Atradius' 2016 profit up but it warns on economic uncertainties in 2017
Dutch trade credit insurer Atradius recorded a 19 percent increase in its net profit in 2016 and enjoyed solid growth. But it also warned on the significant amount of uncertainty facing global and regional trade in 2017.
The company made an after-tax profit of €211.8 million in 2016, a big jump on the €178.2 it made in 2015.
Its operating income before reinsurance was €424.1 million compared with €364.6 million. Positive developments in claims and expenses resulted in the company posting a combined ratio of 78 percent compared with 80.6 percent in 2015.
Its total revenues improved by 2.5 percent to €1.76 billion; its insurance premium revenue was up 1.3 percent at €1.56 billion in 2016.
Isidoro Unda, chairman of the management board of Atradius said: "2016 was another strong year for Atradius. We were successful in making improvements to our operations to the benefit of our cost structure and also enabling us to further enhance our operational efficiency and effectiveness."
The higher net income was achieved despite higher overall reinsurance costs, though these were mainly because of lower claims made on its reinsurance. It attributed a €140.06 million loss to its reinsurance programme, 36 percent worse than in 2015. It said this was driven by lower claims recoveries following a decrease in gross claims.
The company added that there remains a significant amount of uncertainty in 2017 for the outlook of global and regional trade. “The expected renegotiation of numerous trade agreements across the world could potentially stall international trade growth. A side effect of this could be an increase in payment defaults as trade costs are expected to rise, putting pressure on some businesses to improve cash management. This should also increase the need for information and collections services to better monitor creditworthiness of buyers and collect overdue debts,” the company said.
Unda added: "Every year businesses are challenged with new potential hurdles to increasing profits and managing payment risks. At Atradius, we have a strong corporate culture that is focused on ensuring we are able to meet our customers’ expanding needs for securing their receivables. We do this by expanding our credit insurance, bonding, credit information and collections capabilities into new markets, by constantly improving availability of information about buyers and by innovating to deliver new services to our customers."
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