Chief exec Desnos reports company is back in growth mode
Euler Hermes UK chief executive Fabrice Desnos said the trade credit insurer is writing around £3bn of new exposures per month in 2010 as the economy recovers.
Desnos did not give exact comparative figures, but said fresh capacity in 2010 was seeing a “substantial increase” on the year before. “We have written £3bn of new cover every month since the start of this year,” he said. “In April alone, we identified 6,000 businesses where we felt we could increase capacity and invited clients to apply for increased capacity.”
While he expects the levels of corporate insolvency to remain high, in part due to the public spending cuts and increased taxation necessary for economic recovery, Desnos said that the recession in most developed countries, including the UK, was bottoming out, resulting in a more predictable risk environment.
In addition, companies are being more open with their financial information. “Companies are keener to share information with us about their own performance, and that enables us to write more cover with increased confidence,” Desnos said.
At a group level, Euler Hermes is showing signs that it is putting the financial crisis behind it, after posting improved Q1 results.
The firm’s net profit increased to €47.6m (£41m) from €16.5m last year’s first quarter. Its operating profit rose 65% to €61.7m and the combined ratio improved to 90% from 103%. Turnover fell 7.8% to €505.5m in 2010, from €548.5m in the same period last year, as companies continued to scale back their cover limits with the insurer.
Desnos noted that the turnover was a “strong increase” on fourth-quarter turnover of €489m last year, and the company was back in growth mode.
While Euler Hermes does not report numbers for the UK operation alone, Desnos said: “We see similar trends in the UK as we have seen elsewhere in the group.”