DSGi suffers further credit insurance cut by Euler Hermes


DSGi suffers further credit insurance cut by Euler Hermes

Microscope contributor

Euler Hermes has given DSGi another vote of no confidence after informing suppliers that their lines will be halved again on 10 March, leading to fears that the underwriter is heading toward a complete removal of credit insurance on the troubled retailer.

As revealed by MicroScope before Christmaa, Euler pulled back insured lines to the actual level of trade with suppliers but at the start of the year cut insurance by 50% to 60%, revealing its concerns about the UK retail sector and DSGi.

In the latest reduction, Euler has informed distributors of its intent to cut existing lines by another 50% "based upon information provided by the parent company" it said in a letter sent to policy holders.

Based on the previous cuts, some suppliers have already renegotiated Ts&Cs with DSGi but have continued to support the business.

Sources have expressed real concerns about the situation, "the next step for Euler is to remove cover entirely, this certainly appears to be the direction it is heading".

Distributors have approached brokers to underwrite business with DSGi but they are only willing to provide fixed term policies for one year, and with a 25% to 30% premium of the credit line applied.

A spokesman at DSGi once again re-iterated comments made to Microscope when its credit insurance was cut before and after Christmas.

"As everyone is aware credit insurers have been reviewing the level of insurance provided to suppliers across a number of industries, including retail, this is not a DSGi-specific issue," he said in a statement.

He added the firm continued to be an important route to market for suppliers and had not seen any changes to Ts&Cs.

In November, rival insurer Atradius was the first to cut limits on DSGi and industry sources feared that it may also look again to reduce its exposure to the retailer.

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