Euler Hermes’ profits fall

Euler Hermes has announced that its turnover grew by 3.2% to €2,166.5m but net income fell nearly 80% to €83.6m in 2008

Clemens von Weichs, chairman said: “The severe economic crisis we are currently experiencing has resulted in a rise in payment defaults and corporate failures, resulting in an increase in the number and amounts of claims paid by Euler Hermes to its policyholders. This rise in claims weighs on the group’s profitability through a sharp fall in its technical result. Strict cost control and solid financial income nonetheless enabled Euler Hermes to record positive net income of €83.6 million in 2008.”

Other figures:

• Operating income down 70.8% to €168.5m
• Earnings per share of €1.92 versus €9.33 in 2007.
• Combined ratio rose by 29.3 points from 67.9% in 2007 to 97.2% in 2008.
• Net loss ratio rose to 78.1% versus 48.1% in 2007.
• Expense ratio down to 19.1% compared with 19.9% in 2007,
• Gross loss ratio rose by 28.2 points to 81.7%.

The company said: “The deterioration in the loss ratio is linked essentially to the severe crisis that affected all the world economies in 2008, resulting in a sharp increase in claims, both in numbers and amount. This rise includes a major claim in the last quarter linked to the bankruptcy of Woolworths in the United Kingdom, which had a gross impact on the financial statements of close to €59m.