Technical loss “more than offset” by financial income
Credit insurer Euler Hermes posted a technical loss of €59.5m but offset that by investment earnings to break even and produce and operating income of €35.4m.
First half highlights (2008 in brackets)
- Net income €0.7m (€122.3m)
- Turnover €1,084.5m
- Technical result: -€59.5 million (€114.2m)
- Operating income: €35.4 million
- Combined ratio after reinsurance. At 109.1% (82.5%)
- Net cost of claims up by 23.9%.
Wilfried Verstraete, chairman of the Euler Hermes group management board said: “Economic conditions continued to deteriorate throughout the second quarter of 2009. Many companies’ sales contracted and their cash positions worsened, resulting in a significant increase in the number of corporate failures since the beginning of the year.
“The current crisis has also impacted Euler Hermes, with earned premiums eroded by the drop in insured sales linked directly to the very difficult economic conditions and a rise in claims, which weighed on group profitability.
“Despite this difficult environment, Euler Hermes posted a positive operating income for the first half of 2009.”
Saved by investments
The insurer said: “The group’s financial income more than offset its negative technical result, and operating income for the six months to end-June 2009 was positive at €35.4 million. It was, however, down by a very sharp 82.4% compared with the same period in 2008.”
Corporate failures to rise
Euler Hermes expects the number of corporate failures to increase by a further 35% in 2009, following a 27% rise in 2008.
It said: “In the first half of 2009, economic indicators of all countries continued to deteriorate. The fragile situation and the slow pace of the expected recovery will prevent any rapid decline in the number of corporate failures.
“Against this background, Euler Hermes does not foresee any significant improvement in the level of results before 2010.
