- In spite of increasing trade tensions, the country-risk climate improved and there were significantly more upgrades than downgrades
- The value of insured transactions rose by 2% to €87 billion
- Sharp declines on the financial markets at the end of 2018 saw the company ultimately post a net loss of €32 million, in spite of a technical profit from operating activities of €38 million
- In 2018 Credendo expressed its spirit of innovation by launching the Credendo Booster automatic bonding portal in Germany and the AREA42 innovation hub
Country risks: significantly more upgrades than downgrade
2018 will be remembered as a year in which the USA started a trade war. Sustained geopolitical tensions remained a key factor affecting political risks in various regions across the globe. While economic growth was maintained, it was less evenly distributed. Financial conditions also deteriorated, hitting Turkey and Argentina particularly hard.
19 upgrades were issued for short-term political risk, compared with 11 downgrades. Most of the changes were in Latin America, which saw 4 upgrades and 4 downgrades, while the CIS (Commonwealth of Independent States) region showed the strongest positive development with 5 upgrades. The worst affected countries were Nicaragua, Argentina and Iran, each of which was downgraded two notches. Nicaragua stands on the brink of a civil war, while Argentina (alongside Turkey) was the main victim of a crisis of confidence in emerging markets. Iran suffered from the negative consequences of the US withdrawal from the nuclear deal, as well as the reintroduction of sanctions against the country.
For medium-term political risk there were 7 upgrades compared with 3 downgrades.
Besides Iran and Argentina, Zambia was also downgraded as a result of the drop in copper prices and an unorthodox policy that plunged the country into a debt crisis.
In 2018 Credendo managed to post an operating profit and a slight increase in written premiums in a difficult market environment. “In spite of unfavourable currency fluctuations that weighed heavily on compensation paid, Credendo achieved a technical result of €38 million from its operating activities, although this was not enough to compensate for the poorest performance seen on the financial markets since the global financial crisis,” explains Dirk Terweduwe, Chief Executive Officer. The 18% growth at Credendo – Excess & Surety was an encouraging development and demonstrates that surety insurance will become an important market for Credendo in the future. “Meanwhile, short-term whole turnover credit insurance managed to achieve stable performance in a market on which premium income continues to shrink,” Terweduwe continues.
Key figures for 2018
The value of insured transactions rose from €85 billion to €87 billion. Credendo collected total insurance premiums with a value of €330 million.
A profit from operating activities of €38 million was generated, although the poor last quarter on the financial markets impacted on the company’s results and saw it post a loss of €32 million.
Consolidated equity stands at €2.53 billion and Credendo has no debt. Its parent company, Credendo – Export Credit Agency, enjoys an AA rating from S&P Global.
The geographic spread of risks between the various continents is as follows: European Union: 32%; Asia: 29%; Africa: 16%; Central and South America: 11%; other European countries: 8%; North America: 4%; Oceania: 1%.
Credendo is firmly committed to innovation
Credendo is moving with the times and in 2018 introduced two major initiatives in the areas of innovation and digitisation to improve the service offered to its customers.
In April 2018 Credendo – Excess & Surety launched the Credendo Booster in Germany. This portal can be accessed at credendo-booster.com and is a new, automatic distribution platform for bonding that brings speed and efficiency to the process. Brokers and other partners, such as banks, can enter their customers’ data into the system and quickly obtain a bonding facility. The decision is taken immediately for a credit line up to €2.5 million. The customer then enters its data into the system itself for each individual bond that has to be issued and receives the necessary documents directly. The Credendo Booster was also introduced in Italy at the beginning of 2019, with Belgium, Poland and the Netherlands set to follow later on.
Credendo is launching an innovation strategy, based on the firm conviction that it needs to act today to stay on the right track as it enters the uncertain world of tomorrow. Against this background, Credendo has created the AREA42 innovation hub. A new era in credit insurance is dawning – one in which the use of IT platforms, big data, artificial intelligence, blockchain and other new applications will be very much on the radar when it comes to innovation. These trends create threats, but also present opportunities for Credendo, its customers and its partners, such as brokers. The intention with AREA42 is to develop an ecosystem of innovative partners around Credendo. Research is already under way into new concepts that could prove to be future growth drivers over the long term.
Group Deputy CEO
+32 2 788 11 33