Results for the first six months of 2013
The impact of the IAS 19 revision cancelling the “corridor” method on pensions is a € 121.5 million decrease in shareholders’ equity. Shareholders’ equity for 2012 has been restated accordingly. The Group share of shareholders’ equity decreased by € 49.4 million, due to the payment of a € 176.0 million dividend and to a negative revaluation of the bond portfolio which was partially offset by € 166.4 million of net income.
Total turnover reached € 1.25 billion, growing by 5.3% in the first two quarters and 6.1% at constant exchange rate. The second quarter of 2013 achieved a record turnover of €633 million.
The growth engines of 2012 continue to drive 2013 results: Asia, the Americas, and the Middle East. Growth is also picking up in mature markets. After two years of flat top line development, Germany is now growing at 3%.
Again this year, top line growth is supported by strong new production and a sustained record retention rate of 92%. Demand for credit insurance is high both in mature markets where risk awareness is growing as insolvencies increase, and in non-mature markets where clients use credit insurance to safely expand their business.
Despite rising insolvencies in main markets (+8 % expected globally in 2013), profitability remains strong and operating income is € 253.4 million, up 6.2% compared to last year.
The net claims ratio changed minimally compared to last year, at 52.5% against 51.3% in 2012. The low claims ratio level is the result of our selective underwriting in fragile economies, and our capacity to adjust rapidly to deteriorating environments.
The net expense ratio increased by 2.3 points against last year, when we booked most remaining positive run-offs on commissions linked to previous attachment years. Before reinsurance, the expense ratio improved against last year.
The net combined ratio stands at 76.4 % against 72.9 % in 2012. The 3.5 points deviation is entirely linked to the reserve booked on Pescanova, a Spanish fishing company.
The slight decline in the net technical result linked to this specific reserve, and the decrease in the net financial income linked to both declining bond yields and lower foreign exchange result, are more than offset by an exceptional profit of € 32 million linked to the cession of the Spanish and Argentinean entities to Solunion, the joint venture with MAPFRE.
As a result, total operating income at the end of June 2013 is € 253.4 million, up € 14.7 million against last year.
Market value of the Group's investment portfolio decreased by € 73 million and equates to € 4,161 million. This evolution is linked to the dividend payment and to a downward revaluation of the bond portfolio linked to the higher rates, both not completely offset by operating cash inflows.
Net income reached €166.4 million in the first half of 2013, up 2.4% compared to last year.
Euler Hermes expects that global economic growth will slow to 2.4% in 2013 before recovering slightly in 2014. In Europe, the contraction will most likely be sharper than anticipated and the recovery delayed to 2014.
“This pressure is not new,” said Wilfried Verstraete. “We remain cautious on risk and, based on the current outlook, are in a good position to deliver a solid performance once again this year. We continue to broaden our position across regions and business segments, which underpins both the growth and the profitability of our business.”
Results for the second quarter of 2013
(Please download the press release for the data)
The financial documentation section includes the press release, the consolidated financial statements and the presentation of the quarterly results to analysts.
On Wednesday the 24 July 2013, the Group Management Board of Euler Hermes (ELE.PA), a worldwide leader in credit insurance and in the areas of bonding, surety and collections, presented its consolidated half-year results as of 30 June 2013 to the Euler Hermes Supervisory Board. The results have been reviewed by the auditors and the Audit Committee