Fitch predicts return to profitability following difficult conditions in 2009

Trade credit insurers will bounce back into profitability this year after trimming their risks and tightening up on underwriting, Fitch says.

The three main credit insurers – Coface, Euler Hermes and Atradius – suffered in the first half of 2009 as collapsing businesses sparked a flood of claims from out-of-pocket suppliers. Atradius reported a loss of €105m (£92.47m) and Coface a loss of €117m, while Euler Hermes scraped a small profit of €700,000.

Fitch said improvements included “reducing the most sensitive exposures, tariff increases, tightening of terms and conditions and, in extreme situations, the cancellation of policies, typically produce tangible improvements in underwriting results within 12-24 months, due to credit insurers’ ability to quickly re-underwrite this short-tail business”.