|Dear Credit Insurance Colleague
Welcome to issue 12 of Credit Insurance News Digest: 18 October - 1 November.
This issue is kindly sponsored by
GTR (Global Trade Review).
If you are reading this Credit Insurance News Digest, but have yet to sign-up for regular free copies, please add your name to my list of subscribers. You can sign-up to this service using this online form, at the website www.creditinsurancenews.co.uk or simply send me an email.
Credit Insurance News
Equinox Global’s latest offering allows businesses to “top up” their existing policies held with other trade credit providers. The main features of the top up solutions are that the cover offered is identical to the cover of the primary trade credit insurance policy, e.g. insolvency, protracted default and political risks, and that the usual insured percentage is up to 90%. Two types of top up schemes are offered: one insuring proportional additional credit limit amounts based on the credit risk rating assessments made by an internal credit management team or another credit insurer, the second insuring non proportional additional individual credit limit amounts based on Equinox Global’s own assessment and monitoring of credit risks. Mike Holley, Chief Executive Officer of Equinox Global commented: “The objective of this new initiative is to support those companies continuing to do business with good customers where, for capacity reasons, their exposures cannot be fully insured with by one single trade credit insurer." For further information please contact Mike Holley at firstname.lastname@example.org.
Government representatives indicate there is little more they would or could do to ease pressures around credit insurance. Drapers has published an article, 'Exclusive: High street closures gather pace as credit pressure mounts,' (18 October) which advises that 265 branches of fashion multiples shut their doors in the first six months of the year – seven times the number of net indie closures in the same period. However, according to emails seen by Drapers, although the Department for Business (BIS) planned to hold talks with credit insurers at the start of the Summer to try to ease credit insurance pressures for retailers, only one meeting has taken place. Senior policy adviser Thomas Gelderd also said in the emails that measures such as the top-up scheme introduced in 2009 had not been popular: “There would have to be something that had altered within the retail or credit insurance sectors for us to look at another form of top-up scheme,” and referred to an unnamed insurer as having said that although retail was one of the sectors hit hardest by the recession, they “weren’t supportive of government intervention." To view the full article on Drapers' website go to http://www.drapersonline.com/news/multiples/exclusive-high-street-closures-gather-pace-as-credit-pressure-mounts/5041872.article (subscription required).
The Channel article reports that credit insurers' show "general uneasiness" about the IT sector. The Channel has published an article, ''Petrified' insurers slam wallets shut as more resellers go titsup [sic],' (23 October) which reports that despite lower insolvencies than a year ago, trade credit insurers continue to view the IT sector with some caution. An anonymous source at one distributor told The Channel, "Credit insurers are petrified given the way they are behaving," and that the insurers "have never re-instated lines they cut in the aftermath of the credit crunch." To view the article on The Channel's website go to http://www.channelregister.co.uk/2012/10/23/channel_insolvencies_q3/.
Euler Hermes XoL brochure is now available. The official launch of Euler Hermes XoL (EH XoL) took place on October 25 and was a great success. Designed for large and multinational companies seeking protection from exceptional trade credit losses to their balance sheet, the XoL policy features non-cancellable credit and country limits and is designed for companies that demonstrate strong, effective credit management and whose cashflow can withstand an expected accumulation of recurrent trade credit defaults.. Nicolas Delzant, CEO, Euler Hermes World Agency said:“ XoL completes a structured services range which has been recently strengthened by our medium-term transactional cover for political risk and trade finance. We are therefore well positioned to become the market leader across the entire trade credit insurance services spectrum.” To view Euler Hermes press release go to http://www.eulerhermes.com/mediacenter/. To view Euler Hermes' new XoL brochure, click http://gallery.mailchimp.com/71183ce5dfd3f24da943bb852/files/XoL_brochure.pdf
Building article examines trade credit insurance and the construction industry. Building.co.uk has published an article, 'Insurance special report: Trade credit,' (26 October). The article advises that trade credit insurance has returned to construction, examines whether the industry and today’s new policies offer a good deal for firms and concludes that, "the outlook for firms that would like to have the comfort of trade credit insurance is not encouraging." Euler Hermes' Kalpana Padhier, Coface's Grant Williams, Tom Rolfe from LDPA Credit Insurance, Jonathan Smith from Oval Insurance Broking and Ewa Rose of Marke
l are all quoted. To view the article on Building.co.uk go to http://www.building.co.uk/professional/insurance-special-report-trade-credit/5044732.article (subscription required).
Atradius' recent ratings from S&P, Moody's and AM Best. There has been a great deal of interest and discussion in the credit insurance industry in the last ten days after S&P lowered its rating on Atradius from A- to BBB (see Financial Times article - below) as a result of the sovereign debt exposure of Atradius main shareholder - Spanish insurer, Grupo Catalana Occidente. However, as it is a standard procedure within S&P's rating framework to not rate businesses more than one notch above the country in which they are located, the downgrade was not a surprise and S&P themselves explained in their reports that the new rating does not reflect on the financial strength or business outlook of either Atradius or Grupo Catalana. To underline this, in the last week, Atradius’ main operating companies were assigned an A3 rating with negative outlook by Moody’s Investor Services (see Moody's press release), which, Moody's advised, reflected Atradius’ strong position in the credit insurance market, its conservative investment portfolio, good capitalisation, substantial reinsurance protection and low financial leverage. In addition, during September 2012, AM Best assigned Atradius an ‘A’ (Excellent) rating with stable outlook (see AM Best's press release). For more information on Atradius' ratings go to http://www.atradius.co.uk/corporate/inside/ratings.html.
Australian broker NCI advises that trade credit insurance claims from the third quarter of 2012 are the highest they have been since the height of the global financial crisis (GFC). Insurance Business has published an article, 'Broker: Trade credit insurance hits GFC levels,' (23 October), which advises that NCI's quarterly credit risk index found there has been a 24% increase in the number of claims placed, and a 41% increase in the dollar value of claims in Australia. In addition, 60% of key industry credit managers surveyed have seen an increase in requests to extend credit terms. To view the full article on Insurance Business' website go to http://www.insurancebusinessonline.com.au/article/broker-trade-credit-insurance-hits-gfc-levels-144761.aspx.
Chartis helps combat threat of cashflow problems with new debt recovery product. Chartis has announced that it is partnering with STA International to offer its Trade Credit policyholders a service that will help to accelerate debt recovery. STA Managing Director Colin Thomas, said: “Our approach is to move quickly; to get a recovery strategy in place within place 24 hours. At the same time we do everything we can to protect the policyholder’s relationship with the supplier by acting in effect as an extension of their credit control team. This approach has delivered considerable success; our recovery rate is significantly higher than the industry average.” According to a recent report by Sopra Group Solutions, a 20% increase in debt collection cases is anticipated in the coming year. To view Chartis' press release go to http://www.chartisinsurance.com/news-archive_2538_362403.htm
'Be prepared' is the message for UK businesses who want to profit from the excellent trading opportunities in Africa says Coface. Following the announcement last month that Coface was strengthening its own presence on the African continent, the company is now offering advice to businesses who want to expand into one of the fastest-growing regions in the world. Grant Williams, Coface UK's Risk Underwriting Director said: "Coface's latest expansion to Ghana, Ivory Coast and Senegal means that we are the only credit insurer with a direct presence in nine countries in western and central Africa, demonstrating our confidence in this commercially dynamic region. In fact, the amount of business in Africa insured by Coface in the UK has increased by 24% in the first nine months of 2012 alone." To view Coface's full press release go to http://www.cofaceuk.com/CofacePortal/UK/en_EN/pages/home/who-we-are/news?news=121022.
Tinubu Square’s Risk Management Center is available for the B2B market and aims to lower the costs associated with risk management by up to 50%. Tinubu Square has announced the latest release of its Tinubu RMC (Risk Management Center) platform, designed for business-to-business organisations. Tinubu Square advises that by using Tinubu solutions, companies market to and service only “acceptable risk” customers, which helps to reduce DSO (Days Sales Outstanding) by up to 25%, improve cash flow and increase working capital etc. For companies with a trade credit insurance program, Tinubu solutions aims to streamline administrations, reduce claims and achieve higher covers, all of which can, according to Tinubu Square, lower the cost of risk management by up to 50%. Tinubu RMC is the first and only cloud-based, SaaS solution for B2B credit intelligence and operational reporting, providing support on trade credit risk exposure. To find out more about the solution please call +44 (0)207 469 2577 or email email@example.com.
'An urgent cry for help from indie fashion stores.' UK designers are on a roll, but their nurturing grounds on the UK's high streets are going down like ninepins. Paul Turner Mitchell wants action on business rates and credit insurance insurance. http://www.guardian.co.uk/uk/the-northerner/2012/oct/22/stella-mccartney-vivienne-westwood-fahsion-indies-high-street. © Guardian News and Media Limited 2012.
'Downgrade shakes trade credit insurers.' Insurance brokers have warned that a decision by Standard & Poor’s to cut its rating for one of the world’s biggest trade credit insurers, Atradius, to near “junk” . . . http://www.ft.com/cms/s/0/0ca8c0be-1a23-11e2-a179-00144feabdc0.html#axzz2AJg3cTJX. © THE FINANCIAL TIMES LTD 2012.
How can the credit insurance industry improve their policy and/or service offering? EFCIS has launched a competition with a bottle of Champagne as the prize. To enter, send your views on how the credit insurance industry can improve their policy and/or service offering, to firstname.lastname@example.org. (Please mention Credit Insurance News Digest).
Your attention is also drawn to the following, copyright restricted, articles in The Guardian and The Financial Times which specifically mention trade credit insurance:
'Atradius seeks to reassure with new rating.' Atradius, the insurer whose credit ratings Standard & Poor’s this month cut to near “junk” status, has moved to reassure clients by securing a stronger rating . . . http://www.ft.com/cms/s/0/c87f5a22-1f92-11e2-841c-00144feabdc0.html#axzz2AhHLiHyK. © THE FINANCIAL TIMES LTD 2012.
10 Misconceptions about Credit Risk Insurance in the U.S. market. Trade Risk Group has published an article on its website, '10 Misconceptions about Credit Risk Insurance,' which examines the top 10 misconceptions U.S. businesses have about trade credit insurance which, it advises, keeps "this valuable and useful product sidelined in North America." The article also aims to "convey a better understanding of this useful product and its benefits." To view the article go to http://www.traderiskgroup.com/news-resources/.
Atradius reports good news for the UK car industry, but "the picture is not so rosy elsewhere." Atradius has published it latest 'Market Monitor.' This issue features the automotive and transport sectors´ performance and outlook in: Belgium, China, Czech Republic, France, Germany, Spain, the UK, and the U.S. To view the report, go to http://global.atradius.com/creditmanagementknowledge/market-monitor/latest-market-monitor.html.
Opportunities for UK Businesses in the Automotive Sector to Shine Against European Competitors says Coface. A new report on the UK automotive sector produced by Coface, says that UK companies which supply automotive manufacturers are well-placed to survive the weak economic climate in the Eurozone. Grant Williams, Coface UK's Risk Underwriting Director said: " . . . we believe companies in the UK automotive sector are in a stronger position than their European competitors. Most significantly, the efficiency of UK car plants and the availability of technical expertise have encouraged manufacturers such as Jaguar Land Rover, BMW and Honda to invest in UK production facilities while Ford has said it still plans to invest in development and production in Essex and South Wales. Many UK plants are now the sole locations for global production to emerging markets such as China and India and this should have knock-on benefits for UK engineering companies and other specialist component suppliers." To view the full press release on Coface's website go to http://www.cofaceuk.com/CofacePortal/UK/en_EN/pages/home/who-we-are/news?news=121031.
Atradius reports that Turkey´s solvency and liquidity position remains reasonably good. Atradius has published its latest 'Country Report Turkey,' which advises that economic growth will slow in 2012 to 3.5% after 8.5% in 2011. Beside less demand from the Eurozone, this slowdown is caused by policy measures to avoid economic overheating. To view the report, go to http://global.atradius.com/creditmanagementknowledge/turkey/turkey-overview.html.
Equinox Global presentation notes from 'The return of political risk to Europe' seminar. Equinox Global has published a detailed PDF of the presentation notes from its seminar, 'The return of political risk to Europe,' which was held on 11 September. Speakers included Juan Arsuaga, MD of Lloyds Iberia who presented, 'Spain: Managing the crisis impact in the insurance market,' and Bernie de Haldevang, head of FinPro International, Aspen Insurance & Aspens Syndicate 4711 at Lloyds who presented, 'The return of political risk to Europe.' To view the presentations go to http://www.equinoxglobal.com/return_to_political_risk_presentation.
EMEA Credit forum will discuss trading credit ensuring risks in emerging markets and trading in emerging markets. EMEA Credit Forum of P&A Receivables together with its partners Aon, Company Watch, SunGard and Tower Associates are holding an event, EMEA Credit Forum, for senior finance & credit professionals who have responsibility for trading across borders in Europe, the EMEA area or globally. The inaugural meeting is on 21st November 2012 at SunGard, 25 Canada Square, Canary Wharf, London, E14 5LQ and is free to attend. The night before there will be a sponsored networking dinner. For more information or to book a place contact email@example.com.
Credit Insurance Industry: New Reports and Surveys
The same old wine in a brand new bottle: 'Euler Hermes Outlook' predicts that 2013 will be about the resilience of households and companies. Euler Hermes has published its latest 'Euler Hermes Macroeconomic, Risk and Insolvency Outlook - October 2012,' which is available upon demand or via subscription. To request a copy or subscribe, please use Euler Hermes' contact form.
ICM British Credit Awards 2013. ICM has announced that the ICM British Credit Awards for 2013 are to be held at the Hilton Park Lane Hotel, London on 6 February 2013. The awards categories cover all the different aspects of credit from consumer and commercial lending to credit insurance, use of technology and business information, and include: Credit Insurer of the Year, Commercial Finance Provider of the Year, Credit Information Provider of the Year, Credit Professional of the Year. The closing date for entries is 5pm on Friday 16 November 2012. For more information go to http://www.icmbritishcreditawards.com/static/home.
Career Opportunities and New Appointments
Credit Risk Underwriter, London - Salary up to £50,000 p.a.
Exciting times and a great opportunity for an experienced Credit Risk Underwriter to join this top notch team to work across a range of sectors. You will provide expert analysis of the credit risk in response to enquiries from policyholders and generally manage the risk exposure of your client portfolio to achieve an acceptable loss ratio. You will be an excellent broker and client relationship builder, and will have direct contact with both. Ref:- 0711/kl. Please contact Kristina@thehubagency.co.uk or 07931-371990 for further information. (Please mention Credit Insurance News Digest if applying).
Political Risk Underwriter, Lloyds Syndicate
Political Risk Underwriter, Lloyds Syndicate seeks and experienced, ACII qualified, political risk underwriter to join and contribute to their knowledgebase. You'll be the No.2 to the active underwriter and will be expected to offer guidance to more junior members of the team. Experience in underwriting complex risk is essential. For details contact Kerren Leach, Reed Actuarial & Reed Insurance: Tel: +44 (0) 207 220 4777. Mobile: +44 (0) 7940 40 30 46.or email Kerren.Leach@reedglobal.com. (Please mention Credit Insurance News Digest if applying)
Chartis has announced the appointment of three new underwriters to its Trade Credit team. Tony Smith, David Major and Steven Kent will all be based in London, reporting to Will Clark, Trade Credit Manager (UK). All three appointments join Chartis from Euler Hermes and have significant experience in the industry, ranging from 15 to 20 years. Earlier in his career, Tony Smith held roles at Mitsui & Co and Charles Letts & Co. David Major and Steven Kent have both previously worked for Coface and Atradius. To view Chartis' press release go to http://www.chartisinsurance.com/news-archive_2538_362403.html.
Euler Hermes’ specialist XoL underwriting team was recently established in London. It is led by Mark Moran who has more than 15 years of credit risk and commercial underwriting experience, most recently serving as European vice president with Chartis Europe (formerly AIG Trade Credit). The Euler Hermes underwriting team also includes Alexia Parmentier, an international risk and commercial underwriting specialist and Tim Hoggarth, whose global underwriting expertise includes engineering, forest products and emerging markets. Both were formerly with Chartis Europe.
Business Information. Recommended Reports and Surveys
Southern European private companies are healthier than their public peers, finds S&P Capital IQ. According to new analysis from S&P Capital IQ, privately-held businesses in debt crisis-stricken Portugal, Spain and Italy are in many respects in better financial health than their publicly-listed peers. While recent investor concerns over the ability of Portugal, Spain and Italy to service their sovereign debt have helped to depress local equity markets, S&P Capital IQ's analysis shows that - in the aggregate - private companies in those three countries enjoy better short-term liquidity profiles and revenue growth reports while maintaining lower leverage rates than their public counterparts. "These findings highlight that, while many public companies in Southern Europe are in distress on account of what are perceived to be troubled markets and heightened country risk, their private counterparts may be in position to fare better over the coming months," commented Silvina Aldeco-Martinez, Managing Director of S&P Capital IQ. To view S&P Capital IQ's press release go to http://img.en25.com/Web/StandardandPoors/SPCIQ_PrivateCoData_SouthernEurope_PressRelease_23Oct12.pdf.
Latest 'Red Flag Alert Report - Q3 2012' shows a divided nation. The most recent Begbies Traynor Red Flag Alert research, which monitors the financial health of “Corporate UK”, shows a starkly divided nation with marked increases in financial distress amongst businesses based in the North and SMEs, whilst Southern based and larger businesses have shown marked improvements in financial health. The quarter on quarter increase in ‘Significant’ distress levels amongst SMEs (up 10.5%) also indicates the growing impact of zombie businesses - those companies who are in debt and are only just generating sufficient cash to survive - and the choking effect they are having on the natural UK recovery cycle. To view the full report, go to http://www.begbies-traynorgroup.com/default/news/12-10-19/latest_red_flag_alert_report_-_q3_2012_-_a_divided_nation.aspx. To find out more about Red Flag Alert, request a call back from one of their representatives by clicking here - http://dotsurvey.me/001cyof4-8f6yw1c.
Agents of Growth: How UK mid-sized businesses are beating the market. As part of its current drive to champion the UK’s Mittelstand, Grant Thornton was commissioned by the Daily Telegraph to to produce a study looking at what is really happening with mid-sized businesses in the UK today; and has now produced a report which tells of high productivity, rising turnover and head count, as well as faster export growth. To view the report go to http://thinking.grant-thornton.co.uk/elevate/index.php/elevate_templates/article/uk-mid-sized-business-beating-the-market/. A link to an article which appeared in The Telegraph: 'UK’s 'forgotten sector’ that is key to economic recovery,' is also given.
UK ranked 7th for ease of doing business by World Bank report. The World Bank has published the 10th edition of its report 'Doing Business 2013,' which provides objective measures of business regulations for local firms in 185 economies and selected cities at the sub-national level. According to the report, Singapore topped the global ranking on the ease of doing business for the seventh consecutive year, with Hong Kong SAR, China; New Zealand; the United States; Denmark; Norway; the United Kingdom; the Republic of Korea; Georgia; and Australia also in the top ten. For more information and to view a copy of the report go to http://doingbusiness.org/. (Note: The World Bank: The World Bank authorizes the use of this material subject to the terms and conditions on its website, http://www.worldbank.org/terms).
Global Business Index reports that confidence in the UK economy is a bright spot in Europe - although this may be temporary due to a successful summer of events. The fourth 'Sage Business Index,' a global measure of confidence across small and medium sized companies, is now available and has been expanded to survey 10,861 businesses from 15 countries, this time adding Brazil, Poland, Portugal, Switzerland and Ireland. The Index advises that when asked about the global economy, businesses felt that the economic outlook is slightly worse than at the start of this year, with an Index rating of 42.59 on a scale of 0 (declining) to 100 (improving), down from 43.95 in March. For more information and to view the detailed Index go to http://businessindex.sage.com/.
Who's UP/Who's DOWN
UP: Apple has reported that its quarterly profits increased by 24%, driven by a surge in sales of the iPhone which accounts for 47.6% of revenues. Profits in the last three months were $8.2 billion - up from $6.6 billion last year, with revenues of $36 billion - up 27%. For the entire fiscal year, Apple said revenue was $156.5 billion.
UP: Samsung has announced a doubling of quarterly profits compared to a year ago, due primarily to the huge success of Galaxy smartphones. Quarterly profits have now reached £4.59 billion - around 20% of South Korea's GDP. The company also recently won its case against Apple when it was legally judged that Samsung's products do not infringe on Apple's designs. In addition, the judgment ordered Apple to publish a number of ads in the UK stating that there was no infringement.
UP: Asos has reported a 40% rise in pro forma underlying annual profit to £44.5 million for the year to August 31, while revenues increased by 37% to £552.9 million. UK sales were up 10% to £205 million, while international sales overall were up 64% to £333 million. Asos is now expecting to launch websites in both China and Russia in 2013.
UP: Sports Direct has announced that in the nine weeks to 30 September, it saw an 18% increase of group total sales rise to £402.7 million, while across the group as a whole gross profit rose by 21.7% to £167.4 million. Sales were driven primarily by the Group's UK Sports Retail division's 16.8% increase in sales to £295.1 million resulting from the London Olympics. Earlier this month, Sports Direct purchased 20 stores from it former rival JJB Sports (in administration).
UP: Whitbread, the owner of Premier Inn and Costa Coffee, has advised that its half-year profits have increased by 11% to £193.4 million, while total revenues climbed 14.2% to just above £1 billion. Costa performed particularly well, reporting underlying profits up 30% to £36.1 million.
DOWN: Comet has been widely reported in the National Press today (1 November) as very likely to appoint administrators Deloitte in the next day or so. The retailer's recent problems are well known; it is just 8 months since Comet was bought for £2 by OpCapita, while, in recent weeks, it had been reputedly required to pay up-front by many of its suppliers following the withdrawal of credit insurance. The demise of Comet would be one of the biggest retailer failures since Woolworths. Approximately 7,000 jobs and 240 stores are at risk.
DOWN: Santander's Spanish parent, Banco Santander, has reported that its profits decreased by more than 90% in the third quarter - primarily caused by bad property loans in Spain. The group's net income also fell substantially to €100m compared with €1.8 billion in Q3 2011. UK profit fell 21% to €337 million in the three months.
DOWN: HTC, the Taiwanese handset manufacturer has reported a 79% decrease in its Q3 net profit to $133 million from $639 million during the same period last year, and now expects an equally gloomy Q4. HTC downturn in profits is primarily due to increased competition from iOS and Google Android based smartphones from Apples and Samsung.
DOWN: Ford has forecast that its Europe losses will top US$1 billion this year, and in order to help return the business to profitable growth has now announced plans to restructure its European operations. As a result, both its Southampton plant as well as its Ghent plant in Belgium are set to close in July 2013 and 2014 respectively. Ford reported a second-quarter pretax loss of US$404 million in Europe, compared with a profit of US$176 million a year earlier.
DOWN: Mulberry has issued a profits warning following disappointing international retail sales and reduced wholesale shipments. Full year profits are now predicted to fall below last years £36 million, and substantially below the £43 million previously forecast. Mulberry has become the latest luxury fashion brand to warn on profit, following similar action by Burberry last month.
About this week's sponsor: GTR
GTR is the world’s leading international trade, commodity, export and supply chain finance magazine, read by and featuring the market’s key banks, credit insurers, corporates, traders, law firms, brokers and consultants.
Published six times a year, and with an editorial board that reads like a ‘who’s who’ of leading players in the market, GTR provides timely and in-depth news, leads and analysis on the global emerging markets trade finance, export finance and risk markets. The magazine is the accepted premier forum for the global trade finance market.
You can also keep up with the latest on trade finance market trends online at www.gtreview.com. GTR online gets the market talking about the key issues affecting your business, so feel free to add your comments to our stories.
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Credit Insurance News Digests: Sponsorship
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