Euler Hermes sticks with tradition over naïve capital

Credit insurance company Euler Hermes has been adjusting its portfolio in recent years. As growth in its traditional core of trade credit insurance has faltered, it has moved into surety products and recently secured approval to insure bonds issued by US states, an important achievement for the company.

Benoît des Cressonnières, chief executive officer of Euler Hermes Reinsurance with responsibility for the company’s buying programme, said that while its trade credit business has been stagnant because of sluggish economic growth and a lack of appetite for the product, its surety business has been growing steadily.

“The bond markets are a massive global market and we have a very small share. In contrast, the trade credit business is much smaller and we have a much bigger market share. So this move fits in well with our expertise and is delivering steady growth,” Cressonnières said.

This has meant changes to its reinsurance programme in recent years. He said the company buys coverage for its two main lines of business separately but he is comfortable working with the panel of reinsurers with which it has now formed, deep, long-term relationships, and added that he is wary of the potential short-term nature of alternative capacity.

“We haven’t been tempted to work with some of the new capacity that could be naïve,” des Cressonnières said.

“We just want the best structure we can get and also a level of flexibility from our existing reinsurers as we adjust the business. Our results are good and we are confident. We know that if we are making money so are our reinsurers, and we are fine with that.”

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