Atradius, a global leader in trade credit insurance, debt collection and bonding, today reported a loss after tax of EUR 113.3 million. Extensive risk mitigation actions and effective assessment of the creditworthiness of buyers contributed to significant improvement in 2009 second half results.
Financial highlights
Insurance revenues of EUR 1,589.3 million in 2009 compared to EUR 1,774.0 million in 2008
Service result increased 14.5% to EUR 15.0 million (EUR 13.1 million in 2008)
Net investment income grew 42.9% to EUR 68.3 million (EUR 47.8 million in 2008)
Net loss improved 41.4% to EUR 113.3 million (loss of EUR 193.4 million in 2008)
Stronger second half
The improvement in the claims result was most notable in the second half of 2009 and was the driver behind the reduction in the net claims ratio. Expenses and investment income were better than budget 2009 contributing to the positive results Atradius achieved over the last six months of 2009, excluding restructuring costs. "Anticipating the economic crisis we took decisive actions in the second half of 2008 to minimise the impact of the global recession on the risks we share with our customers", said Atradius CEO Isidoro Unda. "I recognise that the depth of the crisis resulted in some actions that were not always well communicated to our customers. We are committed to improving the information flow between Atradius, our customers and brokers".
Insurance segment
Revenues from insurance operations in 2009 were 10.4% lower than in 2008 as a result of the reduced turnover of our customers and the risk mitigation measures we took. The focus in 2009 was to increase the quality and quantity of credit information on our customers buyers and to proactively manage the companys capital position so that long term protection to customers could be guaranteed. A buyer rating service was introduced in most of our markets and additional communications tools were offered that provided customers with more information on the market conditions Atradius was responding to throughout the world.
During the second half of 2008 and first quarter of 2009, exposure to industries and markets with high default probabilities escalated Atradius claims ratio to over 125%. Exposure to high risk buyers was reduced allowing the company to maximise its ability to meet short term customer needs for cover of reasonable risks. At the same time this ensured customers could meet their long term needs for expanding cover as the economy improves and their businesses grow. The reductions in exposure resulted in an improvement in its net claims ratio to 77.1% for the year.
Mr. Unda added, "Our risk acceptance is now higher than that of a number of our competitors providing customers with the right assessment of risks and the right tools to manage exposure through the crisis".
Service segment
Higher service revenues were driven by the debt collection business, which showed 19.8% revenue growth. Revenues from the export credit agency fees that Atradius receives from the Dutch state developed steadily and in line with expectations.
Markets
Market conditions began to improve in the second half of 2009 introducing more stability to the business environment. The global recession and its effect on our customers turnover and Atradius risk mitigation measures resulted in a decline in insurance revenues in all regions except Asia in the first half of 2009. Atradius largest market region, which includes; Spain, Portugal and Brazil, maintained the highest sales volumes with a less than 1% reduction in insurance revenue. Although market conditions were less secure than in 2007 and the first half of 2008, the business environment in most markets stabilised in the second half of 2009 resulting in improving business conditions. "We continue to take a cautious approach to our business but we are expanding our cover", said Mr. Unda.
Outlook
Economic growth projections in 2010 are being led by the US where 2.9% GDP growth is projected. Most major European economies are expected to follow this lead, but at lower rates of GDP growth Germany (1.8%), the UK (1.5%), France (1.4%), the Netherlands (1.2%), Italy (0.9%) and Spain (-0,4%). After a 12.3% slump in 2009, world trade volume of goods and services is anticipated to grow 5.8% in 2010. The increased business output is expected to produce growing insurable sales over the course of 2010 and into 2011.
"Throughout our major markets positive signs of recovery can be seen. Business sentiment across most of Europe is on the rise. Recovery however is still fragile as availability of bank credit remains restricted across Europe and growth in markets like the Netherlands, Belgium and other export focused markets will be impacted by the recovery in larger economies like Germany, France, the UK and the US", said Mr. Unda. "While the business environment calls for continued prudence, within responsible parameters we intend to pursue a more aggressive approach to our business development. The trend of positive results which began in the second half of 2009 has extended through the first two months of 2010. With continued improvement in economic conditions in our markets, we believe this trend in our performance will be sustainable".
The numbers in this press release are unaudited.
