Euler Hermes

Credit Insurance

Trade credit insurance protects a business from non-payment of commercial debt. This service makes sure that invoices are paid and allows a supplier to reliably manage the commercial and political risks of trade. In short, the risks that are beyond the control of the supplier. Thereby, credit insurance indemnifies losses incurred from non-payment of commercial debt, the purpose being to help a business grow profitability.

Bonding

Under bonding cover, Euler Hermes assumes liability for the beneficiary towards third parties for the most varied types of security (e.g. for obligations as a contractor under construction and supply contracts). Bonding is a guarantee for contractors and an alternative to bank bonding to safeguard liquidity. The bond or guarantee secures that the contractor will fulfil its obligations (or defects liability) under a contract. Euler Hermes provides a wide variety of surety bonds and guarantees which support customers in numerous industries for all sorts of obligations (e.g. contract performance bonds, custom bonds, infrastructure bonds, etc.). It issues a varied range of bonds on behalf of its clients around the world.

Debt Collection

Collecting overdue payments is an integral part of the Euler Hermes offering. Debt collection helps companies maintaining and improving their cash flow. Euler Hermes has been offering international debt collection services as part of its credit insurance policies for decades. It handles 380,000 debt collection files in more than 130 countries. The company’s specialist teams are located all around the world. This integrated network stands unique in the world.

Fraud Cover

Through Fraud cover, Euler Hermes protects its clients against internal, external and cyber fraud.

Economic Research

Economic Research at Euler Hermes, is a department entirely dedicated to economic research. It analyzes economic and sector trends, country risks and corporate insolvencies worldwide. The Euler Hermes’ Chief Economist is Ludovic Subran. Economic Research publicly broadcasts through Euler Hermes’ website several publications sharing their latest views and forecasts on topics such as the new trends in international trade, emerging trade risks and business opportunities.

History

Euler Hermes provides guarantees or insurance on accounts receivable arising from the sales of commercial goods and services on credit terms of e.g. 30-day, 60-day time scales or more especially for export companies (as an alternative to making the foreign purchaser obtain a letter of credit), sometimes on longer time scales; it manages guarantees for exports by corporations globally; and also provides other international support for exporters. It distributes its products and services through a network of direct agents, brokers, and banks and tracks companies in markets representing 92% of the world’s GDP.

Foundation

The Hermes Kreditversicherungsbank was founded by 2 men: Dr h.c Wilhelm KISSKALT and Dr. Emil HERZFELDER, on October 7, 1917, and was the first German credit insurance specialized company to be present in all the credit insurance areas: creditor, bond and fidelity insurance. Two months later, on December 18, 1917, Hermes was allowed by the German imperial supervisory authority for private insurance.

Both believed that credit insurance services had to be offered independently from traditional insurance services, because credit insurance services brought answers to specific needs. Dr. Emil HERZFELDER was the first member of Hermes’ Management Board.

The missions

On February 19, 1918, the company was registered in the Berlin trade registry.

In 1926, the German Ministry of Economy entered into an agreement for export credit insurances with Hermes and Frankfurter Allgemeinen Versicherungs-AG, also called the FAVAG. Both companies were supposed to issue credit insurance contracts for export transactions with private sector companies, with the German Reich acting as a reinsurer and assuming 100% of the political and catastrophic risk.

The historical background

1929 financial crisis & the FAVAG collapse

The financial crisis of 1929 (i.e. “Black Thursday”) had a deep impact on several credit insurances companies.

The FAVAG was part of it, and collapsed the same year, mainly due to the substantial losses from the acquisition of financial guarantees. This allowed Hermes to take over all of the export credit insurance contracts it had underwritten. FAVAG was, at this time, the second-largest composite insurance company behind Allianz and its collapse had far-reaching impacts on credit insurance in Germany.

WWII

Following the Depression years from 1929 to 1932, Hermes experienced a period of development with rising premium income and modest profits.

The insights into the causes of FAVAG’s collapse also convinced the Reich’s insurance supervisory authority that the significant risks inherent in the credit insurance business could threaten an insurer’s ability to perform on its property and casualty insurance contracts. Starting in 1930, the supervisory authority therefore began to authorize only specialized companies with adequate minimum capital to offer credit insurance.

During WWII, the government assigned Hermes new missions. The company insured importers against the political risks arising from the war as well as other risks in the export business as guarantees of the German Reich.

This almost led Hermes to bankruptcy, but the military governments then intervened and ordered that no court could initiate a proceeding against an insurance company of the claims involved contracts reinsured by the German Reich and claims losses resulting from the war.

Birth of Euler Hermes

Euler Hermes is therefore the result of different evolutions the SFAC and Hermes knew during the 20th century. The group lays on both companies’ experience & expertise, and also on the different breakthrough they developed through the time (technology, management…). Euler Hermes then decided to, first of all, develop on an international level and, secondly, to simplify the group’s structure.

2004 : A strong international development

From 2004, Euler Hermes begins an international expansion phase, and settled in Asia, Middle East (Emirates, Kuwait, Sultanat of Oman, Qatar) and Latin America. The World Agency, which is Euler Hermes’ solution for multinational companies is created at that moment. In 2013, Solunion, a joint venture between Euler Hermes & MAPFRE, is made in Spain and Latin America. Euler Hermes also increased interest equity in ICIC (the Israeli credit insurance specialist) to 50% this year.

2010-2012 : Group structure simplification movement

3 projects were launched during this period:

Global network

The company has 54 subsidiaries throughout Europe, in France, Italy, Belgium, United Kingdom but also in the United States and Canada, including regional service hubs in New York City, Chicago, Atlanta, Los Angeles, Houston, Toronto and Montreal.

Euler Hermes covers global risk management on six continents, with risk and information specialists located in 54 countries. Euler Hermes has a database with proprietary information on more than 40 million companies worldwide, and provides coverage on shipments to 200 countries around the globe.

Shareholding structure

Following the repurchase transaction, the number of Euler Hermes Group shares held by Allianz France remained at 26,864,230. This represents a stake of 62.9% in Euler Hermes Group’s share capital and 63.9% of real voting rights as at 30 August 2016. The free float covered 35.5% of Euler Hermes Group’s share capital and 36% of real voting rights. Euler Hermes Group held 618,939 treasury shares representing 1.45% of its share capital.”

Board of management

Supervisory board

Corporate social responsibility

According to its website, Euler Hermes consolidated the initiatives taken by its entities worldwide around a single Corporate Social Responsibility policy based on four key areas of commitment.