Annual Report 2019

Directors’ Report 2019

Our Staff
Victor Correra

Vera Duraes

Patrick Campbell

Niamh Derivan

Gerard Coffey

Nigel Mahon

Chris Denham

Cillian O’Dowd

Michelle-Yang Qiu

Imran Khan

Gauri Grover

Tilen Mihelič

Kerri Smyth

Sergio Maizza

Rachel McCormac

Ruth VallenduukDavid Whelan

Brendan O’Connell

Patrick De Almeida

Catherine Roche

Gonzalo Stefanini

Barbara Jankovic

Gregori Guinalli Pereira

Ludovica Terry

Daniel Stausberg

Darryl Conlan

Antoine Lemonnier

Damian Mingorance

Mario Ricciardi

Sarah Barry

Page 2

Atradius Reinsurance DAC
Directors’ Report and Audited Financial Statements
Year ended 31 December 2019

Registered No: 276690
VAT No: 8276690Q
Reinsurance Licence No: C38084
Page 1

Directors’ Report 2019

Contents

Contents

Directors 				

3Directors’ Report

4

				

Directors’ Responsibilities Statement			8		Independent Auditors’ Report

Profit and Loss Account

		

9

			

15

Balance Sheet 						

18Statement of Comprehensive Income

21

Statement of Changes in Equity

		

		

21

Notes to the Financial Statements 		

22

Other Information

56

Page 2				Directors
Non-Executive Directors

Independent Non-Executive Directors

Executive Directors

Daniel Stausberg
Managing Director(German)Niamh Derivan
Finance Director(Irish)Conor Molloy(Irish)Marc Henstridge(British)Appointed
April 3rd, 2019

Antonio Rubio(Spanish)Appointed
June 2nd, 2019

Mary Brennan(Irish)Non-Executive Directors

David Capdevila
Chairman of the Board(Spanish)
Resigned
December 16th, 2019

Page 3

Directors’ Report 2019

Directors’ Report

The directors present their annual report and the audited
financial statements for the year ended 31 December 2019.
Principal activity and review of the business
Atradius Reinsurance DAC (“Atradius Re”) is a leading market
reinsurer providing capacity to primary insurance companies
in credit and bonding insurance.
Atradius Re currently assumes business from 69 countries,
on all continents, maintaining a balanced diversity within
the portfolio. The underlying third party business consists ofaround 61% credit insurance and 39% bonding, based on premium volume. The business is underwritten by a multilingual,highly trained and experienced, international team of underwriters at Atradius Re’s offices in Dublin, Ireland.

Page 4

Atradius Re has created long-standing relationships with
its clients and specialist brokers. The quality of these client
and broker relationships is underscored by the Company’s
unique offering: combining the Atradius Group’s skills in the
primary underwriting of credit insurance and bonding risks
with its own distinctive approach and expertise in structuring reinsurance solutions. In this way Atradius Re can anticipate and respond to its clients’ specific and changing needs.
It continues to evolve and succeed in the face of increasing
competition and is one of only very few reinsurers to havethe capacity to re-underwrite. Those services create a very
distinctive added value to its clients. Moreover, because it cancross-promote and thus provide an evolving portfolio of additional expert services, Atradius Re is widely acknowledged toDirectors’ Report 2019

play an important role in the international development andgrowth of the credit and bonding insurance industry, particularly in emerging markets. The Company is an active memberof and contributor to ICISA, PASA, and the Aman Union.
The Company is authorised and regulated by the Central Bankof Ireland and is authorised to conduct reinsurance businessin the EU internal market in accordance with the provisions of
the European Union (Insurance and Reinsurance) regulations,2015. It is authorised to carry on the business of non-life reinsurance in Ireland and in other jurisdictions, subject to complying with any requirements in those other jurisdictions. It islicensed and/or registered individually in a number of foreign
jurisdictions including Argentina, Bolivia, Brazil, Chile, China,
Colombia, Ecuador, Guatemala, India, Mexico, Paraguay, theRepublic of Panama, and Venezuela.
Atradius Reinsurance DAC (“Atradius Re”), based in Dublin,
Ireland, is a subsidiary of Atradius Investments Limited, also
based in Dublin, Ireland, which is a subsidiary of Atradius N.V.,
a company incorporated in the Netherlands. Atradius N.V.’s
ultimate parent is Grupo Catalana Occidente, S.A, a company
incorporated and listed in Spain.

Third party reinsurance revenue for 2019, of EUR 140.2
million, has increased from EUR 131.4 million in 2018. This
increase is due to both new business and increased shareson exisiting businesss. The company continues to maintain aconservative, forward looking underwriting approach, with anemphasis on increasing profitability thresholds over the cycle.
The success of this approach is reflected in a further reduction
in claims costs, during 2019.
The Company’s prudent investment portfolio continues tobe impacted by the current difficult environment, with low
or negative interest rates and volatile equity markets. The
Company’s investment strategy remains on course, with afocus on preserving capital to avoid large losses on the investment portfolio.
No dividend is expected to be paid, during 2020, to theCompany’s immediate parent company, Atradius Investments
Limited (2019: nil).
The Company’s key objective and long term strategy
includes secured net profits, sustainable growth and a strong
capital position.

Profit for the year and future developments

OutlookIn 2019, Atradius Re once more achieved positive results,
with a profit after tax of EUR 21.3 million. The profit and loss
account for the year ended December 31, 2019, can be seen
on pages 14 and 15.

The economic outlook for 2020 is one of moderating global
growth, with growth expected to decelerate further to 2.3%.
The continued uncertainty from trade policies is compoundedby the negative effects from the spread of the coronavirus,
which has been affecting global supply chains year to date.

KEY PERFORMANCE INDICATORSGroup reinsurance revenue

2019

2018

€’000

€’000

374,011355,508

Third party reinsurance revenue

140,218

131,364

Total Revenue

514,229

486,872

Gross Claims ratio %

47%

48%

Gross Expenses and commissions ratio %

45%

44%

Gross Combined operating Ratio %

92%

92%

Total Assets

1,582,736

1,471,099

Total Liabilities

908,055

836,773

During 2019, the Company’s total revenue, or premium
earned during the year, increased from EUR 486.9 million to
EUR 514.2 million. The claims ratio has reduced from 48%
to 47% and the commissions and direct operating expenses
ratio has increased from 44% to 45%, resulting in a stablecombined ratio of 92%.

The full impact of Brexit is still uncertain, and indeed theimpact of the coronavirus, but Atradius Re and the wider
Atradius group continue to monitor the risks they may impose
and are well prepared for various scenarios, and will continue
to support customers who may be affected.
Atradius Re aims to continue to be a reliable business partner
for all of our customers, steering them away from risks andtowards opportunities, where possible, and enabling tradeand managing risks on their behalf.
As well as this support for our customers, we will continue
to focus on our own business to ensure we maintainour strong capital position in order to withstand financial
stress, meet our financial obligations and ultimately deliver
shareholder value.

Reinsurance revenue from the Atradius Group grew
by 5.2% (2018: 2.0%). This growth is as a result offavourable portfolio development in most countries
and a record high customer retention level of 94.3%.

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Directors’ Report 2019

Credit Rating
In 2019, the Atradius Group had credit ratings from A.M. Bestand Moody’s.
A.M. Best rates the key operating entities of the AtradiusGroup, which includes Atradius Reinsurance DAC, with afinancial strength rating of ‘A excellent, outlook stable’ andMoody’s with ‘A2, Outlook Stable’.
These ratings are a relection of the the Atradius Group being
financially strong and geographically well diversified, with asolid growth and risk profile, and a strong competitive position within the global trade credit insurance market.

business conduct and actions. The individual compliance codes
address specific compliance areas in more detail and set out
detailed compliance requirements that must be met acrossthe Company and which must be included in existing businessprocedures. For the monitoring and testing of effectivenessof these requirements, close alignment is sought with theactivities of the Operational Risk Management and Internal
Audit Units.
The Company is subject to the Central Bank of Ireland
Corporate Governance Requirements for Insurance
Undertakings 2015, but does not fall in scope of the additional
requirements for major institutions. Atradius Re has established a separate Audit Committee and Risk Committee.
Directors’ Compliance Statement

Risk management
As a global reinsurance company, Atradius Re is exposed
to many and varied risks linked both to the nature of ourbusiness and to the external environment.
The risks to which the Company is exposed could materially affect our business, the results of our operations and ourfinancial condition. Our risk management framework has
been developed to identify, assess and manage these risks,and ensure that all risks assumed are in line with the risk
appetite of the Company.
The Company has classified its risks as insurance, financial
and operational. Insurance risks are the risks of financial loss
as a direct result of providing reinsurance; these are predominantly arising from the risk of non-payment by a buyer
covered by a policy (credit reinsurance) or the risk of non-performance of a customer (bonding reinsurance). Financial risksarise out of developments in financial markets and with counterparties – including market risk, credit risk and liquidity risk.
Operational risk is the risks of direct or indirect losses resulting from human error, inadequate or failed internal processes,
systems or external events – and includes the risk of fraud.

The Directors are responsible for securing the Company’s
compliance with its relevant obligations and confirm thatthe following have been done:• the drawing up of a compliance policy statement settingout the Company’s policies that, in the opinion of the
Directors, are appropriate for the Company regarding
compliance by the Company with its relevant obligations;• the putting in place of appropriate arrangements or
structures that are, in the Directors’ opinion, designed tosecure material compliance with the Company’s relevant
obligations; and• the conduct of a review of such arrangements or structuresduring the relevant financial year.

Capital Management
The Company’s strength is evidenced by its strong and growing capital base with capital and reserves at the end of 2019of EUR 675 million, increased from EUR 634 million at theend of 2018.

We refer to a description of the Company’s main risks anduncertainties, and how these are managed, to note 3, Risk
and Capital Management, in the financial statements.

The Company was in compliance with its regulatory capitalrequirements throughout the year.

Compliance Management

Directors, secretary and their interests

Our compliance practices support our business, our reputationand our integrity. These elements are of importance to ourcustomers, suppliers, staff and other stakeholders. Complying
with relevant laws, rules and regulations and maintaining ahigh standard in terms of ethics and integrity, leads to lower
operational risk and more stable business processes. The
Atradius code of conduct outlines the basic corporate, legal
and ethical compliance principles and guidelines that apply to
all employees and that govern operations and its employees’

The Directors who served during the financial period
and the present directors of the Company are listed on
page 3. The Directors and secretary had no interests in theshares of the Company or any other group undertakings as at
31 December 2019 and 2018. The Directors are not required
to retire by rotation.

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Directors’ Report 2019

Creditor payment policy

Going Concern

It is the Company’s policy to agree with suppliers’ terms oftrade on an individual basis at the time orders are placed.
Payments are then made in accordance with contractual obligations. The payment policy applies to all payments to creditors for revenue and capital supplies of goods and services
without exception.

The Directors continue to adopt the going concern basis ofaccounting in preparing the annual financial statements, inthe reasonable expectation that the company has adequate
resources to continue in operational existence for the foreseeable future.

Political Donation
Transactions involving Directors
There were no contracts or arrangements of any significance in relation to the business of the Company in which
the Directors had any interest, as defined by the Companies
Act 2014, at any time during the financial year ended 31
December 2019.

Accounting Records
In accordance with sections 281 to 285 of the Companies
Act, 2014, the measures taken by the directors tosecure compliance with the Company’s obligation to keep
proper accounting records are the use of appropriate
systems and procedures and employment of competentpersons. The accounting records are kept at the registeredoffice of the Company.

Statement of Relevant Audit information
The Directors at the time when the Directors’ report isapproved have confirmed that:

There were no political donations during the financial year,
2019 (2018: Nil).

Events after the reporting date
There have been no significant events affecting the Company
since the reporting date, which would require adjustment ordisclosure in the financial statements.

On behalf of the Board

Daniel Stausberg			
Niamh Derivan
Managing Director
Finance Director
9 March, 2020

• so far as that the Directors are aware, there is no relevant
audit information of which the Company’s auditors areunaware; and• that the Directors have taken all the steps that they ought
to have taken as a director in order to be aware of any relevant audit information and to establish that the Company’s
auditors are aware of that information.

Auditors Note
In accordance with Section 383 (1) of the Companies Act,
2014, the independent auditors, PricewaterhouseCoopers,
Chartered Accountants and Statutory Audit Firm,
have expressed their willingness to continue in office.

Page 7

Directors’ Report 2019

Directors’ Responsibilities
Statement
The directors are responsible for preparing the directors’
report and the financial statements in accordance with theCompanies Act 2014 and the applicable regulations.
Irish company law requires the directors to prepare financial statements for each financial year. Under the law, the directors
have elected to prepare the financial statements in accordance with FRS 102 The Financial Reporting Standard applicable in
the UK and Republic of Ireland and FRS 103 Insurance Contracts (“relevant financial reporting framework”). Under company
law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of theassets, liabilities and financial position of the company as at the financial year end date and of the profit or loss of the company
for the financial year and otherwise comply with the Companies Act 2014.
In preparing those financial statements, the directors are required to:• select suitable accounting policies for the Company Financial Statements and then apply them consistently;• make judgements and estimates that are reasonable and prudent;• state whether the financial statements have been prepared in accordance with the applicable accounting standards, identify
those standards, and note the effect and the reasons for any material departure from those standards; and• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company willcontinue in business.
The directors are responsible for ensuring that the company keeps or causes to be kept adequate accounting records whichcorrectly explain and record the transactions of the company, enable at any time the assets, liabilities, financial position andprofit or loss of the company to be determined with reasonable accuracy, enable them to ensure that the financial statements
and directors’ report comply with the Companies Act 2014 and enable the financial statements to be audited.
They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.

Page 8

Directors’ Report 2019

Independent Auditors’
ReportTo the members of Atradius Reinsurance DAC

Report on the audit of the financial statements
In our opinion, Atradius Reinsurance DAC’s financial
statements:• give a true and fair view of the company’s assets, liabilities
and financial position as at 31 December 2019 and of its
profit for the year then ended;• have been properly prepared in accordance with Generally
Accepted Accounting Practice in Ireland (accounting standards issued by the Financial Reporting Council of the UK,
including Financial Reporting Standard 102 “The Financial
Reporting Standard applicable in the UK and Republic of
Ireland” and Irish law); and• have been properly prepared in accordance with therequirements of the Companies Act 2014.
We have audited the financial statements, included
within the Directors Report and Audited Financial Statements,
which comprise:• the Balance Sheet as at 31 December 2019;• the Profit and Loss Account for the year then ended;• the Statement of Comprehensive Income for the year
then ended;

Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (Ireland) (“ISAs (Ireland)”) and applicable law.
Our responsibilities under ISAs (Ireland) are further describedin the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Independence
We remained independent of the company in accordance withthe ethical requirements that are relevant to our audit of thefinancial statements in Ireland, which includes IAASA’s EthicalStandard as applicable to public interest entities, and we havefulfilled our other ethical responsibilities in accordance withthese requirements.
To the best of our knowledge and belief, we declare that
non-audit services prohibited by IAASA’s Ethical Standard
were not provided to the company.
Other than those disclosed in note 11 to the financial statements, we have provided no non-audit services to the company in the period from 1 January 2019 to 31 December 2019.

• the Statement of Changes in Equity for the year thenended; and• the notes to the financial statements, which include a
description of the significant accounting policies.
Our opinion is consistent with our reporting to the
Audit Committee.

Page 9Independent Auditors’ Report 2019

Our audit approach

Key audit matter

Materiality

Valuation of claims outstanding• €5,400,000 (2018: 4,880,000)

Refer to Note 1 (Accounting Policies) and notes 2, 3 and 6 to
the financial statements• Based on 1% of gross written premium.
Audit scope• We performed a full scope audit of the company’s financial
statements, based on materiality levels.
Key audit matters• Valuation of claims outstanding.
• Estimation of gross premiums earned.
The scope of our audit
As part of designing our audit, we determined materiality andassessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors
made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions
and considering future events that are inherently uncertain. As
in all of our audits we also addressed the risk of management
override of internal controls, including evaluating whether
there was evidence of bias by the directors that represented
a risk of material misstatement due to fraud.

The claims outstanding provision, which arises from bothgroup and third party business is the company’s largest liability and its valuation involves considerable judgement.
The group business claims outstanding provision including
incurred but not reported claims are based on the company’s
share of the technical provisions as reported by the cedinggroup company.
For third party business, reserves are determined on an individual contract basis based on an estimated ultimate loss
ratios which are regularly reviewed for development. Where
known large events have occurred, specific IBNR may beestablished for these events.
The third party business reserves are also reviewed on an
overall basis by applying standard actuarial techniques, which
involve key assumptions, to determine the adequacy of thebooked claims outstanding provision. The key assumptions
underlying these calculations are reporting delays, development patterns and loss ratios.
As a result, the valuation of claims outstanding was a key areaof focus.
Estimation of gross premiums earned

Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the auditof the financial statements of the current period and include
the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors,
including those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; anddirecting the efforts of the engagement team. These matters,
and any comments we make on the results of our procedures
thereon, were addressed in the context of our audit of thefinancial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on thesematters. This is not a complete list of all risks identified by
our audit.

Page 10

Refer to Note 1 (Accounting Policies) and notes 2, 4 and 16 to
the financial statements.
Premiums written relates to business incepted during theperiod, together with any difference between booked premiums for prior years and those previously accrued, and include
estimates of premiums due but not yet receivable or notified
to the Company, less an allowance for cancellations.
Group premium income is based on the estimate of premiumincome reported by the ceding group companies each year.
For third party business, the company writes risk attachingbusiness where the amount of premium to be written in individual contracts is not known with certainty at the start ofthe contract. An estimate of the expected premium income ismade at the beginning of each third party business contract
which is then earned over the duration of the contract basedon an actuarial risk earnings model incorporating actuarial
statistical techniques to evaluate the appropriate earned premium income. Premium estimates and related earned premium income are reviewed by reference to reports received
from the third party companies to determine whether premium adjustments are necessary.

Independent Auditors’ Report 2019

Due to the judgement and estimates involved in the estimation of gross written and earned premium income, this was a
key area of focus

How our audit addressed the key audit matter
We evaluated the actuarial methodologies and key assumptions with the assistance of our actuarial specialists. This
involved:• assessing the methodologies and assumptions underpinning management’s actuarial valuations for both groupand third party business; and• carrying out our own independent valuations for the majorclasses of third party business.
Our work included an assessment of management’s analysisof the output of the calculations from the actuarial models.
For group business, this included a recalculation of the shareof claims outstanding on business ceded to the Company having regard for management’s reconciliations to the amounts
recorded in the financial statements of the group companies.
We tested the controls over claims processing and payment.
We tested the reconciliation of the data used in the actuarialmodels to the underlying systems and reconciled the actuarial
valuation outputs to the financial statements.
We concluded that the methodologies and assumptions
adopted were appropriate and the claims outstanding provision was calculated in accordance with these.
We gained an understanding of the process for booking
premium income for group business and reconciled theamounts recorded by the Company, on sample basis, to theinformation recorded in the financial records for the groupceding companies.
For third party business:• we tested the controls over the initial booking of the premium incomes estimates on individual contracts and thesubsequent review and adjustment of premium income
estimates;• for a sample of third party contracts, we tested the key
assumptions underlying the premium estimates to theoriginal contract treaties and/or to subsequent reported
premium amounts from third party statements;• with the assistance of our actuarial specialists, we considered the appropriateness of the earning patterns applied tothe major classes of business for credit and surety.
• No material exceptions were noted as a result of
these procedures.

How we tailored the audit scope
We tailored the scope of our audit to ensure that we
performed enough work to be able to give an opinion on
the financial statements as a whole, taking into account thestructure of the company, the accounting processes andcontrols, and the industry in which it operates.
Materiality
The scope of our audit was influenced by our application ofmateriality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped
us to determine the scope of our audit and the nature, timing
and extent of our audit procedures on the individual financial
statement line items and disclosures and in evaluating theeffect of misstatements, both individually and in aggregate
on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality€5,400,000 (2018: 4,880,000).

How wedetermined it

1% of gross written premium.

Rationale forbenchmark applied

We believe that gross written premium is a primary measure usedby shareholders in assessing theperformance of the entity, andis a generally accepted auditing
benchmark.

We agreed with the Audit Committee that we would
report to them misstatements identified during our audit
above 270,000 (2018: 244,000) as well as misstatements
below that amount that, in our view, warranted reporting for
qualitative reasons.

Conclusions relating to going concern
We have nothing to report in respect of the following
matters in relation to which ISAs (Ireland) require us to report
to you where:• the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or• the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant doubt about the company’s ability to continue toadopt the going concern basis of accounting for a period
Page 11Independent Auditors’ Report 2019of at least twelve months from the date when the financial
statements are authorised for issue.
However, because not all future events or conditions canbe predicted, this statement is not a guarantee as to thecompany’s ability to continue as a going concern.

Reporting on other information
The other information comprises all of the information in the
Directors Report and Audited Financial Statements other than
the financial statements and our auditors’ report thereon.
The directors are responsible for the other information. Our
opinion on the financial statements does not cover the otherinformation and, accordingly, we do not express an audit
opinion or, except to the extent otherwise explicitly stated inthis report, any form of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doingso, consider whether the other information is materiallyinconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially
misstated. If we identify an apparent material inconsistency
or material misstatement, we are required to perform procedures to conclude whether there is a material misstatementof the financial statements or a material misstatement of theother information. If, based on the work we have performed,
we conclude that there is a material misstatement of thisother information, we are required to report that fact. We havenothing to report based on these responsibilities.
With respect to the Directors’ Report, we also considered
whether the disclosures required by the Companies Act 2014
have been included.
Based on the responsibilities described above and our work
undertaken in the course of the audit, ISAs (Ireland) and theCompanies Act 2014 require us to also report certain opinions
and matters as described below:• In our opinion, based on the work undertaken in the courseof the audit, the information given in the Directors’ Reportfor the year ended 31 December 2019 is consistent withthe financial statements and has been prepared in accordance with applicable legal requirements.

Responsibilities for the financial statements
and the audit
Responsibilities of the directors for the financial
statements
As explained more fully in the Directors’ Responsibilities
Statement set out on page 8, the directors are responsible
for the preparation of the financial statements in accordancewith the applicable framework and for being satisfied thatthey give a true and fair view.
The directors are also responsible for such internal control
as they determine is necessary to enable the preparation offinancial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the company’s ability to continue
as a going concern, disclosing as applicable, matters related togoing concern and using the going concern basis of accounting unless the directors either intend to liquidate the company
or to cease operations or have no realistic alternative but todo so.

Auditors’ responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and toissue an auditors’ report that includes our opinion. Reasonableassurance is a high level of assurance, but is not a guaranteethat an audit conducted in accordance with ISAs (Ireland)
will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the IAASA website at:https://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8fa98202dc9c3a/Description_of_auditors_responsibilities_for_audit.pdf
This description forms part of our auditors’ report.

• Based on our knowledge and understanding of the company and its environment obtained in the course of theaudit, we have not identified any material misstatementsin the Directors’ Report.

Page 12Independent Auditors’ Report 2019

Use of this report

Appointment

This report, including the opinions, has been prepared for andonly for the company’s members as a body in accordance withsection 391 of the Companies Act 2014 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person towhom this report is shown or into whose hands it may comesave where expressly agreed by our prior consent in writing.

We were appointed by the directors on 18 June 2018 to audit
the financial statements for the year ended 31 December
2018 and subsequent financial periods. The period of total
uninterrupted engagement is 2 years, covering the years
ended 31 December 2018 to 31 December 2019.

Other required reporting
Companies Act 2014 opinions on other matters• We have obtained all the information and explanations
which we consider necessary for the purposes of our audit.

Padraig Osborne
for and on behalf of PricewaterhouseCoopers
Chartered Accountants and Statutory Audit Firm
Dublin11 March 2020

• In our opinion the accounting records of the company were
sufficient to permit the financial statements to be readily
and properly audited.
• The financial statements are in agreement with theaccounting records.

Companies Act 2014 exception reporting
Directors’ remuneration and transactions
Under the Companies Act 2014 we are required to report toyou if, in our opinion, the disclosures of directors’ remuneration and transactions specified by sections 305 to 312 of thatAct have not been made. We have no exceptions to reportarising from this responsibility.

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Independent Auditors’ Report 2019

Page 14

Directors’ Report 2019

Profit & Loss AccountFinancial Year Ended 31 December 2019

Page 15

Profit & Loss Account - Financial Year Ended 31 December 2019

Profit & Loss Account
TECHNICAL ACCOUNTGENERAL REINSURANCE BUSINESS

Note

2019
€'000

2018
€'000

Gross premiums written

4541,281

487,918

Unearned premiums

7(27,052)(1,046)Gross premiums earned

4514,229

486,872(59,660)(49,460)

1,922

(313)

Outward reinsurance premiums earned(57,738)(49,773)

Net earned premiums

456,491

437,099

Total Technical Income

456,491

437,099

Gross claims paid

224,500

202,659

Reinsurers' share(16,608)(20,530)

Net claims paid

207,892

182,129

Outward reinsurance premiums
Unearned outward reinsurance premiums

7

Gross change in the provision for claims

6

16,31830,731

Reinsurers' share

6(9,788)112

Net change in the provision for claims

6,530

30,843Claims incurred, net of reinsurance

214,422

212,972

218,193

205,147

Total Technical Charges

432,615

418,119

Balance on the Technical Account for General Business

23,87618,980Net operating expenses

Page 16

8

Profit & Loss Account - Financial Year Ended 31 December 2019

Profit & Loss Account
2019
€'000

2018
€'000

23,87618,980

6,562

6,258

- gain on the realisation of investments

433

2,634

- loss on the realisation of investments(365)(2,020)- exchange gains/(losses)

1,394

1,702

- interest on subordinated loan

(3,750)(3,750)- investment administration(1,296)(1,104)- impairment of Shares(2,482)(344)

Profit on ordinary activities before tax

24,372

22,356(3,039)(2,805)

21,333

19,551NON-TECHNICAL ACCOUNT

Note

Balance on the Technical Account for General Reinsurance Business

Investment income

5- income from investments

Other charges and expenses

Tax on profit on ordinary activities
Profit on ordinary activities after tax

14

All of the above amounts derive from continuing operations.
The accompanying notes form an integral part of the financial statements.

Page 17

Balance Sheet - As at 31 December 2019

Balance Sheet
Financial Year Ended 31 December 2019

Page 18

Balance Sheet - As at 31 December 2019

Balance SheetASSETS

Note

2019
€'000

2018
€'000

15

1,047,566

1,012,501

41,89324,655

1,089,459

1,037,156

Investments
Financial investments
Deposits with ceding undertakings

Reinsurers' share of technical provisions
Provision for unearned premium

7

26,027

23,907

Claims outstanding

6

64,35953,681

90,386

77,588

Debtors
Debtors arising out of reinsurance operations

16

196,707

188,812

Tangible assets

17

67

95

86,03973,318109,923

81,181

1,693

4,473

111,616

85,654

8,462

8,476

1,582,736

1,471,099

Deferred Acquisition Costs

Other assets
Cash at bank and in hand
Other assets

18

Prepayments and accrued income
Accrued interest and commission
Total assets

Page 19

Balance Sheet - As at 31 December 2019

Balance Sheet
2019
€'000

2018
€'000

635

635

Capital contribution

279,054

279,054

Revaluation reserve

19,065

43

Profit and loss account375,927

354,59422

674,681634,326

24

75,00075,000

Provision for unearned premium

7

221,926

191,329

Claims outstanding

6

497,971479,304

719,897

670,633

42

266

6,198

5,896

Liabilities & Shareholders’ Funds

Note

Capital and reserves
Called up share capital presented as equity

Subordinated Loan
Technical provisions

Deposits withheld from reinsurers
Creditors
Unearned Reinsurance Commission
Creditors arising out of reinsurance operations

19

103,104

81,104

Other creditors

20

3,814

3,964

113,116

90,964

1,582,736

1,471,099

Total liabilities and shareholders’ funds
The accompanying notes form an integral part of the financial statements.
On behalf of the Board

Daniel Stausberg			
Managing Director
9 March, 2020

Page 20

Niamh Derivan
Finance Director

Statement of Comprehensive Income & Changes in Equity 2019

Statement Of Comprehensive Income
Note

2019
€'000

2018
€'000

21,333

19,551

Net fair value gains/(losses) on available-for-sale financial investments

21,739(13,931)

Income tax relating to items that may be reclassified(2,717)

1,741

19,022(12,190)

40,355

7,361

Results for the financial year
Other comprehensive income
Items that may be subsequently reclassified to the income statement

Other comprehensive income for the financial year, net of tax

22

Total comprehensive income for the financial year attributable to the ownersof the company

Statement of Changes in Equity
Share
Capital€’000

CapitalContribution€’000

Revaluation
Reserve€’000

Profit & Loss
Account
€’000

Total
€’000

As at 31 December 2017

635

279,054

12,233335,043626,965

Profit for the financial year

-

-

-

19,551

19,551

OCI--(12,190)-(12,190)635

279,05443354,594

634,326

21,333

21,333As at 31 December 2018
Profit for the financial year
OCI
As at 31 December 2019--19,022-

19,022635

279,054

19,065375,927

674,681

Page 21

Directors’ Report 2019

Notes to the
Financial Statements
1 Accounting Policies
General information
Atradius Reinsurance DAC (“the Company”) is a Company incorporated in the Republic of Ireland authorised by the Central
Bank of Ireland to carry out credit and bond reinsurance business. The company registration number is 276690. The registeredoffice is 2nd Floor, La Touche House, International Financial Services Centre, Dublin D01 R5P3. The nature of the company’s
operations and its principle activities are set out in the directors’ report on pages 4 to 8.
The principle accounting policies applied in the preparation of these financial statements are set out below. These policies havebeen consistently applied to all financial years presented unless otherwise stated.

Basis of preparation
The financial statements have been prepared on a going concern basis under the historical cost convention, modified to include
certain items at fair value, and in accordance with accounting standards issued by the UK Financial Reporting Council (FRS102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ and FRS 103 ‘Insurance Contracts’). The
company is also subject to the requirements of the Companies Acts 2014 and the European Union (Insurance Undertakings:
Financial Statements) Regulations, 2015.
The Company’s business activities, together with the factors likely to affect its future development, performance and position
are set out in the Business Review which forms part of the directors’ report.
These financial statements represent the results of the Company only. The Company is consolidated into the Group financial
statements of its ultimate parent company, Grupo Catalana Occidente, S.A, incorporated in Spain.
Atradius Reinsurance DAC is a member of a group where the parent prepares publicly available consolidated financial statements which are intended to give a true and fair view. For this reason the Company qualifies to avail of the exemption under
FRS 102 section 1.12, from the obligation to prepare a Statement of Cash flows.

Foreign currencies
The presentation currency of the Company is Euro. The financial statements of the company are presented in the currency ofthe primary economic environment in which it operates (its functional currency). The financial statements are presented inthousands of Euro (€).
Transactions denominated in foreign currencies are translated into Euro (functional currency) at the rates ruling at the datesof the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated
at the rates ruling at that date. These translation differences are dealt with in the profit and loss account.

Page 22

Notes to the Financial Statements

Reinsurance Classification
The Company’s contracts are classified at inception, for accounting purposes, as reinsurance contracts. A contract that is classified as a reinsurance contract remains so such until all rights and obligations under the contract are extinguished or expire.
Reinsurance contracts are contracts under which certain insurance risks of the primary insurer are agreed to be reinsured by
the reinsurer in accordance with the contractual terms of the reinsurance contract.

Revenue Recognition
Premiums
Premiums written relate to business incepted during the financial period, together with any difference between booked premiums for prior financial years and those previously accrued, and include estimates of premiums due but not yet receivable
or notified to the company, less an allowance for cancellations.
Unearned premiums represent the proportion of premiums written in the financial year that relate to unexpired terms ofpolicies in force at the balance sheet date, calculated on a time apportioned basis.
Interest income
Interest income is recognised by applying the effective interest rate, except for short term receivables when the recognition
would be immaterial.
Dividend income
Dividend income is recognised in the profit and loss account on the date that the Company’s right to receive payment
is established.

Taxation
Current tax, including Irish corporation tax and foreign tax, is provided on the Company’s taxable profits, at amounts expected
to be paid (or recovered) using the tax rates and laws that have been enacted or substantially enacted by the balance sheet
date. The tax expense represents the sum of the tax currently payable and deferred tax and is recognised in the profit and loss
account except to the extent that it relates to items recognised in other comprehensive income, in which case it is recognisedin other comprehensive income.
The tax currently payable is based on taxable profit for the financial year. Taxable profit differs from total comprehensive
income as reported in the financial statements because it excludes items of income or expense that are deductible in otherfinancial years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.
Provision is made at the rates expected to apply when the timing differences reverse. Timing differences are differences
between the Company’s taxable profits and its results as stated in the financial statements that arise from the inclusion ofgains and losses in taxable profits in periods different from those in which they are recognised in the financial statements. A
net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it
can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

Tangible fixed assets
Furniture and equipment are stated at the lower of historical cost less accumulated depreciation or the net realisable value.
Depreciation is calculated using the straight-line method to allocate their costs over the estimated useful lives (between 5
and 10 years). The assets’ residual values and useful lives are reviewed at each balance sheet date and adjusted if appropriate.
Gains and losses on disposals are determined by comparing proceeds with carrying amounts. These are included in the profit
and loss account.

Page 23

Notes to the Financial Statements

Retirement benefit costs
The Company participates in a defined contribution pension scheme. The assets of the scheme are held separately from thoseof the company in independently administered funds.

Financial Assets and Liabilities
The Company’s financial assets comprise of available for sale non derivative debt and equity financial investments, cash andcash equivalents and receivables.

Recognition of financial assets and liabilities
Financial assets and liabilities are recognised only when the Company enters into the contractual provisions of the instrument
i.e. at the time the Company has contractual rights or obligations.

Initial and subsequent measurement
Available for sale financial investments
Financial investments are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition. Realised gains and losses arising from changes in the fair value of these investments are presented in the non-technicalaccount in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of financial investments classified as available-for-sale are recognised in other comprehensive income net of tax. When financial investments
classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the profit and loss
account as net gains or losses on financial investments.
Receivables
Receivables (including deposits) are non-derivative financial investments with fixed or determinable payments that are notquoted on an active market. Receivables arising from reinsurance contracts and deposits withheld by ceding companies are alsoclassified in this category. They are initially recognised at fair value plus transaction costs and subsequently at amortised cost.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short term highly liquid investments thatare readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Fair Value of financial assets and liabilities
The estimated fair value of the Company’s financial assets and liabilities equals their carrying value. The fair values correspondwith the price, at our best estimate, that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Whenever possible, the fair values are based on quoted market
prices. If there is no quoted market price available, valuation techniques are used which are based where practicable on market
prices of comparable instruments or parameters from comparable active markets (market observable data). For a detailed
description of how the Company determines fair value, see Fair Value of Financial Assets and Liabilities under Financial Risk.

Derecognition of financial assets and liabilities
Financial investments are derecognised when the rights to receive cash flows from the financial investments have expired,or where the Company has transferred substantially all the risks and rewards of ownership. If the Company neither transfers
nor retains substantially all the risks and rewards of ownership of a financial investment and does not retain control overthe investment, it derecognises the financial investment. In transfers where control over the asset is retained, the Company
continues to recognise the asset to the extent of its continuing involvement. The extent of continuing involvement isdetermined by the extent to which the Company is exposed to changes in the value of the asset.

Page 24

Notes to the Financial Statements

Impairment of available-for-sale financial investments
The Company, through it’s particiapation in the Group Investment Committee (GIC), makes an assessment at the end of eachreporting period whether there is objective evidence that any available-for-sale financial investments are impaired.
Available-for-sale financial investments will be considered impaired and impairment losses will be incurred only if there is
objective evidence of impairment as a result of one or more events that have occured after the initial recognition of thesefinancial assets that have a negative impact on the estimated future cash flows of them and which can be reliably estimated.

Expenses
Net reinsurance 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 paid claims.
Net operating expenses
Net operating expenses comprise administrative expenses and commissions. Total administrative expenses are expenses
associated with selling and administrative activities (excluding commissions) after reallocation of claims handling expenses
to insurance claims.

LeasesRentals under operating leases are charged on a straight line basis over the lease term, even if the payments are not made onsuch a basis. Benefits received and receivable as an incentive to sign an operating lease are similarly spread on a straight-line
basis over the lease term.

Provisions
Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, itis probable that the company will be required to settle the obligation, and a reliable estimate can be made of the amount of
the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.
The Company recognises a provision for annual leave accrued by employees as a result of services rendered in the current
period, and which employees are entitled to carry forward and use within the next 12 months. The provision is measured as
the salary cost payable for the period of absence.

Reinsurance contracts
Claims incurred
Claims incurred comprise claims and related expenses paid in the year and changes in the provision for outstanding claims
incurred but not reported and related expenses, together with any other adjustments to claims in previous years. Where
applicable, deductions are made for salvage and other recoveries.
Acquisition costs
Acquisition costs which represent commission and other related expenses are deferred over the period in which the related
premiums are earned.

Page 25

Notes to the Financial Statements

Provisions for outstanding claims
Outstanding claims comprise provisions for the estimated cost of settling all claims, incurred up to but not paid, at the balance
sheet date whether reported or not, together with all related claims handling expenses. For group business these provisions,
including claims incurred but not reported (IBNR claims) are based on latest available cedant advices. For third party business,outstanding claims are based on latest available cedant advices with provisions for IBNR claims being estimated by reference
to loss ratio methodologies. Provisions are calculated gross of any reinsurance recoveries. A separate estimate is made of theamounts that will be recoverable from reinsurers based upon the gross provisions and having due regard to collectability.
Provisions for unearned premiums
The provision for unearned premiums represents that part of written premiums, gross of commission payable to intermediaries, that is estimated to be earned in subsequent periods. The change in the provision is recorded in the profit and loss accountto recognise revenue over the period of the risk.
Liability adequacy
At the end of each reporting period, a liability adequacy test is performed to ensure the overall adequacy of the total reinsurance contract liabilities, net of related deferred acquisition costs. In performing this test, current best estimates of futurecontractual cash flows and claims handling expenses are used. Any deficiency is immediately charged to the profit and loss
account by first writing down the related deferred acquisition costs and then by establishing a provision for losses arisingfrom the liability adequacy test.

Deferred acquisition costs
Deferred acquisition costs are expenses of the company that are incurred in connection with the acquisition of new insurance
policies or the renewal of existing policies. Deferred acquisition costs are amortised over the life of the reinsurance contracts
as the premium is earned. The amortisation is included in the operating expenses.

Reinsurance contracts (Outwards)
The Company enters into reinsurance contracts in the normal course of business in order to limit its potential for losses arisingfrom certain exposures. Outwards reinsurance premiums are accounted for in the same period as the related premiums forthe inwards reinsurance business being reinsured.
Reinsurance liabilities comprise premiums payable for outwards reinsurance contracts and are recognised as an expense
when due.
Reinsurance assets include balances due from reinsurance companies for paid and unpaid losses. Reinsurance assets aremeasured consistently with the amounts associated with the underlying insurance contract and in accordance with the termsof the reinsurance contract. Reinsurance is recorded as an asset unless a right of set-off exists, in which case the associatedliabilities are reduced to take account of reinsurance.
Reinsurance assets are subject to impairment testing and the carrying amount is reduced to its recoverable amount. The
impairment loss is recognised as an expense in the profit and loss account. The asset is impaired if objective evidence isavailable to suggest that it is probable that the Company will not be able to collect the amounts due from reinsurers. Gains orlosses on buying reinsurance are recognised in income at the date of purchase and are not amortised.

Subordinated Loan
The subordinated loan is recognised initially at fair value, net of transaction costs incurred. The subordinated loan is subsequently stated at amortised cost. The difference between the proceeds (net of transaction costs) and the redemption value isrecognised in the profit and loss account over the fixed period of the debt during which the interest is fixed using the effective
interest method. Interest payable is reported under other liabilities.

Page 26

Notes to the Financial Statements

2 Critical accounting estimates and judgments inapplying accounting policies
The Company makes estimates and assumptions that affect the reported assets and liabilities. Estimates and judgements arecontinually evaluated. They are based on historical experience and other factors including expectations of future events thatare believed to be reasonable under the circumstances. The most significant areas for which management is required to makejudgements and estimates that affect reported amounts and disclosures are detailed below.
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, thathave a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year, are discussed below.

Valuations of liabilities of reinsurance contracts
For third party business, premium estimates and reserves are set on a contract to contract basis by the Company actuary inconsultation with the reinsurance underwriter. The underwriters estimate the premium income, ultimate loss ratio and ultimate
commission and brokerage costs. These values are then applied to an actuarial risk earnings model incorporating standard
actuarial statistical techniques to evaluate the appropriate earned income, reserves setting and costs basis for each reinsurance
contract. The performance of each reinsurance contract is regularly reviewed for past underwriting years performance anddevelopment and triangulation development to ensure reserves for that contract are maintained or adjusted as appropriate.
For group business, an IBNR estimate is calculated by applying loss frequency severity parameters to the volume of outstanding
insured shipments. Known claims under examination and threatening losses are also included.
Reserves are reviewed on a global basis by splitting the portfolio into homogenous parts and applying standard actuarial
triangulation techniques to review the overall reserve estimates for both group and third party business for adequacy. The
Company’s policy is to hold reserves on a global basis that represent a margin for uncertainty, or prudence margin, above thebest estimate.

Measurement of fair value
The Company measures some of its financial instruments at fair value for financial reporting purposes. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Company uses its
judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at theend of each reporting period.

Impairment of available-for-sale equity financial investments
The Company through its participation on the Atradius Group Investment committee determines that an available-for-sale
equity financial investment is impaired when there has been a significant or prolonged decline in the fair value below its cost.
This determination of what is significant or prolonged requires judgement. In making this judgement, several factors are evaluated including the normal volatility in share price, the financial health of the investment, industry and sector performance,changes in technology and operational and financing cash flows. Impairment may be appropriate when there is evidence ofdeterioration in the financial health of the investment, industry and sector performance, changes in technology, and financing
and operational cash flows.

Page 27

Notes to the Financial Statements

3 Risk & Capital Management
Risk management
As a global reinsurance provider, the Company recognises the importance of risk management. The Company has introduced
a strong governance and associated internal control system within the organisation. As part of the Atradius Group and basedon additional regulatory requirements, the Company continues to strengthen its risk management capabilities by broadening
risk management scope and enhancing the existing risk management tools.
The relationship between risk and capital is fundamental. Understanding how risk-taking consumes capital allows management to steer the Company and take strategic decisions based on risk. These decisions are increasingly being driven by theoutcome of the economic capital model. In addition, risk management and the relationship between risk and capital play acentral role in the regulatory regime, Solvency II, that is in force since 1 January, 2016.
The risk management and internal control framework
The risks to which Atradius Re is exposed could materially affect our business, the results of our operations and our financial
condition. Our risk management and internal control framework has been developed to identify, assess and manage theserisks, and thus to mitigate the possible negative impact on operations and financial results.
Risk Classification
The Company has classified its risks as insurance, financial and operational. Insurance risks are the risks of financial loss asa direct result of providing reinsurance. Financial risks are the risks associated with the balance sheet positions and include
market risk, credit risk and liquidity risk. Operational risks are the risks of direct or indirect losses resulting from inadequate
or failed internal processes, people, systems or external events.

Insurance risk
The Company accepts insurance risk through its insurance contracts where it assumes the risk of loss from organisations
that are directly subject to underlying loss. The Company is exposed to the uncertainty surrounding the timing, frequency andseverity of claims under these contracts.
Insurance risk is directly related to the nature of our business. Through credit reinsurance, we reinsure customers against therisk of non-payment of trade receivables. Through bonding reinsurance, we guarantee a beneficiary that our customers willmeet contractual, legal or tax obligations.
Reinsurance underwriting guidelines define the types of business Atradius Re is authorised to write, with specific guidelines
to type of product, capacity limit, types of exposure, term, and diversity of the underlying insurance ceded. There is particularattention given to ensure the diversity of the business from third party clients and that exposure to any one country, company,
or market is managed within agreed underwriting limits and capacity.
Reinsurance products, their sensitivity to insurance risk, mitigations and controls
The primary insurer writes traditional credit and/or bonding insurance and reports to Atradius Re the aggregate total potential exposure, including the list of insurance buyers over certain limits per the reinsurance agreement conditions. These arereviewed regularly to monitor insurance performance and buyer stability. The underwriters estimate the premium income,ultimate loss ratio and ultimate commission and brokerage costs. These values are then applied to an actuarial risk earnings
model to evaluate the appropriate earned income, reserves setting, and costs basis for each reinsurance contract. The reinsurance contract performance and Total Potential Exposure (TPE) values are reviewed within the control limits set by theunderwriting guidelines, economic capital requirements and regulatory solvency requirements. Any business that exceeds thestandard control limits requires specific committee review and approval, prior to commitment.
All reinsurance business assumed is reviewed regularly in detail for past underwriting years performance, triangulation development, individual buyer exposure development and aggregate total potential exposure management, market and country
exposure. Risk and policy limit setting is monitored to ensure credit quality and performance of the underlying insurance
products to reinsurance terms agreed with the client. Reserves supporting the underlying business are based on standard
Page 28

Notes to the Financial Statements

actuarial statistical models and an independent actuarial review of reserves is carried out, providing an independent best
estimate comparison to the Company’s reserves to support the business.
Insurance risk management tools
Atradius Re transfers a portion of its insurance risk to external reinsurers/retrocessionaires, through a number of reinsurance
arrangements that include quota share and excess of loss treaties. The reinsurance treaties are reviewed annually and it is
the Company’s policy to select only reinsurers that have a high quality standard of solvency/rating. The normal minimum
requirement is an ‘A’ level rating.

Concentration risk
Total Potential Exposure (“TPE”)
The Company is exposed to concentration risk in a number of ways: by ceding company, by country/region or by market. The
tables below illustrate the exposures at the end of 2019 and 2018 in terms of the sum of credit limits issued by our clients totheir policyholders. This is referred to as total potential exposure, or TPE.
TPE is an approximate upper boundary to real exposure, in the sense that limits issued by our clients to their policyholders do
not necessarily give rise to a credit risk at a specific point in time. The real outstanding exposure under limits to a policyholder
is not known in credit insurance. The ‘usage’ of limits is, on average, much smaller than the amount of the limit.
Exposures must be managed in order to monitor accumulations of risks across cedents and assess the potential risk of claims
occurring from the failure of individual companies (or a group of related companies). The Total Potential Exposure is composedof named risk (i.e. buyers that are clearly identified) and unnamed risk. Accumulation is monitored on the named risks as these
are a cedants largest risks.
For Credit reinsurance, the amount monitored is the maximum accumulation of credit limits issued by the ceding company totheir policyholders on any one buyer, or group depending on the treaty risk definition. For Bonding, the amount used is the
maximum accumulation of bonds issued by the ceding company to any one client.
By nature the portfolio diversification is high with a well-diversified geographical spread. As can be seen from the tables below,
our principal concentrations are in Europe, due mainly to Group business that we assume from Atradius Crédito y Caución S.A.
de Seguros y Reaseguros (“AcyC”) and also third party business. Our exposures in Asia and South America are mainly attributable to our third party business, which is outside the risk assumed from the primary markets of ACyC, thus contributing positively to our diversification profile. Within all of these regions, a well-diversified spread by country and cedant is maintained.

TPE 2019€’000%

TPE 2018€’000%

Europe118,663,238

65.73%

131,172,748

71.52%

Asia

28,119,286

15.57%

23,964,975

13.07%

North America

20,825,854

11.54%

17,980,880

9.80%South America

6,185,980

3.43%

3,669,507

2.00%

Oceania

3,619,001

2.00%

4,473,334

2.44%

Africa3,129,655

1.73%

2,141,244

1.17%

Total

180,543,014

100.00%183,402,688

100.00%Page 29

Notes to the Financial Statements

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 in general.
Thus the status of the economy is a major driver of the frequency and severity of claims. Its effect may vary by country andsector. For trade credit risk, the behaviour of customers may also affect the frequency and severity of claims, for instancethrough 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 structural changes are relevant in this respect will vary over time.
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 almost always due to either the insolvency or bankruptcyof the bonding customer. Thus, in the end, the frequency and severity of claims is affected by similar factors to those affecting
credit reinsurance.
All forms of credit reinsurance and bonding bear the risk that changes in legislation, in particular of insolvency law, may affectthe amount and timing of claims payments or recoveries.

Sources and Assumptions
Sources of uncertainty in the estimation of future claims payments
The insurance liabilities that cover claims experience after the reporting period for risks that have been accepted before theend of the reporting period consist of two elements: the provision for unearned premium (UPR) and the claims provisions forclaims ‘incurred but not reported’, the IBNR. UPR relates to the unearned part of premium invoiced in advance and to risks
that have not yet started. IBNR is the Company’s estimate for future claims payments that will result from risks taken on, but
for which no claims notification has been received.
Assumptions, change in assumptions and sensitivity
The risks associated with credit reinsurance and bonding are complex, as will be clear from the above and are subject to anumber of influences that are not particularly open to quantitative sensitivity analysis. However, this section describes thequantitative sensitivity analysis that is feasible.
Set out below are results of sensitivity testing on the claims ratios, showing the impact on profit before tax & shareholders’equity gross, net of reinsurance and by line of business. This sensitivity analysis is the result of a change in a single factor, withother assumptions unchanged.

Pre-tax profit
2019

Shareholders’ equity

Credit€'000

Bonding
€'000

Total
€'000

Credit€'000

Bonding
€'000

Total
€'000

Gross

(10,152)(1,888)(12,040)(8,883)(1,652)(10,535)

Net(8,815)(1,906)(10,721)(7,713)(1,668)(9,381)Gross

10,152

1,888

12,040

8,883

1,652

10,535

Net

8,815

1,906

10,721

7,713

1,668

9,381

5% increase in loss ratios

5% decrease in loss ratios

Page 30

Notes to the Financial Statements

Pre-tax profit
2018

Shareholders’ equity

Credit€'000

Bonding
€'000

Total
€'000

Credit€'000

Bonding
€'000

Total
€'000

Gross

(9,989)(1,681)(11,670)(8,740)(1471)(10,211)

Net(9,036)(1,613)(10,649)(7,907)(1,411)(9,318)

Gross

9,989

1,681

11,670

8,740

1,471

10,211

Net

9,036

1,613

10,649

7,907

1,411

9,318

5% increasein loss ratios

5% decrease in loss ratios

The Company’s method for sensitivity testing has not changed significantly from the prior financial year.

Page 31Notes to the Financial Statements

Claims development tables
The Claims development tables provide an overview of how the Company’s recognised claims costs for underwriting years
2012-2019 have changed at successive financial year ends. This overview also provides a breakdown of the claims provisions
that are held against each underwriting year as at 31 December 2019. Underwriting year here means the treaty year.

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

2012

2013

2014

2015

2016

2017

2018

2019

Total

at the end of the year
when risk was taken

193,145

181,956

204,319

223,079

204,288

206,149

221,130

238,473

one year later

193,589

174,348257,978

258,836

203,554

220,658

245,764

two years later

200,786

182,935

288,825

255,983

211,702216,260

three years later

212,574

186,931

288,276

254,164

210,036

four years later

207,739

188,401

284,849

251,756

five years later

210,836

186,620

279,556

six years later

208,128

184,119seven years later

213,948

Current estimate of
cumulative claims

213,948

184,119

279,556

251,756

210,036

216,260

245,764

238,473

1,839,912

Cumulative
payments to date

182,249

165,673

244,138

220,334

187,690

180,536

169,291

45,997

1,395,908

Claims provision
at 31 Dec 2019
in respect of
2012-2019

31,69918,44635,41831,422

22,34635,72476,473

192,476

444,004

Estimate of grossclaims incurred:

In respect of prioryears (before 2012)

53,967

Total

497,971

Page 32

Notes to the Financial Statements

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

2012

2013

2014

2015

2016

2017

2018

2019

Total

at the end of the year
when risk was taken

26,157

6,558

9,875

25,447

16,41815,86013,01821,341one year later

25,397

9,196

23,84334,81220,01523,21422,904

two years later

26,484

14,811

36,10737,031

21,64225,554three years later

23,404

15,66535,30636,511

20,515four years later

21,814

16,32935,08031,824five years later

22,724

16,24935,273six years later

22,666

15,667seven years later

25,260Current estimate of
cumulative claims

25,26015,66735,27331,824

20,51525,55422,904

21,341

198,338

Cumulative payments
to date19,401

9,763

29,442

29,292

16,74819,414

13,1291,900

139,089

Claims provision at 31
Dec 2019 in respect of
2012-2019

5,859

5,904

5,831

2,532

3,767

6,140

9,775

19,441

59,249Estimate of grossclaims incurred:

In respect of prioryears (before 2012)
Total

5,110
64,359Page 33

Notes to the Financial Statements

Financial risk
Atradius Re is exposed to financial risk mainly through its financial assets, financial liabilities and reinsurance contracts. The
Company monitors and manages the financial risks relating to the operations of the Company through internal risk reports
which analyse exposures by degree and magnitude of risks. These risks include market risk (currency risk, interest rate risk
and equity price risk), credit risk and liquidity risk.
Fair value of financial assets and liabilities
The estimated fair values of the Company’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 to transfer a liability in an orderlytransaction between market participants at the measurement date. Whenever possible, 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 ofcomparable 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 innature 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, the Company 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 in which the Company invests are valued by an external independentvaluation company.
The Company has minimal exposure to financial assets or liabilities which are valued at other than quoted prices in an
active market.
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 thosesecurities not actively traded, fair values are provided by an external independent valuation company.
Other financial assets
The carrying amount of other financial assets, including cash and cash equivalents, is not materially different to their fairvalue, 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 to their fairvalue, given their short-term nature.
The following tables present the fair values of the financial instruments carried at fair value.

Page 34

Notes to the Financial Statements

2019

Level 1€’000

Level 2€’000

Level 3
€’000

Total
€’000

Available-for-sale:
Equity securities

94,90894,908Government Bonds

321,123

321,123

Corporate Bonds

630,907

630,907

628

628

Total

1,047,566

1,047,566

2018

Level 1€’000

Debt securities:

Short term investments

Level 2€’000

Level 3
€’000

Total
€’000

Available-for-sale:
Equity securities

59,94559,945Government Bonds

346,583

346,583

Corporate Bonds

549,066

549,066

Short term investments

56,90756,907

1,012,501

1,012,501

Debt securities:

Total

Level 1 - Quoted prices in active markets
This category includes financial instruments whose fair value is determined 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 andregularly occurring market transactions on an arm’s length basis;.
Level 2 - Valuation techniques based on observable market data
This category includes financial instruments whose 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 on othermarket observable external data;
Level 3 - Valuation techniques incorporating information other than observable market data
This category includes financial investments whose fair value is determined using a valuation technique for which a significant level of 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 fairvalue verified with an external independent valuation company.
Market risk
Market risk is the risk of adverse financial impact as a consequence of market movements such as currency exchange rates,interest rates and other price changes. Market risk arises due to fluctuations in both the value of assets held and the value of
liabilities. The objective of the Company in managing its market risk is to ensure risk is managed in line with the Company’srisk appetite. The Company has established policies and procedures in order to manage market risk and methods to measureit. Market risk comprises three types of risk: currency risk, interest rate risk, and equity price risk.
There were no changes in the Company’s market risk exposure in the financial year nor to the objectives, policies and processes
for managing market risk.

Page 35

Notes to the Financial Statements(i) 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 toadverse movements in equity prices. The company is exposed to equity price risk by its investments in equity instruments,
either issued by corporations or by investment funds. These risks are measured and analysed by using value at risk techniquesand capital models from the external credit assessment institutions. The value at risk measures the potential maximum
loss on the Company’s equity instruments due to adverse movements in equity prices in the short term, while the capitalmodels measure the potential maximum loss in the long-term. The Company maintains a well-diversified portfolio of equity
instruments to manage these risks.
Investment Funds
The investment funds in which the Company invests are exposed to the general investment fund risks of market risk,
counterparty risk, liquidity risk and currency risk. The risks of an investment fund are driven by the nature of the assets in which
the fund invests. The Company only invests in investment funds, the investment restrictions of which in their prospectus are
consistent with the Atradius Group Investment Policy.
Equity instruments issued by Investment funds
The portfolio of equity and money market instruments issued by investment funds are as follows:
2019
€’000

Weight
in %

2018
€'000

Weightin %Passive equities exchange traded funds

14,17950%

11,439100%

Active money market fund

14,160

50%

-

-

Total

28,339100%

11,439100%

Passive equities exchange traded funds
The portfolio of passive equities exchange traded funds consists principally of exchange traded funds that passively track the
Dow Jones Euro Stoxx 50 Index.
Active Money Market FundThe active money market fund invests in money market instruments that are denominated in British Pounds. The fund aims
to maintain a weighted average maturity of a maximum 90 days.
(ii) Foreign currency risk management
Due to the global nature of its reinsurance business, the Company incurs foreign exchange risk due to exchange rate
fluctuations. This risk is managed by hedging, on a monthly basis, of its foreign currency exposures when natural hedges between
the Companys financial assets and financial liabilities, which are primarily reinsurance liabilities, are not already present.
The Company’s exposure to foreign currency exchange rate risk, arising from financial assets and liabilities denominated in
non-functional both major and less traded currencies as at 31 December 2019, is presented in the following table:
Financial
Assets2019€’000

Financial
Liabilities
2019
€’000

Position
2019
€’000

Financial
Assets2018€'000

Financial
Liabilities
2018
€'000

Position
2018
€’000

EUR

1,222,632

517,947

704,685

1,113,662

453,858

659,804

GBP

23,107

18,531

4,576

22,202

20,713

1,489

USD

204,615

183,478

21,137202,380

174,632

27,748

AUD

8,780

8,782

(2)

9,869

8,602

1,267

Other

123,602179,317(55,715)

122,986

178,968(55,982)

Total

1,582,736

908,055674,681

1,471,099

836,773

634,326

Page 36

Notes to the Financial Statements

The following table details the Company’s sensitivity to a 10% increase and decrease in the above foreign currencies against
the Euro. A 10% sensitivity rate is used as a reasonably possible change in foreign exchange rates. For each sensitivity the
impact of a change in a single factor is shown, with other assumptions unchanged.
GBP
€'000

USD
€'000

AUD
€'000

Pre-tax profit

458

2,114

-

Shareholders’ equity

400

1,850

-

Pre-tax profit(458)(2,114)-

Shareholders’ equity(400)(1,850)

-

2018

GBP
€'000

USD
€'000

AUD
€'000

Pre-tax profit

149

2,775

127

Shareholders’ equity

130

2,428

111

Pre-tax profit(149)(2,775)(127)

Shareholders’ equity(130)(2,428)

(111)

2019
10% increase

10% decrease

10% increase

10% decrease(iii) Interest rate risk management
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. The Company is exposed to this risk by investing in debt
instruments and equity instruments issued by investment funds that invest in debt instruments.
The Company manages this risk by monitoring the duration of its debt instruments. Duration demonstrates the dependabilityof a bond’s market value to a change in the underlying discount rate of that bond. The duration figure depicts the percentagechange of the market value of a bond investment if the underlying discount rate is parallel shifted by 1%. The higher the duration figure, the more a bond is sensitive to movements in the underlying discount rate.
The Company uses the duration to assess its interest rate exposure and monitors whether the duration remains between theminimum and maximum duration limit ( between one to five years for government bonds and one to three years for corporate
bonds ), as established by the Atradius Group Investment Policy. As the duration can be described as the percentage change ofthe bond’s value when the underlying discount rate is parallel shifted by 1%, so the average maturity is the weighted averageof the time until a bond has paid its final interest and principal redemption. The duration for 2019 is 1.9 years (2018: 1.7 Years);representing the years it will take for the price of the Company’s debt instruments to be repaid by its internal cash flows. The
average maturity for 2019 is 1.9 years (2018: 2.3 years).

Value-at-Risk
The Company measures equity price and interest rate risk by analysing the Value-at-Risk (VaR) of its financial instruments. Thisrisk metric measures the potential maximum loss on those financial instruments due to adverse movements in equity prices andinterest rates within a specified timeframe 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 and the correlation between them as main
inputs. These volatilities and correlations are provided by financial information providers or financial institutions.
Page 37

Notes to the Financial Statements

The risk of using variance-covariance methodology or any other historical methodology is that it may underestimate the riskinessof the financial instruments. This is because these methodologies assume that the historical volatility of and correlation between
the financial instruments will be repeated in the future. Therefore, it is not intended to represent or guarantee any future pricemovements but rather is to be used as guidance for information purposes and comparison for 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 confidence level of 99% for a period of 12 months. This implies that there is a 1% probabilityof underestimating the potential maximum loss for the coming 12 months.
The following table shows the VaR of the Company’s equity and debt securities:
2019€millions% of themarket value

2018€millions% of themarket value

27.3

33.80%

21.2

35.30%

Government bonds (including
government bonds funds)

5.4

1.70%

10.2

3.00%

Corporate Bonds (including corporatebond funds)

10.1

1.60%

7.8

1.40%

Total portfolio

33.7

3.20%

28.5

2.90%

Equity securities:
Shares (Including equity funds)
Debt securities:

The VaR of the individual portfolio components is based on the volatility of the investments to which they are ultimately
exposed. The volatility of each asset class as a whole serves as input for the VaR calculation of that asset class. In case of aninvestment fund, the volatility of the fund (driven by the characteristics of its underlying securities) serves as input for the
calculation of the VaR of that specific investment fund and is subsequently included in the VaR of the asset class. Total portfolio
VaR may not be equal to the sum of the VaR of the individual portfolio components because the correlation between thesecomponents may be less than one. The VaR percentage increased from 2.9% at the end of 2018 to 3.2% at the end of 2019
and the VaR value increased from EUR 28.5m at the end of 2018 to EUR 33.7 m at the end of 2019. The increase in the VaRpercentage and the VaR value is due to the volatility of equities during 2019.
Credit risk
Credit risk is the risk that counterparties will not meet their contractual obligations to the Company. The key area in which theCompany is exposed to credit risk is the possibility that a reinsurer fails to pay a claim.
If a reinsurer fails to pay a claim for any reason, the Company remains liable for the payment to the policyholder. The Company
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 is found to be below
this threshold, the Company has the right to either terminate the reinsurance relationship during the course of the reinsurance
year, or else seek collateral if the relationship is to continue.
With regard to managing the credit risks of the financial investments, the investment policy of the Company 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 overall fixed income portfolio is almost completely invested in investment grade debt
securities which are rated ‘A-‘ or higher. If a corporate bond in which the Company has indirectly invested (through an investment fund) falls below the minimum credit rating or is not rated, it is reviewed by the Group Investment Committee to decide
whether the investment fund is still a suitable investment. The maximum concentration limit per issuer is 5% of the market
value of the financial investments of the company. The Group Investment Committee on which the Company sits monitors thislimit and action is taken if a concentration limit is breached. The counterparty ratings of reinsurance assets, debt and equity
securities and short-term investments as at 31 December 2019 are presented in the following table:

Page 38

Notes to the Financial Statements

AAA

AA

A

BBB

Other and
Non-Rated

Total

-

16,77370,909-2,704

90,386

Government bonds

146,288

158,407

16,428--321,123

Corporate bonds

7,297

65,627

371,446

186,537-

630,907-

22,29946,881

19,053

6,675

94,908Deposits withheld byceding companies

-

6,181

30,391810

4,511

41,893

Short term deposits andmoney market funds

-

628

-

-

-

628

Cash & Cash equivalents--

109,923--

109,923

153,585

269,915645,978

206,400

13,8901,289,768

AAA

AA

A

BBB

Other and
Non-Rated

Total

-

12,11061,239-4,239

77,588Government bonds

163,256

148,51134,816--

346,583

Corporate bonds

8,255

75,570423,10342,138-549,066-

6,419

34,88814,082

4,556

59,945

Deposits withheld byceding companies

-

7,387

7,258

4,813

5,197

24,655

Short term deposits andmoney market funds--

56,907--56,907

Cash & Cash equivalents--

81,181--

81,181

171,511

249,997699,392

61,033

13,992

1,195,925

At 31 December 2019€’000
Reinsurance Assets
Reinsurers share oftechnical provisions
Debt securities:

Equity shares
Short-term investments:

Total

At 31 December 2018€’000
Reinsurance Assets
Reinsurers share oftechnical provisions
Debt securities:

Equity shares
Short-term investments:

Total

Page 39

Notes to the Financial Statements

The following class of financial assets includes the carrying value of financial assets that are past due but not impaired. Allother classes of financial assets do not include any carrying values that are past due.

2019

Neither past
due nor
impaired€'000

Past due 3-6months€'000

Past due 6-12
months€'000

Past due 12months +€'000

Past due andimpaired€'000

Carrying
amount€'000

194,011

2,380

316

-

-

196,707

Neither past
due nor
impaired€'000

Past due 3-6months€'000

Past due 6-12
months€'000

Past due 12months +€'000

Past due andimpaired€'000

Carrying
amount€'000

188,774

5

18

15

-

188,812

Debtors arising out ofreinsurance operations

2018

Debtors arising out ofreinsurance operations

Liquidity risk
Liquidity risk is the risk that Atradius Reinsurance DAC would be unable to meet its payment obligations when due. Liquidity
risks originate from short term fluctuations in cash flow patterns either on incoming or outgoing cash. It is the Company’s
policy to maintain sufficient cash and marketable securities to manage its liquidity risks. The Atradius Group Investment policy
states that investments should only be in financial instruments that can be liquidated in less than 4 business days. In practice,most of the Company’s assets are marketable securities which can be readily converted into cash when required. The Company
is liquid with cash reserves of EUR 110 million (2018: EUR 81 million).
The Company’s liquidity risk exposure and policy in respect of liquidity risk management has remained unchanged.
The following tables are an estimate of the amount and timing of the undiscounted main cash flows at the end of the reporting
period and includes both principal and interest cash flows.
As at 31 December 2019€’000

Less than 1 year

1 to 5 years

More than 5 years

Total

16,6895,690

59

22,438Subordinated Loan--

75,00075,000Insurance Contracts

454,766

265,131-

719,897

Payables

84,480--84,480Total

555,935

270,82175,059901,815

Less than 1 year

1 to 5 years

More than 5 years

Total

220,710

725,9905,330

952,030

628

-

-

628

Other Financial investments

136,801--

136,801

Cash and bank deposits

109,923--

109,923

Receivables

196,707--

196,707

Reinsurance Contracts

79,547

10,839-90,386

Total

744,316

736,8295,330

1,486,475

Other Creditors

As at 31 December 2019€’000
Debt securities
Short term investments

Page 40

Notes to the Financial Statements

As at 31 December 2018€’000

Less than 1 year

1 to 5 years

More than 5 years

Total

21,083

5,468

32

26,583

Subordinated Loan--

75,00075,000Insurance Contracts

414,160

256,473-

670,633

Payables

58,485--58,485

Total

493,728

261,941

75,032

830,701

Less than 1 year

1 to 5 years

More than 5 years

Total

Debt securities

157,239

738,410-895,649

Short term investments

56,907--56,907

Other Financial investments

84,600--84,600Cash and bank deposits

81,181--

81,181

Receivables

188,79715-

188,812

Reinsurance Contracts

65,325

12,263-77,588634,049

750,688

-

1,384,737

Other Creditors

As at 31 December 2018
€’000

Total

Operational risk
Operational risks are the risks of direct or indirect loss from inadequate or failed internal processes, human and system errors
or external events. We use this definition in line with industry practice as well as the European Union Solvency II Framework
Directive. Within the Atradius Group, the Operational Risk Management (ORM) unit is responsible for developing methods forthe identification, assessment and response to risks, and for monitoring and further enhancing the overall risk management
and control framework. The ORM unit works closely with both Internal audit and Legal and Compliance. Operational risk
management activities such as financial reporting controls, business continuity management and reporting to management
all ensure that operational risks within the organisation are identified, and maintained within risk policy guidelines.
Compliance
Our compliance practices support our business, our reputation and our integrity. These elements are of importance to ourcustomers, suppliers, staff and other stakeholders. Complying with relevant laws, rules and regulations and maintaining a highstandard in terms of ethics and integrity, leads to lower operational risk and more stable business processes. The Atradius codeof conduct outlines the basic corporate, legal and ethical compliance principles and guidelines that apply to all employees andthat govern operations and its employees’ business conduct and actions. The individual compliance codes address specificcompliance areas in more detail and set out detailed compliance requirements that must be met across the company and whichmust be included in existing business procedures. For the monitoring and testing of effectiveness of these requirements, closealignment is sought with the activities of the Operational Risk Management and Internal Audit Units.
The Company is subject to the Corporate Governance Requirements for Insurance Undertakings 2015, but does not fall in scopeof the additional requirements for major institutions. Atradius Reinsurance DAC has established a separate Audit Committee
and Risk Committee as required under the 2015 Corporate Governance Code.

Page 41

Notes to the Financial Statements

Capital management
Objectives, policies and processes with regard to capitalThe objective of the Company in managing its capital is to ensure that it is sufficiently capitalised to be able to continue as agoing concern after meeting all its financial obligations and to meet its externally imposed regulatory capital requirements,
while maximising the return to its shareholders.
In order to ensure capital adequacy, a capital buffer above the regulatory solvency capital required is maintained, such thatlarge loss events would not impair the ability of the Company to carry on its normal course of business. The regulatory capital
structure of the Company consists of shareholders’ funds, comprising issued capital, reserves and retained earnings as disclosed in note 22 plus the subordinated loan as disclosed in note 24.
As an authorised reinsurer regulated by the Central Bank of Ireland, the Company is subject to regulatory capital requirements,
which for the year ended 31st December 2019 are based on the EU Directive requirements in respect of Solvency II, whichbecame effective from 1 January 2016.

Solvency II
Solvency II applies to all EU (re)insurance companies and establishes a new set of capital requirements, risk management anddisclosure standards. The capital requirements can be calculated by reference to a standard formula as defined in the Solvency II
regulations, or by an internal model that most accurately reflects a company’s risk profile. Together with the Atradius Group, theCompany has developed an internal model to calculate its capital requirements in respect of insurance risk, since the results ofthis model most accurately reflect its unique business and risk profile. Regulatory approval for this internal model was received
in 2017. Accordingly, the partial internal model is used to calculate insurance, or underwriting, risk, and the standard formulafor calculating all other risks. The Company was in compliance with its regulatory capital requirements throughout the year.

Page 42

Notes to the Financial Statements

4 Segmental information
Analysis of gross premiums written, gross premiums earned, gross claims incurred, gross operating expenses and outwards
reinsurance by class of business.
Gross
premiums
written
2019
€’000

Gross
premiums
earned
2019
€’000

Gross
claimsincurred
2019
€’000

Gross
operatingexpenses
2019
€’000

Outwardreinsurance

Technical
result

2019
€’000

2019
€’000

Credit Reinsurance

452,978

430,508(203,049)(201,008)(9,180)17,271

Bond Reinsurance

88,30383,721(37,769)(37,762)(1,585)

6,605

Total

541,281514,229(240,818)(238,770)(10,765)

23,876Grosspremiums
written
2018
€’000

Gross
premiums
earned
2018
€’000

Gross
claimsincurred
2018
€’000

Gross
operatingexpenses
2018
€’000

Outwardreinsurance

Technical
result

2018
€’000

2018
€’000

Credit Reinsurance

414,796

411,645(199,779)(184,180)(17,994)

9,692

Bond Reinsurance

73,12275,227(33,611)(32,396)

68

9,288

Total

487,918

486,872(233,390)(216,576)(17,926)

18,980Gross premiums written resulting from contracts concluded in:

2019
€’000

2018
€’000

Europe368,105

328,603

Asia

83,836

77,813

North America

41,61236,155South America

29,90823,611

Oceania

9,866

12,405Africa

7,954

9,331

Total

541,281

487,918

Page 43

Notes to the Financial Statements

5 Net investment returnNet
investment
incomeFinancial
Year ended€'000

Net realised
gains
Financial
Year ended€'000

Net realised
lossesFinancial
Year ended€'000

Impairment
Financial
Year ended
€'000

Net
investment
expenseFinancial
Year ended
€'000

Net
investment
results
Financial
Year ended€'000

Equities

2,500

-

(303)

(2,482)

-

(285)

Bonds

3,870

433

(62)

-

-

4,241

Cash and Cashequivalents

192

-

-

-

-

192

Other investment
expenses

-

-

-

-

(1,296)(1,296)

Total

6,562

433

(365)

(2,482)(1,296)

2,852

2018

Net
investment
incomeFinancial
Year ended€’000

Net realised
gains
Financial
Year ended€’000

Net realised
lossesFinancial
Year ended€’000

Impairment
Financial
Year ended
€’000

Net
investment
expenseFinancial
Year ended
€’000

Net
investment
results
Financial
Year ended€’000

Equities

2,692

2,378

(1,830)

(344)

-

2,896

Bonds

2,948

256

(24)

-

-

3,180

Cash and Cashequivalents

618

-

(166)

-

-

452

Other investment
expenses

-

-

-

-

(1,104)(1,104)

6,258

2,634

(2,020)(344)(1,104)

5,424

2019

Total

Page 44

Notes to the Financial Statements

6 Claims incurred net of reinsurance
Gross
€’000

Reinsurance
€’000

Net
€’000

(479,304)

53,681(425,623)

Movement on provision(16,318)

9,788(6,530)Foreign exchange movement on opening provisions(2,349)890(1,459)(497,971)

64,359(433,612)

Gross
€’000

Reinsurance
€’000

Net
€’000

Outstanding claims brought forward(451,256)

53,869(397,387)

Movement on provision(30,731)(112)(30,843)

2,683

(76)

2,607

(479,304)

53,681(425,623)

Gross
€’000

Reinsurance
€’000

Net
€’000

Provision for unearned premium brought forward(191,329)

23,907(167,422)

Movement on unearned premium(27,052)

1,922(25,130)

Foreign Exchange movement on opening provisions(3,545)

198(3,347)

Provisions for unearned premium carried forward(221,926)

26,027(195,899)

Gross
€’000

Reinsurance
€’000

Net
€’000

(185,179)

22,291(162,888)

Movement on unearned premium(1,046)(313)(1,359)Foreign Exchange movement on opening provisions(5,104)

1,929(3,175)

Provisions for unearned premium carried forward(191,329)

23,907(167,422)

2019
Outstanding claims brought forward

Outstanding claims carried forward

2018

Foreign exchange movement on opening provisions
Outstanding claims carried forward

7 Unearned Premiums
2019

2018
Provision for unearned premium brought forward

Page 45

Notes to the Financial Statements

8 Net Operating Expenses
2019
€’000

2018
€’000

195,860

193,491

Change in deferred acquisition costs

12,721

2,897

Administrative costs

9,612

8,759

218,193

205,147

2019
€’000

2018
€’000

Investment return

5,334

5,768

Impairment of shares(2,482)(344)

Net foreign exchange gains/(losses)

1,394

1,702

Auditors Remuneration

(94)

(92)

(477)

(458)

Net acquisition costs

Net operating expenses

9 Profit on ordinary activities
Profit on ordinary activities is stated after charging:

Rentals under operating leases:-

Land & buildings

-

Other

(6)

(13)

Depreciation

(28)

(29)

Staff Costs(3,502)(3,301)

Taxation on profits(3,039)(2,805)

Page 46

Notes to the Financial Statements

10 Staff Costs
2019
€’000

2018
€’000

Wages & salaries

2,848

2,655

Social Security costs

320

290

Pensions cost

189

148

Other Costs

145

208

3,502

3,301

Total

The average monthly number of employees, including executive directors, during the financial year 2019 was comprised
as follows:

2019

2018

Reinsurance activities

11

10

Support

17

15

Total

28

25

11 Auditors’ remuneration
Auditors’ remuneration for work carried out for the Company in respect of the financial year ended 31 December 2019 is asfollows

Audit of individual company accounts (incl VAT)
Other Assurance Services

2019
€’000

2018
€’000

48

48

46

44

94

92

There were no tax or other non-audit services provided

Page 47

Notes to the Financial Statements

12 Directors’ remuneration
Number of
Directors

2019

Number of
Directors

2018

Emoluments

7

609

7

553

Benefits under long-term incentive
schemes

-

-

-

-

Gain on exercise of share options

-

-

-

-

- Defined benefit scheme

-

-

-

-

- Defined benefit scheme

7

42

7

40

Compensation for loss of officepaid by the Company and othertermination payments

-

-

-

-

Total

7

651

7

593

Contributions paid to a retirement
benefit schemes:

13 Employee pension scheme
Eligible staff are members of the defined contribution scheme operated by the Company. The pension cost charges to the
profit and loss account for the financial year was EUR 189,347 and was fully paid in 2019 (2018: EUR 147,731).

14 Taxation on profit on ordinary activities
Corporation tax:

Current Irish tax
Deferred tax: origination and reversal oftiming differences
Total

Page 48

2019
€’000

2018
€’000

(2,693)(4,223)

(346)

1,418

(3,039)(2,805)

Notes to the Financial Statements

There are net deferred tax assets at 31 December 2019 of EUR 0.176 million (2018:EUR 3.245 million). These comprise adeferred tax asset in respect of timing differences in respect of deductible expenses of EUR 1.072 million (2018:EUR 1.418
million), offset by deferred tax liabilities of (EUR 0.891 million) (2018:EUR 1.826 million) in respect of the recognition of net
fair value gains on available for sale financial investments, and timing differences between the tax allowances for the cost of
fixed assets for tax purposes and depreciation for accounting purposes of (€5,000) (2018: (€5,000)). There are no unused
tax losses or tax credits at the end of the reporting period (2018:Nil).
The current tax charge for the year is different than the current charge that would result from applying the standard rate of
Irish corporation tax to the profit on ordinary activities before tax. The difference is explained below:

2019
€’000

2018
€’000

Profit on ordinary activities before tax

24,372

22,356

Profit on ordinary activities multiplied by the standard rate of Irish corporation tax
for the year of 12.5%(3,047)(2,795)

Disallowable expenses and other items(7)(1,422)

Income and other items not taxable for tax purposes

346-

Origination and reversal of timing differences

(346)

1,418

Depreciation in excess of capital allowances

(1)

(1)

Over/ (under) provision in respect of previous years

16

(5)

(3,039)(2,805)

Effects of:

15 Investments
The carrying value of the Company’s available for sale financial investments are summarised below:

Market Value
2019
€’000

Purchase Value
2019
€’000

Market Value
2018
€’000

Purchase Value
2018
€’000

94,90877,55859,94562,310628

628

56,90756,907

Debt securities and other fixedincome securities - listed

952,030

947,386

895,649

891,675

Total

1,047,566

1,025,572

1,012,501

1,010,892

Available-for-sale
Equities – listed
Short Term Investments

For debt securities and other fixed income securities the amount repayable at maturity totals EUR 937,772(2018: EUR 880,748).

Page 49

Notes to the Financial Statements

16 Debtors arising out of reinsurance operations
Measured at undiscounted amounts receivable

2019
€’000

2018
€’000

Amounts owed by holding and fellow subsidiary undertakings duein less than one year

83,08674,894

Amounts owed by third parties due in less than one year

113,621113,918

Total

196,707

188,81217 Tangible fixed assets
Furniture &Equipment
€’000

Total
€’000

845

845

Additions--

Disposals

-

-

845

845

As at 1 January 2019

750

750

Provided in the financial year

28

28

-

-

As at 31 December 2019

778

778

Net book amount at 31 December 2019

67

67

Net book amount at 31 December 2018

95

95

2019

Costs
As at 1 January 2019

As at 31 December 2019
Accumulated Depreciation

Disposals

Page 50

Notes to the Financial Statements

18 Other Assets
2019
€’000

2018
€’000

Deferred Tax Assets

176

3,245

Current Tax assets

844

693

Other assets

673

535

1,693

4,473

Total

19 Creditors arising out of reinsurance operations
Measured at undiscounted amounts payable

2019
€’000

2018
€’000

Amounts owed to holding and fellow subsidiary undertakings

68,125

51,119Amounts owed to third parties

34,97929,985

Total

103,104

81,104

Page 51

Notes to the Financial Statements

20 Other creditors
2019
€’000

2018
€’000

Corporation tax

-

214

PAYE

51

51

PRSI

72

76

VAT

93

112

Other taxation

9

14

Other creditors

3,589

3,497

Total

3,814

3,964

2019
€’000

2018
€’000

As at 1 January

17

24(Decrease)/Increase in provision-(7)

As at 31 December

17

17

21 Provisions for liabilities
Unused annual leave provision

The leave pay provision represents the holiday balance accrued as a result of services rendered in the current financial period andwhich employees are entitled to carry forward. The provision is measured as the salary cost payable for the period of absence.

22 Capital & Reserves
Called up
Share
Capital€’000

CapitalContribution€’000

Revaluation
Reserve€’000

Profit &
Loss
€’000

Total
€’000

635

279,05443354,594

634,326

Profit for the financial year

-

-

-

21,333

21,333

Other comprehensive income--

19,022-

19,022635

279,054

19,065375,927

674,681

As at 1 January 2019

As at 31 December 2019

Page 52

Notes to the Financial Statements

As at 1 January 2018

635

279,054

12,233335,043626,965

Profit for the financial year

-

-

-

19,551

19,551Other comprehensive income--(12,190)-(12,190)635

279,05443354,594

634,326

As at 31 December 2018

The Called up share capital represents the nominal value of shares that have been issued. The authorised share capital of
Atradius Reinsurance DAC amounts to EUR 635,000, all of which relates to called up share capital, presented as equity, and isdivided into 635,000 ordinary shares with a nominal value of EUR 1 each (2018: the same).
The capital contribution represents capital received from our shareholders.
The revaluation reserve represents accumulated changes to the fair value of existing available-for-sale financial investments
since their acquistion. Deferred taxes are provided for unrealised gains or losses arising from changes in the revaluation reserve
and are included in other comprehensive income.
The profit and loss reserve represents all current and prior financial period retained profits and losses.

23 Operating lease commitments
At 31 December 2019 the Company’s total future minimum lease payments under non-cancellable leases were as follows.
2019
€’000

2018
€’000

Within 1 year

321

328

Between 1 & 5 years

471

787

-

-

After 5 years

During the financial year an amount of EUR 320,508 (2018: EUR 327,609) has been recognised as expense.

24 Subordinated Loan
On 20 April 2016 the shareholders of Atradius N.V. provided a subordinated loan to Atradius Reinsurance DAC with a principal
amount of EUR 75 million. The subordinated loan bears interest at a fixed rate of 5.0% per annum, payable annually in arrears
on 20 April each year until and including the maturity date: 20 April 2026. Atradius Reinsurance DAC may redeem the loan on
the first call date, 20 April 2021, or thereafter on each interest payment date.
The subordinated loan qualifies as a Tier 2 basic own funds item as set out in article 73 of the European Commission’s Solvency
II Delegated Regulation (2015/35).
The fair value estimate of the subordinated loan issued to Atradius Reinsurance DAC is EUR 81.9 million (2018: EUR 81.5
million). The fair value of the subordinated loan is classified as Level 2 under the fair value hierarchy and as Tier 2 basic own
Page 53

Notes to the Financial Statements

funds for Solvency II. The fair value of the subordinated loan is based on a valuation model using observable market data.
The fair value estimate of the subordinated loan is provided by an external independent valuation company, which uses its own
proprietary valuation systems to value securities supported by economic and market assumptions from financial information
providers. The model calculates the present value of the subordinated loan’s cash flows discounted using the Euro government bond yield curve as a benchmark and applying an appropriate risk spread. The risk spread applied is estimated using thecredit spreads of market quoted subordinated bond issues from similar issuers and with similar rating and maturity profiles.

25 Commitments
As at 31 December 2019, there were collaterised deposits, letters of credit and reinsurance trusts issued in the amount of
EUR 45,138,506 (2018: EUR 41,202,912). These deposits, letters of credit and reinsurance trusts are issued in relation to ourclients’ regulatory requirements.

26 Reclassifications of comparatives
Comparative figures have been reclassified where necessary to conform to the current year’s presentation.

27 Immediate and ultimate parent company
Atradius Investments Limited, a company incorporated in Ireland, is the Company’s parent company. Financial statements
for Atradius Investments Limited are available from the 2nd Floor, La Touche House, International Financial Services Centre,
Dublin D01 R5P3.
Atradius Investments Limited is a subsidiary of Atradius N.V., a company incorporated in the Netherlands. Atradius N.V.’s ultimate parent is Grupo Catalana Occidente, S.A., a company incorporated and listed in Spain.
The largest group into which the financial statements of Atradius Reinsurance DAC are consolidated is Grupo Catalana
Occidente, S.A., following consolidation into Atradius N.V.
The consolidated financial statements are publicly available on its website www.grupocatalanaoccidente.com.
The financial statements of Atradius Reinsurance DAC can be found on its website www.atradius.com.

28 Events after the reporting date
There are no events after the reporting date which require adjustment or disclosure in the financial statements.

Page 54

Notes to the Financial Statements

29 Related party transaction
The total remuneration for key management personnel for the financial period totalled EUR 651,000 (2018: EUR 593,000),
being remuneration disclosed in Note 12 of EUR 651,000 (2018: EUR 593,000).
Intercompany balances with Atradius N.V. are unsecured and free from guarantees. They are settled periodically, typically ona monthly basis.

31 Approval of the Financial Statements
The directors approved the financial statements on 26th February 2020.

Page 55

Notes to the Financial Statements

Notes to the Financial Statements

Directors andOther Information
Executive Directors

Bankers

Daniel Stausberg (German)
Niamh Derivan (Irish)

BNP Paribas Fortis SA/NV
Herengracht 595
1017CE
Amsterdam
The Netherlands

Non-Executive Directors
David Capdevila (Spanish, resigned 16th December, 2019)
Marc Henstridge (British)
Antonio Rubio (Spanish)

Ulster Bank Ireland DAC
Ulster Bank Group Centre
George’s Quay
Dublin 2
Ireland

Independent Non-Executive Directors
Conor Molloy (Irish)
Mary Brennan (Irish)

Secretary
Rachel McCormac
2nd Floor
La Touche HouseInternational Financial Services Centre
Dublin D01 R5P3

Solicitors
William Fry Solicitors
2 Grand Canal Square
Dublin 2

Registered Office
La Touche HouseInternational Financial Services Centre
Dublin 1

Independent Auditor
PricewaterhouseCoopers
Chartered Accountants and Statutory Audit Firm
One Spencer Dock
North Wall Quay
Dublin 1

Page 56

Registered No: 276690
VAT No: 8276690Q
Reinsurance Licence No: C38084

Notes to the Financial Statements

Page 57

Atradius Reinsurance DAC
2nd Floor,
La Touche House,
International Financial Services Centre,
D01 R5P3,
Republic of Ireland.
Phone: +353 (0)1 602 9200
Fax: +353 (0)1 686 4705
www.atradiusre.com