Euler Hermes Q1 profits drop but combined ratio improves

France-based credit insurance company Euler Hermes reported lower net income for the first quarter of 2017 but the combined ratio improved as the company implements actions to protect profitability.

Net income fell 12.8 percent year on year in the first quarter of 2017 to €88.2 million. The deviation is explained by exceptional gains realized last year on the sale of Bürgel, partly compensated by the improved net combined ratio this year, the company said in its results statement.

The net combined ratio improved 0.9 percentage points year on year to 78.4 percent in the first quarter.

“Actions implemented during 2016 to protect profitability are bearing fruit,” said Wilfried Verstraete, chairman of the Euler Hermes board of management.

“Commercial performance - especially in new business - is beginning to show signs of an upturn, even if not yet fully translated in group financial results”, Verstraete noted.

“In an economic environment characterized by uncertainties and still increasing geopolitical tension, we continue to transform the company for its digital future. Successfully launched digital initiatives include the broker portal pilot in the Netherlands, the geographical extension of E-bonds, and internal digital skills training. Bonding and transactional cover products are developing positively, and productivity plans in Germany and France are on track.”

Earned premiums dropped 0.3 percent year on year to €554.8 million in the first quarter. Operating income fell 14.4 percent to 108.9 million compared to €127.2 million in the same period a year ago, which included the gains from the sale of the Bürgel entities in Germany at €24.3 million before tax.

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