​The Group Management Board presented the consolidated results as at 31 March 2011 to the Euler Hermes Supervisory Board on 6 May 2011. The results have been reviewed by the Audit Committee.

Turnover: €544 million - Net technical result: €70 million - Ordinary operating income: €103 million - Net income: €75 million

​The first quarter of 2011 confirmed an ongoing global economic recovery already observed in 2010. In this environment, Euler Hermes posted a €544 million Q1 2011 turnover, up 7.6% compared to Q1 2010.


The Group is confident that it will achieve continuous top line recovery throughout 2011 as retention is strong at over 90% and the outlook on insured turnover is positive”, declared Wilfried Verstraete, Chairman of the Euler Hermes Board of Management. The group recorded a net income of €75.3 million, compared to €47.6 million at the end of March 2010. This strong increase was mainly driven by an improved combined ratio (75.0%).


A. Key figures

In the first quarter of 2011, Euler Hermes recorded a net income of €75.3 million, compared to €47.6 million at the end of March 2010. This strong increase is the result of an improved combined ratio which dropped from 90.0% to 75.0%, with the net claims ratio and the net expense ratio decreasing by 9 and 6 points, respectively.

B. Turnover

For the first three months of 2011, group turnover reached €544 million, increasing by 7.6% compared to the first three months of 2010. All regions are contributing to this increase towards last year, but especially so Northern and Southern Europe and the Americas. After the Q4 2010 peak of €567 million, Q1 2011 turnover is back to Q3 2010 level (€542 million), penalised by the seasonality of the portfolio renewal (47% of the portfolio has been renewed during the first quarter - Q1 figures are traditionally lower than in subsequent quarters) and by rate decreases conceded at the beginning of 2011 renewals.

C. Ordinary operating income

The net technical result, before financial income, reached €70.5 million at the end of March 2011, compared to €24.5 million at the end of March 2010. Net claims ratio and net expense ratio improved by 9 points and 6 points, respectively, over the last twelve months.
Net claims decreased to €142.7 million, down by 8% compared to Q1 2010. Net claims ratio on current attachment year is 62.6% against 70% last year. With a positive contribution of additional run-off of €7.3 million the net claims ratio all attachment years was 49.1% compared to 58.1% at end of March 2010.
Claims frequency had dropped significantly in 2010 compared to the crisis year 2009 and bottomed out in third quarter 2010. During the last quarter 2010 and in Q1 2011, covered claims amounts increased again, due to a more flexible risk underwriting policy to support customers’ demands. As a result, claims ratio current year is rising against previous quarters, in line with the group’s expectations.
Euler Hermes has taken the appropriate measures to contain the risks arising from the recent developments in Japan and in the Middle East and North African countries. So far, there has been no significant increase in claims notifications.
The net expense ratio improved by 6 points from 31.9% to 25.9% between Q1 2010 and Q1 2011. The increase in gross expenses (impact +3.4 points) was overcompensated by higher commissions (impact -6 points), by higher service fees (impact -1.2 point), and by the increase in net premiums (impact -2.3 points).
Combined ratio stands at 75% in Q1 2011 against 90% in Q1 2010 and 68% in Q4 2010.
Net investment income as at 31 March 2011 reached €32.9 million, €9.7 million below the level of last year. The decline is mostly attributable to the absence of foreign exchange gains contrary to last year (impact of €-8.2 million). The decrease in realised gains (€-4.1 million) was partially compensated by higher current investment income (€+2.5 million), mostly on equity.
As a result of the higher turnover, lower net claims and net expense level, ordinary operating income has increased from €67.1 million at the end of March 2010 to €103.4 million at the end of March 2011.

D. Investment portfolio

At end of March 2011, the market value of the group's investment portfolio increased by €97 million compared to end of 2010, to €3 865 million, due to free cash flow generation and despite a decrease in the unrealised capital gains reserves, which is mostly due to rising interest rates.

E. Non ordinary expenses

As at 31 March 2011, €1.2 million of restructuring charges, mostly consulting fees, were booked on the project Excellence.

F. Net result

Euler Hermes’ strong operational performance is also reflected in net income which reached €75.3 million at end of March 2011 compared to €47.6 million at end of March 2010.

G. Outlook

The start into 2011 still benefits from the 2010 recovery. However the world economy growth is expected to slow down in 2011 (+3.1% after 4.1% in 2010, +1.8% in OECD countries after +2.5% in 2010). At the same time, country risk remains strong and is more complex, volatile and global than before.
In this context, businesses face multiple risks and look for further support in their trade risk management. This is why Euler Hermes trusts that demand for credit insurance will remain solid.
New production is expected to gain momentum and retention rate should be above 90% on remaining renewals (half of the portfolio). As expected, the pressure on prices is strong but Euler Hermes is still confident to be able to deliver a 5-6% growth of its premiums in 2011.