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Euler makes second reduction in DSGi credit insurance

Paul Kunert

Only weeks after Euler Hermes cut credit insurance for troubled retailer DSGi the underwriter has taken further steps to reduce its exposure to the business.

As exclusively revealed by Microscope prior to Christmas, Euler the largest credit insurer in the UK IT channel reviewed DSGi's limits and reduced the lines to the actual level of trade with suppliers.

However, DSGi is still viewed as risky according to sources in the channel and major suppliers have today seen a 50% to 60% reduction in insured limits while others have reported a complete withdrawal of credit insurance.

A spokesman at DSGi re-iterated the statement made weeks ago when Euler first took corrective action, stating that credit insurers were reducing their limits across many industries including retail and the issue was not specific to his company.

He refused to make any additional comments ahead of a trading statement to be released next week to update the market on its sales over the festive period.

According to sources Euler was pre-empting bad news and its move could have implications for the retailer's cash flow and Ts&Cs with suppliers.

"All financial directors within distribution will be looking at their business with DSGi," said one wholesaler, "and there will be changes to Ts&Cs, including a reduction in the 90 days that it takes to pay suppliers currently."

The reduction in cover by Euler is more serious as it eats into suppliers' level of insured trade with DSGi but could be followed by further cuts from Atradius, which already reduced unused limits late last year.

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