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Euler Hermes > Glossary



​Response given by Euler Hermes to the request of a policyholder to cover all or part of the outstandings of one of its customers.


a bond is a negotiable debt security representing a fraction of a loan issued by a company, public sector entity or state. Bondholders are repaid before shareholders if the issuing company goes bankrupt. However, bondholders are not entitled to any of the rights attached to shares (rights to earnings and the right to manage the company via voting rights)


An independent intermediary who canvasses companies in order to offer them a credit insurance policy. Brokers advise policyholders during the implementation of the policy or agreement and in its day-to-day administration​


Total assets owned by a company less its liabilities

Capital increase

When a company needs funds, it may make a capital increase. It offers the opportunity, notably to existing shareholders, to subscribe to new shares at a given price

Cash pooling

A method of centralized management at a single point of all of a group’s bank accounts. The goal is to optimize cash requirements and surpluses; it may be domestic or international, notional or involve the actual transfer of fund


Time-saving plan (compte épargne temps) used by employees to set aside accrued leave


Situation in which a risk is realized. This entitles the policyholder to compensation and triggers the compensation mechanism provided for in the credit insurance policy


Extra-judicial and/or judicial procedure conducted by Euler Hermes to secure payment of a receivable by the debtor


Sum of the expense ratio and the loss ratio

Cox Ross Rubinstein model (CRR)

Simplified binomial model

Credit insurance

Technique whereby a company protects itself against the risks of non-payment of its trade receivables

Dilutive effect

​Effect that decreases earnings per share (for example by increasing the number of shares)


The portion of a company’s earnings attributable to the shareholder. A distinction is made between the net dividend, i.e. the amount actually paid by the company to the shareholder, and the gross dividend, which also includes the tax credit

Earnings per share

Calculated as consolidated net income divided by the number of shares comprising share capital, net of any treasury stock

Expense ratio

Overheads as a proportion of premiums

IAS (International Accounting Standards)/IFRS (International Financial Reporting Standards)

he set of accounting standards drawn up by the IASB until 2002

IASB (International Accounting Standards Board)

A private body founded by the accounting institutes of nine countries in 1973. Its main objectives are to establish internationally acceptable accounting standards, to promote their use and, more generally, to work towards theinternational harmonization of accounting practices and the presentation of financial statements. The IASB comprises 14 independent members


Reimbursement by Euler Hermes of losses sustained by a policyholder as the result of the insolvency of one or more of its customers, provided they are covered by an existing policy


Instrument used to measure and compare the performance of shares or bonds


Legally recognized incapacity of the debtor to meet his or her commitments and, as such, to pay his or her debts

Integrated group

Group with an exclusive network of affiliates that pool their resources and skills to provide seamless service quality and local management

Interest rate swap

The principle behind an interest rate swap is to compare a variable interest rate with a guaranteed interest rate and for the two parties to pay each other the interest rate differential without exchanging nominal amounts

Issue premium

As part of a capital increase, the premium is the difference between the subscription amount (valuation of the Company) and the nominal value of share capital. The issue premium forms part of a company’s shareholders’ equity

Loss ratio

Claims as a proportion of premiums

Market capitalization

A company’s stock market value. It is calculated by multiplying the share price by the number of shares comprising share capital

Merger premium

Premium equal to the difference between the capital increase of the acquiring company and the contribution of the acquired company

Net book value

A company’s net assets or total assets less total debts. In some respects, it represents a company’s value. It can be calculated for the parent company (net book value) or for an entire group of companies (consolidated net book value)


Price-earnings ratio, ratio of the share price to earnings per share. It is also referred to as the capitalization multiple

Permanent difference

Difference between accounting and tax rules that has no impact on the subsequent year’s taxable profit


Credit insurance contract between Euler Hermes and the policyholder


Amount paid by the policyholder to the insurance company in exchange for risk coverage. A distinction is made between:
  • written premiums: the amount billed during the period to cover the risks under the contract; and
  • earned premiums: the portion of the premium written during the period or earlier corresponding to the coverage of risks during the period concerned


Process by which the policyholder may, based on information provided by Euler Hermes on the solvency of its customers, select its customers and reduce its own losses​

Proprietary information

Information prepared by Group companies and owned exclusively by Euler Hermes. It is a guarantee of the service quality offered to its clients​

Receivables management

Suite of services offered to companies aimed at ensuring the collection of receivables after invoicing to the debtor and up to the litigation phase, where applicable​


Transaction whereby an insurance company self-insures with a third party (the reinsurer) against some of the risks that it has guaranteed, in exchange for the payment of a premium


object of the insurance, probability of a claim occurring

RSU (Restricted Stock Units)

The economic equivalent of bonus share plans

SAR (Stock Appreciation Rights)

The economic equivalent of stock option plans (see definition of stock option)


Title of ownership

Solvency margin

Regulatory amount to be constituted, in addition to technical reserves, to ensure that commitments towards the Group’s clients are met

Stock option

Options to purchase or subscribe stock at a fixed price, usually distributed to executives of a company to give them a vested interest in increasing the Company’s value

Sums recovered

All collections after indemnification, when the insurance company takes over the policyholder’s rights to receivables that are insured and have been indemnified

Surplus claims reserve before reinsurance

The difference between the estimated final cost of claims at the end of the first year and the actual estimate for a given year of occurrence. The difference is calculated before reinsurance

Sustainable development

Launched in 1987 by the Brundtland Commission of the United Nations, this concept is based on the precept that we should “meet the needs of the present without compromising the ability of future generations to meet their own needs.” When applied to a company, a sustainable-development policy assumes the simultaneous pursuit of three objectives: “economic growth, preservation of the environment and social well-being.”

Tax proof

Explanation of the passage between the theoretical tax rate corresponding to that of the parent company and the actual tax recorded in the income statement

Technical reserves

Amount of an insurer’s commitments to its clients. They appear as liabilities in the balance sheet

Technical results

Sum of the turnover, the claims costs, the operating expenses (acquisition costs, administrative expenses and service expenses) and the reinsurance result

Time difference

Difference between the accounting and tax rules that has an impact on the subsequent year’s taxable profit