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02 Dec 2008
Credit insurance giant Euler Hermes has revised its 2008 profits in the wake of the Woolworths collapse.
The Canary Wharf-based mammoth has recorded a ‘higher than expected’ claims development in the fourth quarter of the year, in particular resulting from the fallout of the Woolworths escapade, which has caused the firm to register claims declarations on the risk, mainly in the UK and Germany.
Euler, which is the biggest credit insurer in the IT industry, has revealed it estimates a ‘negative result’ in Q4 2008 and estimates its outlook for full year profit of between €100m (£85m) and €110m.
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The statement read: “Reduced consumer spending combined with tightening financial conditions will continue to maintain pressure on the liquidity of corporates and economies in general.”
Eddie Pacey, director of credit at Bell Micro, said: "This shows the extent of the risk Euler carries, particularly with the case of Woolworths. No credit insurer is there to pay out claims, it is there to manage risk. If that risk is increasing they are going to want to avoid carrying the can and that is understandable."
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