Euler Hermes on the stock market

Share price performance

The share’s performance was strongly affected in 2008 by external factors as well as factors specific to the credit insurance activity.

• External factors

2008 was characterised by a general distrust of the financial sector. The solvency problems faced by some players in the sector added to investors’ anxiety.

• Factors specific to credit insurance

Euler Hermes was faced with a strong economic slowdown in 2008 in all its main markets. The first regions to be affected were the United States and Southern Europe, reflected in a sharp rise in claims in the first quarter. This deterioration spread to the United Kingdom in the second quarter and then to Northern Europe in the second half of 2008.
These difficult economic conditions have weighed on the group’s profitability, with a significant fall in earnings over all four quarters of 2008. This naturally has a strong impact on the share price, particularly as growth forecasts were revised downwards repeatedly, pushing back to 2009 any possibility of economic recovery.

Euler Hermes’ share price therefore dropped from €84.77 at 31 December 2007 to €35.07 at 31 December 2008.
With the support of its majority shareholder AGF, an Allianz company, and of its minority shareholders, Euler Hermes has taken all the necessary measures, in terms of both commercial strategy and risk policies, to ensure the group’s long-term profitability.

A long-term relationship with clients

Euler Hermes has built a long-term relationship with its clients and shareholders based on dialogue, ethics, rigour and transparency.

• By securing business transactions throughout the world, Euler Hermes contributes to its clients’ profitable growth and optimises its shareholders’ investment.
  
  The group’s commitment to clients is based in particular on irreproachable business practices and constant dialogue. Euler Hermes' employees are constantly attentive to clients' needs so as to develop the most appropriate services. At the same time, the group works unceasingly to extend its knowledge of each business sector and all the corresponding players.
  
  By systematically gathering detailed and exclusive information, the group can identify the risks incurred by its clients very early on and guide their response.
  By anticipating and responding rapidly, the group provides the security its clients need to develop their business.

A long-term relationship with shareholders

The same transparency, rigour and ethics underpin Euler Hermes' commitment to its shareholders.

• The capital allocated to the group by its main shareholders, AGF and Allianz, and by institutional investors and the public, is a mark of their confidence and a crucial resource for developing the group’s business. Euler Hermes aims to ensure the long-term profitability of its capital by targeting a return on equity of at least 15% throughout the cycle. Similarly, acquisition projects financed with equity must generate a minimum return of 15%.
  
  The Group Management Board and Supervisory Board, and the various associated committees (audit committee and remuneration and appointments committee) ensure that this long-term profitability is an integral part of group management’s targets.
  
  Euler Hermes’ dividend policy is based on a minimum payout ratio of 50% of net income, thus ensuring an average yield of 4.06% over the past four years