other(17,668)-

10,171837(6,661)

Total(53,286)(4,547)

3,356

537

(53,940)

Deferred income tax assets are recognised for tax losses carried forward, unused tax credits, and deductible
temporary differences, to the extent that it is probable that taxable profits will be available against which the unused
tax losses carried forward, unused tax credits, and deductible temporary differences can be utilised.
ACyC has unrecognised tax losses carried forward balances amounting to EUR 38.5 million (2019: EUR 36.2 million).
The expiration of these unrecognised tax losses carried forward is included in the following table:
Expiration unrecognised tax losses carried forward

2020

2019

1 - 3 years

1,889

3,656

4 - 9 years

3,112

6,034

Indefinite

33,48826,469Total

38,48936,159The deferred and current income tax charged or credited to other comprehensive income during the year is presented
in the following table:
Deferred tax

Current tax

2020

Deferred tax

Current tax

2019

Revaluation reserve in shareholders equity related to:
Available-for-sale financial investments(1,477)-(9,170)

-

5,467

-

4,623

-

-

1,744

-

(577)

3,989

1,744

(4,547)(577)

Pension reserve in shareholders equity related to:
Recognised actuarial gains/(losses)
Currency translation reserve in shareholders equity related to:Currency translation reserve
Total

86

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

19 Payables
2020

2019

Accounts payable on insurance and reinsurance business

324,500

121,888

Payables arising out of reinsurance operations

268,443

70,824

Amounts due to policyholders

41,171

34,814

Amounts due to intermediaries and current account Dutch State

14,886

16,250Trade and other accounts payable

68,85878,911

Accounts payable

10,342

6,385

Other accounts payable

58,516

72,526

Total

393,358

200,799

The payables are substantially all current.
The significant increase on payables arising out of reinsurance operations is coming from the schemes signed in somecountries with the Governments (see section 4.3.3).

20 Other liabilities
2020

2019

Ceded pipeline premium¹ and return premium²

240,108

252,428

Deposits received from reinsurers

66,016

63,936

Unearned reinsurance commission

91,54796,605

Payroll and bonus accruals

37,00841,329

Reinsurance accruals

11,91829,536

Other accruals

59,66971,681Other taxes

18,884

6,975

Lease liabilities

70,83669,716

Total

595,986

632,206

1) Ceded pipeline premium: Ceded accrued premium which has not been invoiced but for which Atradius is on risk
2) Return Premium — amount due the insured because the actual cost of a policy is less than the insured has previously paid

Other taxes increased due to the denetting of indirect tax advance payments.

20.1

Information regarding the deferements of payments to providers

The information required by the Second Final Provision of Spanish Act 31/2014, of December 3, through which theConsolidated Text of the Spanish Companies Act is amended for the improvement of corporate governance andSpanish Act 15/2010, of July 5, which amends Spanish Act 3/2004 of December 29, is detailed below. Said information
has been prepared by the Company’s Directors whilst applying the Resolution of the Spanish Accounting and Audit
Institute dated January 29, 2016. This information is limited to the operations carried out by the ACyC subsidiary
based in Spain.

87All amounts in thousands of Euro, unless otherwise stated

2020

2019

Days

Days

Average term of payment to providers

15.68

22.20

Ratio of paid operations

15.68

23.44

Ratio of outstanding operations

16.64

1.27

AmountAmount30,72926,209852

1,551

Total payments
Total outstanding payments

According to ICAC Resolution, the business operations corresponding to the delivery of goods or provisions of services
accrued from the date of the entry into force of Spanish Act 31/2014, December 3, have been taken into account for the
calculation of the average term of payment to providers.
For the sole purposes of providing the information stipulated in this Resolution, providers are deemed as the tradecreditors through debts with suppliers of goods or services, included in the “Debits and payables – Other debts-Rest ofother debts” items of the balance sheet’s current liabilities.
The "Average term of payment to providers" is deemed as the period between the delivery of the goods or theprovision of the services by the provider and the material payment of the operation.
Lease liability maturity analysis
Lease liability maturity analysis (undiscounted cash flows)

2020

2019

Less than one year

18,39917,676

Between one and five years

45,94341,505More than five years

17,967

18,193

Total

82,30977,37421 Net premium earned
Credit insurance

Gross

Reinsurers'
share
2020

Net

Gross

Reinsurers'
share
2019

Net

Written premium

1,335,017(984,597)

350,420

1,393,694(857,178)

536,516

11,87921,962

33,841(19,064)

24,322

5,258

91

(64)

27

(1,117)

619

(498)

1,346,987(962,699)

384,288

1,373,513(832,236)

541,277

Written premium

111,754(64,078)

47,676135,247(81,045)

54,201

Change in provision for unearned
premium

12,138(11,390)748(12,153)

2,995(9,158)

(62)

42

(20)

(183)

81

(102)

123,830(75,427)

48,404

122,911(77,969)

44,942

1,470,817(1,038,126)

432,691

1,496,424(910,206)

586,218

Change in provision for unearned
premium
Other movements
Total
Bonding

Other movements
Total
Total premium earned

The written premium and change in provision for unearned premium contain reinsurance business.

88Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

22 Service and other income
2020

2019

Credit Information services

49,89851,980Business information services

10,009

9,933

Total

59,907

61,913Credit information services are part of the insurance segment. Business information services are part of the service
segment.
Characteristics of service contracts and income:--The contracts of credit information and business information services mostly have a duration of one year.
The contract period of credit information contracts is linked to the insurance policies, which can be up to two
years. But the credit limits are renewed on an annual basis, which requires additional credit information thatis separately invoiced to the customer.
The agreed performance obligations and transaction prices, included in the contracts, are clear and contain nojudgements that significantly affect the determination of the amount and timing of revenue.
The contracts contain no financing elements, warranties or obligations for returns or refunds.
The service contracts contain no variable consideration.
All costs for obtaining and fulfilling contracts are recognised as expenses. Atradius does not incur costs thatmeet the criteria to create assets for obtaining or fulfilling specific contracts.
Applying the practical expedient in paragraph 121 of IFRS 15 Atradius does not separately disclose theremaining performance obligations for service contracts at year end, since the contracts either have aduration of one year or Atradius is allowed to recognise revenue in an amount to which it has a right toinvoice.

23 Net income from investments
Net investment income by type of investment

2020

2019

Debt securities available-for-sale

6,849

8,144

Equity securities available-for-sale

12,757

6,754

295

1,714

19,901

16,612555

813

20,456

17,425

Debt securities available-for-sale

(386)

(9)

Equity securities available-for-sale(6,492)(1,330)

IncomeOther investments
Total income from financial investments
Investment property
Total investment income
Expenses

Handling expenses(2,555)(1,962)

Total expenses from financial investments(9,433)(3,301)

(46)

(17)

Total investment expenses(9,479)(3,318)Net income from investments

10,977

14,107

Investment property

89All amounts in thousands of Euro, unless otherwise stated

Net investment income by nature of income/(expense)

2020

2019

Interest

5,896

7,803

Dividends

6,138

6,750

Realised gains

8,117

2,263

Rental income from investment property

305

609

20,456

17,425

Handling expenses(2,555)(1,962)

Realised losses(4,023)(1,009)Impairment loss

(2,828)

(288)

(73)

(59)

Total

(9,479)(3,318)Net income from investments

10,977

14,107

Income

Total
Expenses

Depreciation of investment property

Net income from investments
In interest income and expenses reported above, the component related to financial investments available-for-sale is
net EUR 5.6 million (2019: EUR 6.1 million); this is derived from government and corporate bonds.
Net gains/(losses) by category

Impairments

Realised
gains/(losses)
2020

Investment property

Impairments

Realised
gains/(losses)
2019

27

250

42

204

Financial assets classified as available-for-sale(2,855)

3,844

(330)

1,050

Total

(2,828)

4,094

(288)

1,254

24 Insurance claims
Credit insurance

Gross

Reinsurers'
share
2020

Net

Gross

Reinsurers'
share
2019

Net

Claims paid in the year

616,740(397,612)

219,128

689,515(460,761)

228,754

Change in claims provisions

199,950(210,828)(10,878)(796)

11,503

10,707

Claims handling expenses

37,166-

37,16637,037-37,037

853,856(608,440)

245,417725,756(449,258)

276,498

Claims paid in the year

30,615(20,774)

9,841

22,683(14,804)

7,878

Change in claims provisions

5,915(2,303)

3,612

22,808(14,069)

8,739

Claims handling expenses

1,667

-

1,667

1,548

-

1,548

Total

38,197(23,077)

15,12147,038(28,873)

18,165892,054(631,516)

260,538

772,794(478,131)

294,663

Total
Bonding

Total insurance claims

For more detail on the change in claims provisions, see Note 16.2.1.

90

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

25 Net operating expenses
2020

2019

Total administrative expenses

359,114373,645

Acquisition costs

164,016

169,634

Change in deferred acquisition costs

2,687(1,769)Gross operating expenses

525,817541,510

Commissions received for business ceded to reinsurers(403,569)(435,034)

Total net operating expenses

122,248

106,477

2020

2019

382,312395,621

Other service expenses

7,215

9,008

Group costs

8,421

7,601

Total gross administrative expenses

397,948412,230

Claims handling expenses allocated to insurance claims(38,834)(38,585)

Total administrative expenses

359,114373,645

Administrative expenses by type of businessInsurance and information expenses

In the gross administrative expenses are included:- Depreciation, amortisation and impairment charges for intangible assets and property, plant and equipment amountto EUR 57.3 million (2019: EUR 58.9 million).
- Short term and low value leases amount to EUR 534 million

Employee benefit expenses

2020

2019

255,956

263,528

Restructuring costs and termination benefits

297

1,176

Pension costs - defined contribution plans

9,288

9,100

Pension costs - defined benefit plans

14,672

12,732

Total employee benefit expenses

280,213286,536

2020

2019

19

143

Other interest expense

5,741

2,527

Interest expense on lease liabilities

1,733

2,026

Total

7,493

4,696

Salaries and wages (including social security costs)

For an explanation of the employee benefit details see Note 15.

26 Finance expenses

Net interest on the net defined benefit liability

91All amounts in thousands of Euro, unless otherwise stated

27 Income tax
2020

2019

Current tax

47,48980,387

Deferred tax(17,168)(3,356)

Income tax expense/(income) for the year

30,321

77,031

The reconciliation from the expected tax rate to the actual tax rate is provided in the following table:
2020

2019

Result before tax

115,246258,204

Tax calculated at domestic tax rates applicable to results in the respective countries

31,15265,790Tax exempt (income)/loss(4,798)(569)

Write down/(reversal) of deferred tax assets

173

(359)

Reassessment of prior year local tax positions

2,270

5,516

Impact of change in tax rate

2,449

(1,682)

Other

(924)

8,334

30,321

77,031

Income tax expense/(income) for the year
The weighted average applicable tax rate was 27.0% (2019: 25.5%).

Deferred tax assets relating to losses carried forward in certain entities have been impaired. This is included in ‘write
down (reversal) of deferred tax assets’.
The impact of the change in tax rate in 2020 mainly reflects the effect of changes in income tax rate in the Netherlands
and the UK.

28 Dividends per share
The dividends paid in 2020 and 2019 were EUR 102.9 million (EUR 24.86 per share) and EUR 91.8 million (EUR 22.18
per share) respectively.

29 Assets not freely disposable
The financial assets not freely disposable in 2020 are EUR 201.2 million (2019: EUR 200.7 million). Assets that are notfreely disposable consist of financial investments, properties and cash that have been held mainly for local regulatory
purposes and can be used to cover technical provisions. The amount of pledged assets not covering technicalprovisions is EUR 67 million (2019: EUR 61.6 million).

30 Capital commitments and contingencies
Capital commitments of EUR 11.4 million (2019: EUR 21.1 million) are related to contracted obligations for future
payments for outsourcing, networking, imaging and licences.
ACyC has contingent liabilities in respect of matters arising in the ordinary course of business. It is not anticipated thatany material liabilities will arise from the contingent liabilities. The company has given guarantees to third parties
amounting to EUR 2.0 million (2019: EUR 1.2 million).

92

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

31 Personnel
The number of employees working for ACyC are included in the following table:
2020

2019

Senior Management

9293

Technical staff and middle managers

476

479

Administrative staff

1,918

1,927

Other

245

246

Total

2,732

2,745

The distribution by gender at the close of the fiscal years 2020 and 2019, of the full time equivalent number of
employees, distributed by professional category, is the following:
2020
Men

2019
Women

Men

Women

Senior Management

79

14

80

14

Technical staff and middle managers

335

140

342

139

Administrative staff

968

940

989

935

Other

56
1,437

187
1,281

57
1,468

186
1,274

Total

The Board of Directors, at the end of 2020 is integrated by 9 members (Men:8 , Women:1), (2019 : 9 members (Men:8 ,Women:1)).

The duty of loyalty and duty to avoid situations of conflicts of interest of the Directors
The members of the Board of Directors have sent to the Company the communications relating to the duty of loyalty
and to the duty to avoid situations of conflicts of interest, pursuant to articles 227 to 231 of the Spanish Companies Act,as amended by Spanish Act 31/2014 of December 3 for the improvement of corporate governance.
In said communications, the members of the Board of Directors have stated that they have not been in any situation of
direct or indirect conflict of interest with the interest of the Company and that, according to the information that they
are aware of and that they have been able to obtain with the greatest due diligence, the persons linked to them havenot been in this situation either. Lastly, in compliance with the aforementioned Act, they have indicated that theywould promptly inform of any change that may occur with regard to the detailed information.

93

All amounts in thousands of Euro, unless otherwise stated

32 Related party transactions
The following table provides the total value of transactions which have been entered into with related parties in thefinancial year:
`
2019
`

2020
Parent 1)
Receivables from parent

2,003

1,165

Rendering of services

47,386

44,114

Outward insurance premiums, claims, commissions

32,925(11,927)(5)(5)

86,97597,49944,05051,279Other related parties 2)

Investment expenses
Receivables from other related parties

3)

Payables to other related parties
1) Parent – Atradius Insurance Holding N.V..

2) Other related parties – transactions with other subsidiairies of Atradius.

3) Receivables from other related parties: includes transactions on Accounts Receivable on Insurance and Reinsurance business, Other Accounts Receivable, Purchase of Receivables with other subsidiairies of Atradius.

Terms and conditions of transactions with related parties
No guarantees have been provided or received for any related party receivables for 2020 or 2019. For the years ending
31 December 2020 and 2019, ACyC has not raised any provision or expenses for doubtful debtors relating to amounts
owed by related parties.
All relationships with related parties are at arm’s-length.

Compensation of ACyC Board of Directors and Executive Committe
The Board of Directors did not receive any remuneration as members of the Board, nor any pension or life insurance
obligations contracted on their behalf.
The following table provides details on the remuneration for members of the Executive Committee, which haveassumed senior management functions:
Remuneration

2020

2019

Short term employee benefits 1)

1,010

1,379

Long - term employee benefits

364

667

Post-employment benefits

147

188

1,521

2,234

Total compensation(1) Short-term employee benefits include salaries, housing, social security, medical expenses, lease cars and other.
There is a D&A insurance policy premium, that covers liability indemnity, with a cost of EUR 0.2 million (2019: EUR 0.1 million).

From the total compensation detailed in the table above, EUR 1.2 million (2019: EUR 1.6 million) has been paid at theend of the reporting period. The remaining balance payable is subject to meeting the variable pay conditions. Apartfrom this they do not have other relationships with the Company or its subsidiaries.

94

Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

33 Auditor fees
The following expenses were made for audit and non-audit services rendered by the Group’s external auditor:
PwC 1)
Accountants
Spain

Other PwC 1)
Networkorganisations

Total PwC 1)
Network

Audit financial statements

641

807

1,449

Other audit services

401

27

428

Fiscal advisory services

-

-

-

Non-audit services

-

7

7

1,043

842

1,885

PwC 1)
Accountants
Spain

Other PwC 1)
Networkorganisations

Total PwC 1)
Network

Audit financial statements

556

1,051

1,607

Other audit services

394

36

430

Fiscal advisory services

-

-

-

Non-audit services

-

10

10

950

1,097

2,047

2020 including VAT

Total

2019 including VAT

Total
1) PricewaterhouseCoopers Auditors

These amounts relate to the actual expenses incurred for the audit of the related financial year, and other services, onan accrual basis (expenses and non-recoverable VAT costs are included).

34 Events after the reporting period
The Board of Directors proposes to the General Meeting to allocate the result for the year to the retained earnings.

95

All amounts in thousands of Euro, unless otherwise stated

The Board of Directors of ATRADIUS CRÉDITO Y CAUCIÓN S.A. DE SEGUROS Y REASEGUROS, in the meeting
held today, 3 March 2021, has formulated the Consolidated Annual Accounts (IFRS) and the Consolidated
Management Report of the Company, corresponding to the financial year ended 31 December 2020. They consist
of ____ consecutively numbered pages, in addition to this and the following signature pages numbered from (i)to (ix), both included.
And as an evidence thereof, in compliance with the provisions of article 253 of the Spanish Companies Act, theDirectors referred to in the following pages sign this statement, on 3 March 2021.

The Board of Directors

José Ignacio Álvarez Juste

Francisco José Arregui Laborda

Bernd Hinrich Meyer

Xavier Freixes Portes

Hugo Serra Calderón

Désirée Maria van Gorp

John Patrick Hourican

Carlos Halpern Serra

José María Sunyer Sendra

96Consolidated financial statement 2020 Atradius Crédito y Caución S.A. de Seguros y Reaseguros

ANNEX. DETAIL OF REAL ESTATE AT 31 DECEMBER 2020
(Figures in euros)
Location

Address

Country

Year ofpurchase Gross value

2020
Accumulated
amortization

Net value

Date of last
valuation

Impairment

OWN-USE REAL ESTATE
ALCALA DE H.
ALICANTE

Comp.Inmob. Garena Plaza pl
Spain
9B
C/ San Fernando , 19
Spain
Principal

2005

1,031,468(251,926)

779,542(174,064)

13-Nov-20

2002

429,024(46,593)

382,431-13-Nov-20

BILBAO

Gran Vía, 17 2º Planta Of.1 y 3 Spain

2004

2,931,093(628,063)

2,303,030-

13-Nov-20

CASTELLON

Ruíz Zorrilla, 1 5º

Spain

1999

414,097(108,325)

305,772-

13-Nov-20

GERONA

Avda. Jaime I, 1

Spain

1990

335,248(164,394)

170,854-

18-Nov-20

LA CORUÑA

Real, 85 6º

Spain

1975

495,743(339,346)

156,397-

17-Nov-20

LAS PALMAS

Plaza de España, 6

Spain

2020

365,013(1,029)363,984(3,312)14-Nov-19

LEON

Avda. Independencía, 2 3º

Spain

1974

67,259(50,421)

16,838-13-Nov-20

MADRIDPº de la Castellana, 4

Spain

1995

21,739,237(7,004,905)

14,734,331-

13-Nov-20

MALAGA

Avda. Andalucia, 19 L-A2

Spain

1981

160,619(96,289)

64,331-13-Nov-20

MALAGA

Avda. Andalucia, 19 L-A5

Spain

1987

119,346(62,497)

56,849-13-Nov-20

MURCIA

Avda. Libertad, 2

Spain

1988

252,571(128,056)

124,515-

13-Nov-20

MURCIA

Avda. Libertad, 2 Local C

Spain

2001

115,755(35,961)

79,794(89)

13-Nov-20

OVIEDO

Conde de Toreno, 4

Spain

1967

104,352(83,482)

20,870-13-Nov-20

PAMPLONA

Avda. Carlos III, 13-15

Spain

1984

110,902(61,624)

49,279-13-Nov-20

SEVILLA

Plaza Nueva, 8 Dpdo. 5

Spain

1971

494,036(395,853)

98,182-17-Nov-20

SEVILLA

Plaza Nueva, 8

Garaj. 63

Spain

1971

6,842

(4,904)

1,938-

17-Nov-20

SEVILLA

Plaza Nueva, 8

Garaj. 50

Spain

1973

6,540

(4,688)

1,852-

17-Nov-20

TARRASA

Gutemberg, 3 3º F

Spain

1976

143,451(95,523)

47,928-13-Nov-20

VALENCIA

Avda. Jacinto Benavente, nº
14

Spain

2004

2,284,661(431,719)

1,852,942-

13-Nov-20

VALLADOLID

Duque de la Victoria, 4

Spain

1978

247,596(160,780)

86,815-13-Nov-20

ZARAGOZA

Plaza Salamero, 14 3º A

Spain

1975

285,300(193,579)

91,720-17-Nov-20

ZARAGOZA

Plaza Salamero,14 Trasteros

Spain

1989

4,608

(3,031)

1,577-

17-Nov-20

OPORTO

Plaza Buen Suceso, 61

Portugal1905

977,169(286,120)

691,049(48,559)

13-Nov-20

LISBOA

Avda. la Liberdade, 245

Portugal

2001

1,444,953(439,358)

1,005,596-

13-Nov-20

LISBOA

Av.Columbano Bordalo
Pinheiro, 75

Portugal

2017

3,970,100(198,450)

3,771,650(29,979)

12-Nov-19

ROMA

Via Crescenzio

Italy

1972

15,823,758(2,775,346)

13,048,412(17,929)16-Nov-20

ROMA

Via Cassiodoro 9

Italy

1993

1,328,200(222,042)

1,106,158-

16-Nov-20

BAERUM

Trulsrudskogen 17

Norway2002

309,055(93,208)

215,846-

8-Jul-20

55,997,998(14,367,514)

41,630,483(273,932)

Total own use properties

All amounts in thousands of Euro, unless otherwise stated

Location

Address

Country

2020

Year ofpurchase Gross value

Accumulated
amortization

Impairment

Net value

Date of last
valuation

THIRD PARTIES´USE REAL ESTATEALBACETE

Tesifonte Gallego, 4

Spain

1982

59,865(34,984)

24,881-17-Nov-20

ALMERIA

Lachambre, 2 2º

Spain

1996

102,998(40,888)

62,111-17-Nov-20

BADAJOZ

Avda. Ramon y Cajal, 13 1º

Spain

1992

64,119(28,982)

35,137-13-Nov-20

BARCELONA

Provenza, 216

Spain

1965

2,394,648(1,915,718)

478,930-

13-Nov-20

BILBAO

Gran Vía, 53

Spain

1967

146,093(116,874)

29,219-13-Nov-20

BURGOS

P. Alonso Martinez, 8

Spain

1987

80,510(41,922)

38,588-18-Nov-20

CORDOBA

Ronda de los Tejares, 32

Spain

1986

127,910(68,442)

59,468-16-Nov-20

GRANOLLERS Avda. San Esteban, 9

Spain

1999

201,270(76,916)

124,354-

13-Nov-20

JAEN

P. Constitución, 10

Spain

1989

76,541(38,203)38,338-17-Nov-20

JEREZ

Cmte. Paz Varela, 21 2º L-8

Spain

1988

41,184(20,862)

20,321-

16-Nov-20

LA CORUÑA

Alameda, 34 5º C

Spain

1974

82,324(57,616)

24,707-13-Nov-20

LAS PALMAS

Plaza de la Fería, 40

Spain

1968

-

-

-

-

25-Jun-18

LEON

Avda. Independencía, 2 3º

Spain

1974

8,199

(2,955)

5,244-

13-Nov-20

LERIDA

Avda. del Segre, 1

Spain

1990

109,392(52,595)

56,797-13-Nov-20

MADRID

R. Fdez. V. , 57

Spain

1978

1,093,837(686,806)

407,031-13-Nov-20

MADRID

Dulcinea, 47 Bajo L-1-2

Spain

1969

213,572(170,858)

42,714-13-Nov-20

OVIEDO

Conde de Toreno, 4

Spain

1967

52,176(41,741)

10,435-13-Nov-20

P. MALLORCA Pª del Borne, 15

Spain

1975

137,568(94,409)

43,159-13-Nov-20

S. C.
TENERIFE

Villalba Hervas, 9 1º C

Spain

1987

190,727(99,196)

91,531-13-Nov-20

SABADELL

Plaza de Cataluña,16

Spain

1997

222,201(81,747)

140,454-

17-Nov-20

SANTANDER

Cuesta, 2 4º Dcha.

Spain

1985

132,231(72,025)

60,207-13-Nov-20

SEBASTIAN

Fuenterrabía, 2 2º D

Spain

1975

68,460(47,455)

21,005-

10-Sep-20

SEVILLA

Plaza Nueva, 8 Garaj. 61

Spain

1971

6,842

(4,905)

1,938-

17-Nov-20

SEVILLA

Plaza Nueva, 8 Garajes

Spain

1973

32,699(23,438)

9,261-

17-Nov-20

TARRAGONA

Rambla Nova, 76 1º 2

Spain

1976

110,509(74,502)

36,007-17-Nov-20

VIGO

Uruguay, 2 2º

Spain

1967

205,884(164,708)

41,176-13-Nov-20

VITORIA

Manuel Iradier, 24 L-1

Spain

1986

71,875(38,231)

33,644-13-Nov-20

ZARAGOZA

Plaza Salamero, 14 3º B

Spain

1975

116,558(79,048)

37,510-17-Nov-20

ZARAGOZA

Coso, 98-100 7º 6

Spain

1972

41,409(31,759)9,650-

13-Nov-20

GENOVAVia di Sottoripa 1/A

Italy

1991

249,333(58,923)

190,410(45,700)

16-Nov-20

PORDENONE

Via della Colonna 2

Italy

1985

340,000(86,178)

253,822(19,253)

16-Nov-20

ROMA

Via Padre Semeria 29

Italy

1985

176,406(29,952)

146,454-

16-Nov-20

UDINE

Via Manzini 8-9

Italy

1992

184,416(48,458)

135,958(50,202)16-Nov-20

7,141,756(4,431,296)

2,710,460(115,156)

Total Investment properties