Credit insurance has shown in 2009 its capacity of service

In 2010, the capacity of Crédito y Caución as a global operator will be especially relevant, given the reactivation of the destination markets of Spanish exports.
Analisis Credito y Caución
Madrid - 23-mar-2010

For the first time since the change in the cycle trend, 2009 has marked a slight reduction in average delinquency rates suffered by Spanish companies, after the intense aggravation registered in 2008. In this environment of gradual stabilisation of risks, the three main levers of credit insurance risk analysis associated to each client, indemnity in the event of default on payment and collection processes have shown their full capacity of service.

The work of Crédito y Caución begins with default prevention, by assessing each of the debtors of our insured parties. In 2009 the Company has issued 2.3 million credit opinions, 32% less than in 2008, which shows a decline in commercial activity. Nonetheless, our structured, technical and dependable response to risk developments has started to reflect a stabilisation in the payment behaviour. At year end 2009 the average risk covered for each insured company exceeded 5.7 million euro, which equates to a 7.2% growth with respect to the previous year.

On the other hand, the Company has faced indemnities through their own resources. This injection of liquidity which generally represents 80% of the insured operation six months after default of payment enabled continuity in the activity of many companies insured after the economic environment of the second half of 2008 and its effects on the risk of default.

The service cycle of credit insurance closes with the collections processes, through which the Company attempts to recover 100% of the amount unpaid. The amounts collected by Crédito y Caución, with the help of a network including over 300 specialised offices, have increased by 42% in 2009, up to 402 million euro.

In parallel to our maintaining service levels through the cycle, technical balance has also been gradually recovered. Credit insurance showed a significant improvement in claims as from the second quarter of 2009, reflecting the downturn, both in number and amount, of claims and maintenance of technical income levels. The claims ratio, at year end, has been of 98%, as compared to 161% in 2008.

In 2009, Crédito y Caución has progressed in its integration with the Atradius Group, which entails for our policyholders to count on direct support in 42 countries to which practically the whole of Spanish exports are bound, and access to our own opinion on 52 million companies worldwide. Crédito y Caución acts as the sole operator of the Atradius Group in Spain, Portugal and Brazil for small, medium and large businesses, an area that is the most important among the seven regions in which the global operator is present, and which concentrates 33% of its total activity.

From the point of view of service to our clients, the milestone in 2009 has been the full integration in the global risk management structure at Group level, which should improve the speed and quality of our follow-up on our customers international clients. The international dimension of Crédito y Caución has turned the Company into the only operator with a significant presence in Spain and able to provide a truly global service. This added value will be especially relevant in 2010.

2010 will likely mark the start of a recovery in commercial activity; certain uncertainty factors still remain, however, regarding the evolution of Spanish companies ability to pay. Other neighbouring markets are reactivating at a much clearer rate than the domestic market, so that export will be one of the key growth vectors for any Spanish company. Irrespective of how the general environment develops, credit insurance will continue to act as a powerful instrument for market survey and profitable growth, swiftly isolating the default threats.

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