Credit insurer Euler Hermes issues profit warning

by Gill Montia

Story link: Credit insurer Euler Hermes issues profit warning

Leading credit insurer, Euler Hermes, has issued a profit warning.

The company, which is owned by German insurer, AGF-Allianz, says that following the collapse of Woolworths Group (UK) and taking into account a higher than expected number of claims in the fourth quarter of the year, it expects to record profit of €100 million, in 2008.

Profit for the nine months to the end of September stands at €152.3 million and the firm is therefore expecting to post a loss of up to €52 million in the final quarter.

The group, which protects worldwide business transactions totalling €800 billion, says it is not expecting any major improvement of the claims environment in the coming months.

Adding that reduced consumer spending combined with tightening financial conditions will continue to maintain pressure on the liquidity of corporates.

In related news, the Confederation of British Industry (CBI) has recently highlighted the dangers of credit insurers withdrawing cover, in a letter to Prime Minister Gordon Brown.

The Confederation has called on the Government to become the credit insurer of last resort, as a temporary measure.

Director general of the CBI, Richard Lambert, explained that in recent weeks a number of companies have had trade credit cover withdrawn.

In some cases it appeared that credit insurers were withdrawing cover from small businesses because of the risk that some of their larger customers may fail.