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Euler ups credit insurance by €40bn, predicts fall in insolvencies

Microscope contributor

Credit insurer Euler Hermes has brushed aside continued fears of a double dip recession to forecast a drop in corporate insolvencies for this year and next.

The largest indemnifier on the planet, Euler has started to up limits for customers across a number of industries including IT following a 5% sequential rise in Q2 revenues to €1.03bn, although this represented a 5.4% year-on-year drop.

"The good results allowed us to increase our risk acceptance, and by that, our exposure by €40bn over the last three months," said Wilfried Verstraete, chairman of the Euler Hermes Group Management Board.

The total cost of claims fell 50.5% to €264m which clearly helped bolster operating income to €120.2m compared to a loss of nearly €60m in the first half of 2009.

Euler was heavily criticised by some in the UK IT industry in the last 18 months over its decision to rapidly reduce its exposure, cutting limits on high profile businesses including DSGi Business and SCC.

The global economy continues to gradually recover though it is expected to slow again next year, a point acknowledged by Euler however it predicted a 3% fall in company failures in 2010 and a 5% in 2011.

"Insolvencies should not return to pre-crisis levels," the firm said.

Channel insolvencies have defied gloomy market conditions during the recession, thwarting numerous predictions of a bloodbath, though public sector spending cuts will undoubtedly cause trouble for some incumbent resellers. 


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