PRESS RELEASE

Trustful development of Trade Credit Insurance and Surety business in 2010
Sovereign debt crisis might impact economic recovery

-     ICISA members indicate a general positive trend in increased trade and improving company results
-     Trade Credit Insurance premiums remained at 2008 levels and are still 4% above 2007 levels
-     Uncertainties surrounding government debt and its outlook challenge market confidence
-     Members of ICISA have a positive outlook for the remainder of the year based on Q1 results

The Trade Credit Insurance and Surety industry met for their 68^th Annual General Meeting in Marseille (France) to discuss market and industry developments. During today’s press call on ‘Sovereign debt threatens economic recovery’, ICISA President Clemens von Weichs, the President-elect Joaquín de la Herrán and its Executive Director Robert Nijhout, discussed concerns raised during the meetings about the levels of government debt as this affects market trust.

Trade Credit Industry and Surety results  
“Insured exposure for Trade Credit Insurance is reported at 1.5 trillion Euros which is a decrease of 24% due to lower trade volumes”, said von Weichs. Premium in 2009 was 5.21 billion Euros with claims of 4.53 billion Euros. Trade Credit insurance premiums remained at 2008 levels as claims have stabilised at a ratio of 84%. “The average premium rate has increased reflecting a continued higher risk environment. These figures demonstrate the ability of Trade Credit Insurance to turn around a negative trend”, von Weichs added.

“Surety members of ICISA reported an amount of 1.3 billion of claims in 2009, an increase of some 68% compared to 2008. However, there is a wide difference between markets in Surety losses. Therefore this cannot be seen as a general trend for the Surety sector”, commented Nijhout. Surety premium income has gone up by 32% compared to 2008 to 1.7 billion Euros. Surety exposure over 2009 is 2.69 billion Euros which was an increase of 15% compared to 2008.

Von Weichs shared his thoughts on the developments in regulating the financial market and in particular Solvency II. He stated that “the ICISA members are hopeful that IASB/FASB Board will decide that contracts meeting the definition of insurance should be accounted for as insurance contracts”. But he stressed his concerns about the capital requirements for the Trade Credit Insurance industry under the current Solvency II proposals. He indicated that concern is raised through quantitative impact studies and regular meetings with regulators and supervisors”.

The crisis is not over yet
“Because the sovereign debt crisis is still continuing, it remains to be seen if the economic recovery is structural. Government measures to bring down debt can influence and threat global trade. Market confidence might be eroded again”, stated von Weichs.

Nijhout added that “due to these uncertainties, and as the number of insolvencies increases with recovery gathering pace, the claims situation may worsen for the corporate sector. Underwriters and policyholders will work closely together to manage potential losses resulting from these insolvencies for Trade Credit and Surety customers”.

Outlook
Members of ICISA have a positive outlook for the remainder of the year based on Q1 results. ”Nevertheless midterm expectations are more difficult to predict – especially in the European context. In these mature markets trade credit insurers will focus on additional service capacity to give more value to their customers”, commented de la Herrán. 

ICISA elect new President
At the Annual General Meeting members of ICISA elected their President for the period 2010 – 2011. The new President, Mr. Joaquín de la Herrán is CEO of Compañía Española de Seguros de Crédito a la Exportación, S.A. (CESCE). The new term starts on 11 June 2010.

During his acceptance speech, the President-elect thanked the former President Mr. Clemens von Weichs “for leading the association through a difficult economic period by demonstrating stability and continuity in times when nothing could be taken for granted”. He marked further “the changed focus of the association during the von Weichs’ Presidency towards more proactive Advocacy and Media Relations and therewith more transparency by sharing statistics and other relevant data with the media and supervisors”. Von Weichs could also be accounted for “the expanded focus of the association on Single Risk, Political Risk and Structural Finance”.

During his Presidency de la Herran wants to concentrate “on further expanding the association focus from Europe to the growing markets in Asia and the Americas and build on the achievements of the former President”.     

NOTE TO THE EDITOR:
The International Credit Insurance & Surety Association (ICISA) brings together the world's leading companies that provide trade credit insurance and/or surety bonds. Founded in 1928 as the first credit insurance association, ICISA has currently 45 members in total. The trade credit insurance members account for over 95% of the world's trade credit insurance business. Today, with over USD 2 trillion in trade receivables insured and billions of dollars worth of construction, services and infrastructure guaranteed, ICISA members play a central role in facilitating trade and economic development on all five continents and practically every country in the world.