Atradius reports 2010 net profit of EUR 124.9 million

 

S&P outlook raised to 'Stable'

 

Amsterdam, 23 March 2011 - Atradius, a global leader in trade credit insurance, debt collection and bonding, today reported a profit after tax of EUR 124.9 million* for its 2010 financial year. As a result of the improved performance of the Atradius Group and its parent company Grupo Catalana Occidente N.V., Standard & Poor's (S&P) has raised its outlook for Grupo Catalana Occidente N.V. and its main operating entities to "stable" and confirmed the A- rating.

The confirmation of the A- rating is based on the strong competitive position of the Group, its 2010 results and the increase in the level of solvency. S&P considers that the "stable" outlook reflects the solid results of the traditional business, despite the weakness of the Spanish market, and the strong and sustained results that the Group has achieved in the credit insurance business. The recovery in results and the improvement in future earnings generation capacity are the basis for the change in outlook to stable.

 

Financial highlights

• Profit after tax: EUR 124.9 million compared to a loss of EUR 113.3 million in 2009
• Insurance revenues: EUR 1,449.7 million compared to EUR 1,589.3 million in 2009
• Shareholders' equity: EUR 1,035.2 million compared to EUR 905.0 million in 2009
• Gross combined ratio: 74.0% compared to 121.8% in 2009

 

Atradius risk acceptance increased in second half

Insurance premiums were impacted by lower insurable turnover of a smaller base of customers. Risk acceptance grew over the course of 2010 as expected default frequencies decreased. This resulted in an increase in new business volumes and improved retention rates.

The Atradius regions of Oceania and Asia, as well as Germany, Central and Eastern Europe increased insurance revenues and profits in 2010. All other regions improved profits, in many cases quite significantly.

Isidoro Unda Chairman and CEO of Atradius commented; "Lower turnover in 2010 is reflective of the business environment in the first half of the year. Despite a slow, global economic recovery, sales volumes of our customers and our own risk acceptance have increased over the course of the year."

 

Insurance performs relatively well in difficult conditions

Profits were driven by reduced claims and lower expenses. Insurance claims declined from EUR 1,356.8 million in 2009 to EUR 559.6 million in 2010. The gross claims ratio of 38.6% in 2010 improved significantly compared to 85.4% in 2009. Gross insurance operating expenses improved to EUR 498.8 million in 2010 from EUR 524.7 million in 2009. The gross operating expense ratio improved to 35.4% in 2010 from 36.4% in 2009. Unda continued; "Insolvency rates were relatively high, but we expect default rates to decline in 2011. This has enabled us to increase our risk acceptance over the course of the year. We are now at risk acceptance rates comparable to pre crisis levels despite the higher insolvency rates."

 

Debt collection wins new customers despite the dip in revenue

Collections and recoveries income of EUR 42.9 million in 2010 compared to EUR 69.6 million in 2009 reflecting fewer collections opportunities in 2010. "In 2010 we widened our marketing and sales efforts to expand our customer base. As a result, we have added a number of new large collections customers that will enable us to build our service revenues as business activity grows in 2011 and 2012", added Unda.

 

The outlook for 2011 - conservative growth

Unda concluded; "We expect global economic growth to continue expanding in 2011 at conservative rates. We plan on having a higher average risk acceptance rate than in 2010. This should provide us with a steady increase in insurable turnover and also increase new business and service revenue. Throughout the Atradius organisation we are committed to providing our customers excellent service. This starts with our account teams working directly with the customer and extends to customer service teams and underwriters who monitor and analyse buyer risks in every market in which our customers are doing business."

* Atradius N.V. forms part of the Group of Grupo Catalana Occidente S.A. The figures included in the Financial Statements of Atradius N.V. could differ, from those of Grupo Catalana Occidente S.A. due to necessary consolidation adjustments.

 

About Atradius

The Atradius Group provides trade credit insurance, surety and collections services worldwide, and has a presence through 160 offices in 42 countries. Atradius has access to credit information on 52 million companies worldwide and makes more than 22,000 trade credit limit decisions daily. Its products help protect companies throughout the world from payment risks associated with selling products and services on credit.

For further information:

Atradius Corporate Communications
Denise Hung
Phone: +61 2 9201 2389
Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

Asia-Pacific and Latin America lead global GDP growth

 

EU and US lag behind in global recovery

 

Amsterdam, 15 February 2011 - The recovery in global activity has been led by countries in the Asia-Pacific region, with 6.9% growth, and Latin America with 5.7% growth, while Western European and US GDP, at 1.7% and 2.9% respectively, have lagged behind, according to international credit insurance and collections company Atradius. The overall EU figure also masks a wide disparity in the GDP development of member states, ranging from a 3.6% rise in Germany, the UK and France to a dip of 4% in Greece.

Improving real economic activity led to a widespread decrease in insolvencies during 2010, although the speed and timing varied from country to country. The level of insolvency rates remained structurally high, however, as did the general price of credit risk.

The pace of the economic recovery is expected to slow in 2011 compared to 2010, but the likely scenario - that of a protracted recovery - implies that there will be further improvements in the insolvency environment in 2011. Despite these projected improvements, a prolonged period of relatively weak corporate credit conditions is expected.

While the opinion is that the downward phase of the cycle is now behind us, there is still uncertainty surrounding the sustainability of the recent pick-up. Emerging fiscal constraints coupled with sluggish credit conditions translate into a high degree of forecast uncertainty for 2011. Large and growing imbalances within the Eurozone became the major theme of 2010, and the fallout from recent sovereign debt pressures in Greece and Ireland underscores the risk of rapid contagion.

Consequently, GDP growth rates in 2011 are expected to be slower than 2010 and below their historical averages.

Download the Atradius Economic Outlook. 

 

About Atradius

The Atradius Group provides trade credit insurance, surety and collections services worldwide, and has a presence through 160 offices in 42 countries. Atradius has access to credit information on 52 million companies worldwide and makes more than 22,000 trade credit limit decisions daily. Its products and services aim to reduce its customers’ exposure to buyers who fail to pay for the products and services they buy. With total income of more than EUR 1.7 billion and a 31% share of the global trade credit insurance market, its products help protect companies throughout the world from payment risks associated with selling products and services on credit.

For further information:

Atradius Corporate Communications
Denise Hung
Phone: +61 2 9201 2389
Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

What foreign businesses need to know if they have to collect debt in China

 

Amsterdam, 27 January 2011 - Trade with China has many anomalies which aren't obvious to Western businesses, creating financial challenges. This is particularly true in the case of debt collection which officially does not even exist in China.

China has had a vivid history around debt collections, which therefore were by the Chinese government prohibited in the late 19th century. The regulation is still in place and whilst debt collection doesn’t officially exist, companies in debt collections will register themselves as “risk management” businesses or “credit consultants". International debt collection agents may collect foreign debts owed to Chinese companies, but only legal or authorised bodies, such as specialised legal firms may collect Chinese debts.

The list of documents required to implement a collection are extensive. Terms and conditions for supply of goods and services must be set before an order is accepted. The process must be controlled via a comprehensive document chain, such as purchase orders, delivery notes and invoices. These should be in writing in order to provide evidence.

Aside from considerations of currency exchange, local knowledge, taxation and legal systems and labour regulations, businesses will face unexpected challenges when collecting in China. “Filed data on businesses is not necessarily accurate because corporate auditing is not always reliable - local credit investigations are resourceful but because there are no standardised criteria the quality of work from one service to the next varies enormously,” says Tony Au, from Atradius Collections who is based in Hong Kong and responsible for the business in China. “Additionally, the expansive geographical area can also prove a challenge, especially as debt collections are often done face-to-face.”

A different set of attitudes govern Chinese business and these manifest themselves clearly in the approach to credit management and debt. “Losing face”, is still a major issue for Chinese companies, and bankruptcy is still treated as something dishonourable.

Western businesses should know that the success rate on overall debt collection in China stands at an estimated 30%. In general, the limitation of action regarding applications to a people’s court for protection of civil right under general trading is two years; and for some exceptional international purchasing contracts is four years. This means after the stipulated period (counting from the last demand date but not the original due date), the creditor cannot file a claim under the jurisdiction system.

Due to the challenges and risks, a route forward is to make sure to have trusted local support. Resources such as international business organisations or chambers of commerce help establish Western businesses with legal and credit management contacts and explain how the foreign system works. A successful option is engaging a dedicated debt collection service with experience in collecting Chinese debt.

Larger internationally based collectors like Atradius Collections, have offices in Hong Kong which has the advantages of being exempt from Chinese mainland regulations but sharing the same language, culture and time zone and use trusted Chinese partners, ensuring a greater chance of success in collecting debt in China.

 

About Atradius Collections

Atradius Collections, a business unit of Atradius Group, provides efficient, quick and flexible solutions to recover domestic and international trade debts. With a global network of collections specialists, lawyers and insolvency practitioners worldwide, Atradius Collections serve over 14,000 customers handling on average 100,000 cases a year. Over 80 years of worldwide credit management industry experience uniquely position Atradius Collections as a global leader in business-to-business debt collections.

For further information:

Corinna Lohse
Phone: +31 20 553 3028
Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

Credit sales can stimulate trade, according to Atradius white paper, but transparency and trust are essential

 

10 June 2010 - Atradius NV, a leading global credit insurer, has today launched its white paper ‘The future of trade credit’, the aim of which is to establish the effect that the economic downturn of the past two years will have on companies’ inclination to offer credit terms of sale to their business to business customers, and to recommend actions to ensure that credit remains the engine of successful trade.

Based on qualitative interviews with and surveys of businesses operating throughout Europe and in many other countries, the white paper has found a hardening of attitudes between suppliers and buyers, with suppliers in some instances withdrawing credit facilities from their customers, and instead insisting on up-front payment, while powerful buyers have demanded longer credit terms from their hard pressed suppliers.  However, when businesses were asked their views on the future use of trade credit, the concensus was that it will grow to build trust between supplier and buyer, and, with bank finance hard to come by, to allow buyers more time to pay.

With trade credit in limited supply, the ability to provide buyers with credit terms, and in some cases extended credit terms, has grown in importance. Credit insurance can play an empowering role by giving suppliers confidence to offer credit to their buyers. The white paper urges businesses to treat credit as an aid to mutually successful trade, and questions the wisdom of either suppliers enforcing cash terms, or powerful buyers insisting on extended credit terms that place their suppliers in a difficult financial position.  The paper also advises businesses to be absolutely open about their financial information and future plans with credit insurers, as this can open the door to the support that they can bring to successful credit transactions.

Survey responses for the paper from small to medium sized entities (SMEs) suggest that they are particularly sensitive to changes in credit terms that could endanger their cash flow, as they have less available capital and access to bank finance than their larger counterparts, and the paper urges banks to refocus on corporate lending as an opportunity for generating profits rather than as a risk.

Atradius Chief Executive Isidoro Unda had this to say about the white paper’s findings: “The global economy is always subject to peaks and troughs but the downturn of the last two years has upset the natural rhythm of trade on credit terms.  For trade to function successfully, there needs to be trust between supplier and buyer backed by sensible credit management processes. This requires flexibility to adapt to changing circumstances as well as honesty and openness between all those involved in the transaction – supplier, buyer, bank and credit insurer. Most of the businesses that followed those principles have emerged from the downturn stronger, while those that refused to acknowledge escalating trading risks have fared worse.”

Download the Summary or Full Report of The White Paper

 

About Atradius:

The Atradius Group provides trade credit insurance, surety and collections services worldwide, and has a presence through 160 offices in 42 countries. Atradius has access to credit information on 52 million companies worldwide and makes more than 22,000 trade credit limit decisions daily. Its products and services aim to reduce its customers’ exposure to buyers who fail to pay for the products and services they buy. With total income of more than EUR 1.7 billion and approximately 31% share of the global trade credit insurance market, its products help protect companies throughout the world from payment risks associated with selling products and services on credit.

For further information:

Atradius Corporate Communications
Denise Hung
Tel.: +61 2 9201 2389
Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it