Credit Insurance News Digest

Credit Insurance News for Credit Insurance Professionals
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Dear Credit Insurance Colleague
Welcome to issue 10 of Credit Insurance News Digest: 4 - 18 October.

This issue is kindly sponsored by Atradius.


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Index


Credit Insurance News
Atradius urges SMEs to use trade credit insurance to obtain finance. Atradius has urged companies to consider trade credit insurance as a means of gaining funding as well as protection from payment defaults and has stressed that by insuring payments, businesses can improve their own finance terms. The advice comes after a report commissioned by the banking industry earlier this month, which found that only 43% of firms used external finance, compared with 51% just three months earlier, indicating a sharp drop in lending. In addition, a third of businesses that had applied for loans had been turned down, along with a fifth of those that had applied for an overdraft. Alun Sweeney, Director of Atradius UK and Ireland, said: “During these difficult times when much of the business community is struggling to gain credit and an increasing number of firms are resorting to using personal funds in order to finance businesses, trade credit insurance should be actively considered as another means to increase bank lending.” To view Atradius' news release go to http://www.atradius.co.uk/corporate/press-relases/atradius-urges-business-to-use-tci-to-get-finance.html.

Trade Credit Insurance to triple in the US in the next 5 years. PropertyCasualty360.com has published an article, '4 Business Benefits to Having Credit Insurance', by Robert Hawthorne of Coface USA, which examines the benefits of trade credit insurance for companies in the U.S. and advises that  credit insurance premiums in the U.S., currently about $800 million, are expected to triple in the next 5 years.  As exports by American companies—especially SMEs—have grown by nearly a third in just 3 years, the article suggests that the current European economic crisis, and other regional concerns in Latin America and the Middle East, have made credit insurance a must for companies. To view the full article go thttp://www.propertycasualty360.com/2012/09/26/4-business-benefits-to-having-credit-insurance?utm_source=CreditInsuranceNewsUK&utm_medium=eNL&utm_campaign=PC360_LinkBuilding.

Euler Hermes increases credit insurance support to UK exporters. Trade Finance has published an article,  'Euler Hermes increases cover for UK exporters' (28 September) in which Euler Hermes advises that in the first six months of 2012, it increased the value of credit limits underwritten for UK exporters by 6.5% – underwriting the equivalent of approximately £30 billion of trade. Demand in Russia and India was particularly strong. To view the full article on Trade Finance's website go to http://www.tradefinancemagazine.com/Article/3096052/Search/Results/Euler-Hermes-increases-cover-for-UK-exporters.html?Keywords=Euler+Hermes  (subscription required, or free 7 day trial available).

Chamber of Commerce complains of a lack of support for businesses from the credit insurance industry.  Midlands Business News has published an article, 'Black Country Chamber of Commerce calls for greater assistance to SMEs wishing to export' (2 October) in which the Black Country Chamber of Commerce  comments that a lack of credit insurance is preventing some SMEs from exporting, and that  there has been a lack of support for businesses from credit  insurance industry over the past four years. The article also advises that the Chamber would welcome a code of conduct that would ensure that insurance providers’ decisions are both transparent and fair.  To view the article of Midlands Business News' website go to http://www.midlandsbusinessnews.co.uk/2012/10/black-country-chamber-of-commerce-calls-for-greater-assistance-to-smes-wishing-to-export/.


New Reports and Clips
Reports from Credit Insurers:
Unpaid businesses on the rise in North America, according to Atradius study. Over 5% of monies owed by customers is written off by North American businesses as uncollectable debt, according to the latest research from  Atradius. The latest Atradius Payment Practices Barometer, which surveyed businesses in North America shows an increase on the previous year. Uncollectable debts rose significantly in Canada, Mexico and the USA. In Canada from 2.9% in 2011 to 5.2% in 2012; in Mexico from 4.3% in 2011 to 5.2% in 2012 and in the USA from 4.6% in 2011 to 5.6% in 2012. This compares negatively with the position in Western Europe which has remained stable since the previous year, at just 3%. Andreas Tesch, member of the Atradius N.V. Management Board commented, “Insolvencies in the United States have been declining for the past two years. The survey responses showing an increase in uncollectable receivables highlight the fact that lower insolvency rates do not necessarily translate into fewer payment defaults. To the contrary, it emphasises the importance of due diligence and protection against payment defaults.”   To view the Barometer go to http://www.atradius.co.uk/creditmanagementknowledge/publications/europeanpaymentbehaviour.html.
 
Euler Hermes advises that the global automotive sector will hold up well in 2012 and 2013. Euler Hermes has published its latest analysis of the the global automotive market, 'The global automobile market returns to cruising speed', which advises that the global automotive market is expected to hold up well, with 4% growth in 2012 and 2013. The analysis also found that production of private and commercial vehicles should reach 83.3 million units this year, and close to 87 million units next year. The industry owes its performance to the emerging economies, first and foremost China and India. “In a global market posting stable growth, Europe is lagging behind. More than ever, manufacturers must now have an international presence and market specific product range to achieve the returns necessary to finance investment and research”, commented  Wilfried Verstraete,  Chairman of the Euler Hermes Group Management Board. To view Euler Hermes' press release go to http://www.eulerhermes.com/mediacenter/.

Yves Zlotowski, Chief Economist Coface, comments on the global economic outlook. Yves Zlotowski, Coface Chief Economist, has given his opinion on global economy evolution, the Spanish banking problem and Chinese economic policy in a video clip which can be viewed on Coface's website and YouTube. To view, go to http://www.coface.com/CofacePortal/COM_en_EN/pages/home/risks_home/country_risks/news?news=120925.

Additional recommended reports:

UK town centres in 2020. Experian has published a new report, 'Town Centre Futures 2020', which sets out how the UK’s town centres will have changed by the end of the decade and what town centres, high streets and retailers need to do to survive and thrive. The report also identifies key factors that will leave a permanent mark on 1,200 UK town centres by 2020. To download the report from Experian's website complete the form at http://www.experian.co.uk/marketing-information-services/town-centre-futures-2020-whitepaper-landing.html.

Low levels of construction activity across all sectors. Drivers Jonas Deloitte has published its latest,  'UK Cities Crane Survey Summer 2012', which monitors developments in Manchester, Leeds, Birmingham, Glasgow and Edinburgh, with the latest results showing low levels of activity across all sectors. To download the report from Deloitte Jonas Driver's website complete the form at
http://www.djdeloitte.co.uk/?doc=45251.



Industry Events
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 award 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 5pm on Friday 16 November 2012. For more information go to http://www.icmbritishcreditawards.com/static/home.

Aon Insight "Exporting for growth". The second of Aon's Insight events, 'Exporting for growth', is being held on Wednesday 31 October at The London Film Museum. The event, hosted by Aon Trade Credit and sponsored by Atradius, is an opportunity to hear invaluable insight from speakers on current global economic trends and the impact on exporting, as well as specific export market updates on the Middle East and Africa and India.  The morning presentations will also be followed by a networking opportunity over lunch.   For further information or to register go to http://www.thehub-aon.co.uk/media-centre/events/insight-2012-exporting-for-growth.

Reynolds to give top tips on how to get the most out of credit insurance. The Association of Credit Professionals is holding a conference, 'Advance your Skills in Credit Management',  on 18 October at Amex Community Football Stadium, Brighton. Some of the topics covered include: 'Top Tips - Get the most out of Credit Insurance in 2012, by Andre Carnie of Reynolds (Reynolds are also a sponsor), 'Do's and don'ts of Credit and Business Intelligence' by Equifax, and  'Insolvency in the UK 2012' by Moore Stephens LLP. The event is free for ACP members and £60 for non-members and includes lunch and refreshments. Places are limited. Contact richard@youracp.org  (quoting: Credit Insurance News Digest) to confirm your attendance or to book a ticket.


UK: Late Payment
Late payment has again been in the news this week, with two new reports from Bacs and British Chamber of Commerce (BCC) which indicate that the cumulative cost to UK business as a result of late payment, together with the number of companies affected, is soaring. According to Bacs, £36.4 billion is now owed to UK SMEs - the highest amount ever. Bacs has also calculated that delayed invoice settlement alone will cost smaller UK businesses nearly £700 million in 2012.
 Although the Government and other industry bodies have instigated a series of initiatives over the past few years to ameliorate late payment culture, there is little sign of any success so far. In fact, conversely, there are some indications that late payment is becoming even more entrenched. Not only is the amount owed to UK SMEs now over £12 billion higher than less than 2 years ago according to Bacs, there is every indication that the number of businesses experiencing late payment is growing. BCC suggest that 94% of businesses are now impacted by the issue, while Bacs finds that the number of SMEs impacted has risen from 785000 to more than a million in less than 1 year.
 In addition, a comparison of Bacs past surveys show that SMEs are now waiting even longer for invoices to be settled, with an average of 29.6 days beyond terms reported at the end of last year contrasting with over 43 days in the current survey.
 The tough economic climate is certainly to blame to some extent: 47% of UK the SMEs surveyed by Bacs saying that cash-flow problems is cited as an excuse or non-payment, while 33% of companies surveyed by BCC admit to paying beyond terms due to cash-flow constraints caused by the knock-on impact of their own late-payment. However, there is also ample evidence to suggest that late payment has simply become an accepted fact of business life – common practice which may bear little relation with companies' actual ability to pay. The CEO of Lovetts went even further this Summer, when he described late payment as a ‘badge of honour’ which would not be tolerated in many other countries.
           
Some hard data:
  • According to Bacs’ survey of 478 SMEs, the number of UK SMEs businesses facing late payments has now surpassed one million, with a total collective debt of almost £36.4 billion - up from £35.3 billion in December 2011 and £24 billion two years ago.
  • While there are regional differences across the UK as a whole, Bacs also found that the average amount owed to UK SMEs has decreased to £36000 from £45000 in December 2011 and £39,000 earlier in 2011. Although ostensibly good news, taking into account the cumulative amount owed this underlines the fact that more SMEs are being adversely affected by late payment.
  • 59% of UK SMEs experience late payment, according to Bacs. This is an increase of 14% on the number of SMEs affected in June 2010.  SMEs in the Midlands have the worst experience, with 63% affected.
  • The BCC’s nationwide survey of 5343 companies found that 94% of companies experience late payment. In addition, 24% of companies surveyed report that more than 40% of payments are received later than agreed terms.
  • Bacs found that the average UK SME experiencing late payment now has to wait 43.4 days beyond payment terms for payment, with Northern businesses  waiting even longer - an average delay of 46.8 days. The most common payment terms according to BCC is 30 days, with 70% of business using this as their standard term.
  • 37% of companies surveyed by Bacs and 34% of companies surveyed by BCC  found that the worst late payment offenders are large companies. Government and not for profits were at the bottom of the offenders’ list.
  • The potential consequences for UK SMEs are obvious, with 35% of SMEs surveyed by Bacs advising that late payment debts of up to £20000 (£16000 less than the average overdue amount) would be sufficient to put them out of business.  
Primary Sources
Talk Business, 11 July, Late payment is ‘badge of honour’ for British businesses.
Bacs Payment Schemes Ltd - press release 24 May 2011, British corporates are worst offenders in £24 billion late payment debt.
Bacs Payment Schemes Ltd - press release 2 November 2011, Late payments at all-time high as SMEs wait longer to get paid.
Bacs Payment Schemes Ltd - press release 15 May 2012, Overdue payments exceed £35 billion for UK SMEs.
Bacs Payment Schemes Ltd - press release 28 September 2012, Late payments debt high enough to put UK SMEs out of business
.

BCC – news release 28 September 2012,  Late payments add to cashflow woes for businesses.


Who's UP/Who's DOWN
UP:  Lloyd's of London has reported a return to profitability with a pre-tax profit of £1.53 billion for the first-half of 2012. This compares with a huge loss of £697 million in 2011. The substantial rise in profits was due to the fact that there were no major natural disasters in the first half of 2012. In contrast in 2011, following the Japanese tsunami and other natural disasters, claims surged and the year became the costliest on record.
UP: Aldi has reported a rise of 200% in UK profits for 2011, with a profit of £57.8 million compared to a loss of £56 million the previous year.  Turnover also increased to £2.76 billion during 2011, compared to £2.14 billion in 2010. Research by Nielsen found that Aldi's customer base had grown by more than 1 million since 2010, and that the company now has 4.1% slice of the UK grocery market - a 54.1% increase in marketshare compared to just a year earlier.  The company is set to open 40 new stores by the end of 2013
.
UP: TheHut.com has announced that its sales during the first half increased by 54.3% - reaching £66.2 million (£42.9 million in 2011), with visitors to the group's website increasing by 37.8% to 44.1 million.  EBITDA rose from £300,000 to £4 million.
UP: Arsenal has announced that they made a pre-tax profit of £36.6 million for the last financial year ending May 31, 2012 - a substantial increase on the previous year's pre-tax profit of £14.8 million. The increase is due primarily to the £40 million sale of footballers Robin van Persie and Alex Song. Revenues decreased from £255.7 million to £243 million, due to lower property sales, while turnover from football activities increased from £225.4 million to £235.3 million.
UP: Zamano, the Irish mobile data services company, has announced that it achieved first-half revenues of €9.463 million - an increase of  51.7% on the same period last year. Pre-tax profits increased to €946,000 from a pre-tax loss of €530,000.  The Group now anticipates a strong trading outcome for the full year 2012.
UP: Aryzta, the global food business, has reported pre-tax profits of €444.1 million in the year to the end of July -  12.9% higher than the same period in 2011. Revenue increased by 8.5% to €4.21 billion, with growth primarily outside Europe.  Despite, what the Group called a 'satisfactory' performance, looking forward it has now sharply downgraded its expectations for 2013.

UP: M&C Saatchi have announced a pre-tax profits in the first half of 2012 to £8.7 million - an increase of 13%.  Operating profit in the UK also increased by 15% year on year, while total group operating profit was £8.6 million. The UK accounts for 64% of pre-tax profits and 44% of revenues. New UK clients include
Twitter and Spotify.
UP: Shepherd Neame has advised that its turnover for the first half of 2012 increased to a record £133 million - an increase of 9.6%. In addition, pre-tax profits at £9.1 million were nearly 40% higher than in 2011.  Beer sales were up 5.6%, and food sales performed particularly well with a 10.9% increase.

UP: Sainsbury's has announced that its total sales in Q2 increased by 4.4%. and by 4.1% for the entire first half. Like-for--like sales were also higher: 1.9% in the first Q2 and 1.7% in the first half. Sales were boosted by the retailer's official sponsorship of the Paralympic Games and a 20% growth in online sales.

DOWN:  As expected, Tesco has reported a fall in pre-tax profits of 11% to £1.66 billion - its first fall in profits in nearly 20 years.  On the brighter side, there were some tentative signs that the retailer's £1 billion store investment programnme is beginning beginning to pay off as there was an increase in like-for-like sales in the three months to 25 August of 0.1% excluding fuel - the first rise for seven quarters. Tesco, despite being world's third largest supermarket group, still makes over 60% of its trading profit in the UK.  Internationally, sales were down 17% to £378 million. 
DOWN: JJB Sports has now called in the administrators having after failing to find a buyer. It has also announced that it is due to sell 30 of its stores as a going concern, as well as its brand and website to Sports Direct. 133 stores could not be saved and will close with immediate effect.
DOWN: Boden has advised that its pre-tax profits for its full year (to 31 December 2011)  have reduced by 45% from £32.5 million in 2010 to £17.9 million  - largely due to higher cotton prices.  Sales growth remained modest in the UK, with the best growth in Germany (up 21%) and the U.S. (up 9%). Total group sales increased by 6% to £245.9 million.
DOWN: HMV has announced  a decease in like-for-like sales of 11.6% in the 20 weeks to September 15th 2012. Total sales fell by 14.8%. The retailer has blamed the lack of new releases over the Summer as the cause of the downturn to its sales, but also advises that the number of new releases out over the Christmas period should help drive improved sales.
DOWN: Moy Park, the Northern Irish Poultry food company, has announced an 82.8% decrease in pre-tax profits to £4.8 million for the year ended 31 December 2011, which it has blamed on the surging price of poultry feed and other raw materials. This result comes despite the fact the the company achieved its greatest ever turnover, up by 16.4% to £1.1 billion.



Current Career Opportunities/New Industry Appointments
Career Opportunities - Please quote Credit Insurance News Digest if applying.
Trade Credit Team - London. Our client, a Lloyd’s Broker, is looking to recruit a team able to set its own budget and business plan. You will have a proven track record of business production and ideally have experience in dealing with Global Corporate clients. This is an excellent opportunity to build your own business in a dynamic trading environment. Contact: David Flint, KPM Search, D) 020 7670 1986, M) 07946 740 458, E-Mail: d.flint@kpmsearch.co.uk

Credit Insurance Account Director, Birmingham - Competitive Salary & Benefits. Fantastic opportunity to join this top notch Lloyd's Broker in their Credit Risk team as an Account Director. The role will
ideally be based in Birmingham, but Manchester and Leeds would also be considered. Your main responsibility will be to identify untapped prospects via internal networks as well as providing an excellent service to existing and future clients. For this role you will have experience of developing new business within the mid to large corporate client space within an insurance broker and within trade credit insurance. You should be part or ACII qualified, a superb communicator, team player and a client relationship builder. Job Ref. 3022 - The Hub Agency Ltd - Kristina@thehubagency.co.uk or 07931-371990

Producing Broker, London: Top 5 Broking House seeks an experienced Producing Broker to spearhead their Structured Credit team. Proven experience of developing and winning new business is essential within any international market. Package to attract the best. Please contact Kerren Leach on kerren.leach@reedglobal.com / 07940 40 30 46.

Account Handler, London: Top 5 Broking House seek an account handler to join their Trade Credit team who focus primarily on WTO UK & Export business. Some knowledge of the credit insurance market is essential, this could have been gained in an underwriting or broking environment. c.£30k. Please contact Kerren Leach on kerren.leach@reedglobal.com / 07940 40 30 46.

Risk Underwriting Manager, London (Brand New Role): Credit Insurance Provider seeks an experienced Team Manager to join them. You will be managing a small portfolio of clients as well as overseeing a team doing the same. Experience of credit risk within a Credit Insurance, Invoice Factoring, Lease Financing or similar is essential. Excellent package. Please contact Kerren Leach on kerren.leach@reedglobal.com / 07940 40 30 46
.

New Appointments
QBE has announced that it has expanded its trade credit and surety team over the last quarter.  Most recently with Ian Bocca, the Manager of News Business Development in the UK, who will market QBE's Trade Credit offerings and support and grow broker relationships.   John Cross has taken up the new position of Underwriter – Product and Market Development.  Karl McKiernan and Lauren Griffiths have joined the Risk Team - Karl as Risk Underwriter, specialising in the energy and construction engineering sectors  while Lauren will manage QBE's fuel book.  In the Surety team, Bruce Shepherd has joined as Surety Risk Analyst  with Nils Hoppenworth appointed Surety Underwriter in Düsseldorf.

New Appointment at Atradius. Atradius has announced that Delfin Rueda, Chief Financial and Risk Officer, will leave Atradius at the end of October to pursue a professional challenge elsewhere. Chris van Lint, currently Director of Group Risk Management, has been named Chief Risk Officer, pending approval by the Dutch National Bank. A successor for the position of Chief Financial Officer has not yet been named. To view Atradius' news release go to http://global.atradius.com/corporate/pressreleases/delfin-rueda-to-leave-atradius.html.

Euler Hermes strengthens its operation in Asia Pacific. Euler Hermes has advised that it has further strengthened its operations in Asia Pacific with the appointments of Shan Aboo, Francois Bergeron and Victor Jiang. Francois Desnos commented, "They will add strong support to our ambitious growth strategy and benefit our clients in realising the commercial opportunities the region offers."  To view Euler Hermes' news release go to http://www.eulerhermes.com/mediacenter/.

 

About Atradius
The Atradius Group provides trade credit insurance, surety and collections services worldwide. With a presence through 160 offices in 45 countries, it has a market share of approximately 31% of the global trade credit insurance market. Atradius has access to credit information on 100 million companies worldwide and makes more than 20,000 trade credit limit decisions daily. Its products help protect companies throughout the world from payment risks associated with selling products and services on credit. Atradius UK has paid out over £150m in claims in support of Britain’s businesses in the past three years and is committed to developing products to help all types of business to trade safely, both domestically and abroad. Their latest policy has been specifically developed to help media agencies.

 

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The next issue of Credit Insurance News Digest will be out on Thursday 18 October.

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