Euler Hermes

Euler Hermes
Société Anonyme
Traded as Euronext: ELE.PA
CAC Mid 60 Component
Founded 2002 Euler Hermes
1917 Hermes
1893 ACI
Headquarters Tour First 1, place des Saisons - 92048 La Défense Paris, France
Key people
 Axel Theis, chairman of Euler Hermes Supervisory Board (since May 25th, 2015); Wilfried Verstraete, chairman of Euler Hermes Board of Management (since April, 2010)
Products Credit insurance, Reinsurance, Trade debt collection, Bonding
Revenue € 2,569.9 million (2016) [1]
€ 376.8 million (2016) [1]
€ 287 million (2016) [1]
Total assets € 6,505.9 million (2016) [1]
Total equity € 2,622.4 million (2016) [1]
Number of employees
 +5900 (2016) [1]
Parent Allianz
Divisions Euler Hermes Americas; Euler Hermes Asia-Pacific; Euler Hermes Germany-Austria-Switzerland; Euler Hermes France; Euler Hermes Mediaterranean countries, Solunion
Website http://www.eulerhermes.com

Euler Hermes is a credit insurance company that offers a wide range of bonding, guarantees and collections services for the management of business-to-business trade receivables.

A subsidiary of Allianz SE, Euler Hermes is listed on ELE.PA and is rated AA- by Standard & Poor's.[2] The Group posted a consolidated turnover of €2,569.9 million in 2016.[1] Euler Hermes employs +5,900 employees in over 50 countries and insured global business transactions for €890 billion in exposure at the end of 2015.

Activities of Euler Hermes

Bonding

Euler Hermes issues a varied range of bonds on behalf of its clients around the world.

Debt Collection

Euler Hermes handles 380,000 debt collection files in more than 130 countries.

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.[3] 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.[4]

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.

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.[5]

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. 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.[6]

2010-2012 : Group structure simplification movement

3 projects were launched during this period:

  • One Euler Hermes: simplification of the Group’s structures and clarification of its governance.
  • Excellence: Increase in productivity and flexibility of the cost base through worldwide streamlining of operations.
  • Blue Europe: merging within the legal entity Euler Hermes Europe SA of 12 insurance branches from Czech Republic, Denmark, Finland, Hungary, Ireland, Italy, Netherlands, Norway, Romania, Slovakia, Sweden, United Kingdom)

Global network

The Group’s economic organization is based on six geographic regions: France (Headquarters) - Germany, Austria and Switzerland - Northern Europe - Mediterranean countries, Middle East and Africa - Americas - Asia Pacific.

The Group is present throughout the world via insurance companies, service companies and/or branches. 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.

Americas

This region includes all the direct insurance and reinsurance activities carried out in the United States, Brazil and Canada, as well as related collection revenues.

Asia & Pacific

This region has all the direct insurance and reinsurance activities realized by subsidiaries based in Asia (China, Indonesia, Japan, India, Singapore, Macau, Malaysia, Thailand, Vietnam, Hong Kong & South Korea) and Oceania.

Europe

France

In 1927, Société Française d’Assurance Crédit (SFAC) is founded by diver’s large insurance societies, including Assurances Générales (a precursor of AGF). Euler Hermes is born from the merge between SFAC and Hermes in Germany.

Germany - Austria - Switzerland

This region combines the direct insurance and assumed business realized by the German enterprises in Germany, Switzerland and Austria.

Mediterranean countries, Middle East & Africa

This region includes the direct insurance and assumed business in Italy, Greece, Morocco, Turkey, Tunisia, the Gulf Countries and South Africa. Since 2013, the region does not cover the activity of Spain as the entity was given up to Solunion, the joint enterprise with MAPFRE.

Northern Europe

This region combines direct insurance and assumed business in Northern European countries and in Eastern Europe.

Joint Ventures

Solunion

In 2013 Euler Hermes and MAPFRE launched Solunion[7] to provide trade credit insurance solutions in Latin America and Spain. In January 2017, Solunion began to operate in the Dominican Republic.[8]

ICIC

The Israeli Credit Insurance Company (ICIC) is the leading credit insurer in Israel. Credit insurer Euler Hermes has raised its stake in Israeli counterpart ICIC to 50%, from 33% in 2007.[9]

COSEC

COSEC is the leading Insurer in Portugal for credit and insurance. The Portuguese commercial bank BPI and Euler Hermes share COSEC into equal parts.[10]

CPPIC EULER HERMES

In 2017, Euler Hermes and China Pacific Property Insurance Company have launched a distribution joint venture in Asia. The joint venture will be headquartered in Shanghai.[11]

Shareholding structure

Following the repurchase transaction,[12] 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.”[13]

Financial information

(in €millions)200920102011 IAS 19 proforma2012 IAS 19 proforma2013[4]2014 2015[13] 2016[1]
Revenue2,085,7112,147,7342,274,9222,397,8962,486,2402,527,012 2,638.4 2,569.9
Operating income74,771388,930466,373431,835458,606413,125 417.8 376.8
Net income18,988294,452332,193305,500313,729302,060 302.5 287
Net combined ratio104.7%68.7%69.8%74.6%75.3%75.4% 80.1% 79.8%
Total Equity1,795,7792,130,4212,218,3492,345,2412,461,8702,580,525 2,715.4 2,622.4

Board of management

  • Wilfried Verstraete, chairman. In charge of coordinating the work of the members of the board of management, steering and coordinating the activities of all the group’s companies, and representing the company towards third parties. He also supervises the group’s internal audit, human resources and communication functions.
  • Frédéric Bizière, member of the board of management in charge of risks, information and claims functions and reinsurance.
  • Clarisse Kopff, group chief financial officer and member of the board of management in charge of group asset management, compliance, finance, legal, M&A, Tax and risk and capital management.[14]
  • Paul Overeem, member of the board of management in charge of market management, commercial and distribution.
  • Michele Pignotti, member of the board of management in charge of market management
  • Ludovic Sénécaut, group chief operating officer responsible for operations and IT services.

Supervisory board

  • Axel Theis, chairman, member of the Allianz SE board of management responsible for the global insurance lines and the regions UK, Ireland and Australia.
  • Brigitte Bovermann, vice-chairwoman and member of the Nomination and Remuneration Committee and of the Audit and Risk Committee. head of Business Division « Global Insurance Lines & Anglo Markets » of Allianz SE
  • Ümit Boyner, independent member, executive board member at Boyner Holding A.S
  • Philippe Carli, independent member and chairman of the Audit and Risk Committee, General Manager Groupe Amaury
  • Nicolas Dufourcq, independent member, chief executive officer of Banque Publique d'Investissement (BPI)
  • Ramon Fernandez, independent member, chief executive officer delegate in charge of group finance and strategy at Orange since September 2014
  • Maria Garana, independent member, president and chief executive officer of Microsoft Iberica
  • Marita Kraemer, member of the supervisory board and the chairwoman of the Risk committee of Unicredit Bank AG Germany, Munich.
  • Thomas-Bernd Quaas, independent member and chairman of the Nomination and Remuneration Committee, member of the supervisory board of Beiersdorf
  • Jacques Richier, member, CEO of Allianz France

References

  1. 1 2 3 4 5 6 7 8 "Registration Document 2016" (PDF).
  2. ↑ "RatingsDirect : Research Update : Euler Hermes Group Core Subsidiaries Affirmed At 'AA-' On Improved Enterprise Risk Management; Outlook Stable" (PDF). Eulerhermes.com. Retrieved 2015-12-29.
  3. ↑ "Euler Hermes : nomme Ludovic Subran Chef Economiste".
  4. 1 2 "Euler Hermes : 2013 Registration Document" (PDF). Allianz.com. Retrieved 2015-12-29.
  5. ↑ "The Insurance Industryand the Economies of Central and Eastern Europe,1918-1945" (PDF).
  6. ↑ "Euler Hermes increases shareholding in Israeli Credit insurer".
  7. ↑ "Solunion official launch; Euler Hermes, MAPFRE trade credit insurance joint venture".
  8. ↑ "Solunion launches in Dominican Republic".
  9. ↑ "Euler Hermes raises stake in Israel's ICIC to 50%".
  10. ↑ "Cosec presentation".
  11. ↑ "Euler Hermes launches JV with CPIC".
  12. ↑ "Pres Release 19052016" (PDF). Eulerhermes.com. Retrieved 2016-05-19.
  13. 1 2 "2015 Registration Document" (PDF). Eulerhermes.com. Retrieved 2015-12-29.
  14. ↑ "Kopff Clarisse".

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