In a context of sluggish global growth, Euler Hermes showed very strong performance in 2019: all regions and lines of business are growing. Revenues reached €2,913 million, up 7% at constant exchange rates, with North America and Asia-Pacific as the fastest growing regions. Net combined ratio (excluding services activities) improved by 1.2 point to 79.9% driven by better prior year development and a lower expense ratio.
Operating profit reached a record high this year: €475 million, up 10%, positioning Euler Hermes as one of the main profit contributors to the Allianz’ P&C segment. This is mainly due to higher premiums and a better combined ratio, coupled with higher current investment income.
Solvency II ratio for Euler Hermes Group is at 159% at the end of 2019 improving by 4 points compared to end of 2018.
These strong results illustrate how Euler Hermes, in less than two years, translated its 2021 strategy “Confidence to be bold” into record financial achievements, while the digitalization and the innovation announced as part of our transformation strategy materializes according to plans.
Our strategy based on diversification in terms of products and geographies is paying off: for the second year in a row, Euler Hermes achieved the highest level of new business in its history, and reached an excellent retention rate of 91%. Euler Hermes also confirmed its rank as #1 brand recommended for trade credit insurance for customers for the third year in a row.
In an effort to constantly challenge and improve customer experience, Euler Hermes recently released its new customer platform: MyEH. Built and designed in collaboration with its customers, MyEH illustrates Euler Hermes' strategy as an industry leader reinventing the credit insurance customer experience. A world class leader thanks to an innovative UX design, MyEH is built out of market insights and developed with a fully customer-centric approach: it already counts 6,500 users (including our Belgian and Luxemburgish customers) and should reach 65,000 users by the end of the year. MyEH is a sparring partner for customers to achieve their business targets: it is efficient for both small companies looking for quick and easy solutions, and for larger ones who have more credit risk expertise and need advanced solutions.
“Single Invoice Cover”, a new offer launched in 2018 and available through a single API, continued to be integrated in 2019 by new partners such as Fundbox in the US or Moment in France. This allows fintech startups to grow by benefiting from the guarantee of Euler Hermes, a pledge of confidence for their customers and prospects.
Euler Hermes also accelerated on the innovation side with a strong focus on data: The Datalab, founded in October 2016 with 2 data scientists in Paris, reached 33 employees this year. Its first product, a Machine Learning asset, enhances its in-house grading system. It has improved prediction capabilities, delivering a positive impact in terms of claims avoided and new business acquired.
Last March, Euler Hermes launched its open data portal, granting public access to millions of exclusive data for anyone to access, use and share valuable data on international B2B trade.
Finally, Euler Hermes also launched last month Trade Match, a free data visualization tool allowing access to Euler Hermes proprietary data and expert analysis in just a couple of clicks. Combining country risk ratings and forecasts for export gains and trade growth, Trade Match reveals the risks and opportunities for exporters across 17 sectors and 70 countries.
IT-wise, Euler Hermes is moving forward on its API journey, through the introduction of new products at a marginal cost by recombining APIs. These APIs are now everywhere in the company, connecting back-end apps with the front end and giving clients easy access to Euler Hermes portals. Already 17% of the policies are now managed through APIs.
Lastly, the recent inclusion of Environmental, Social and Governance (ESG) criteria to our country risk ratings marks a tipping point symbolic of companies and investors belief that ESG-related risks are going to drive everything they care about most: growth, market share, profitability. Moreover, the correlation between non-payments and severe climate-related events (supply chain interruptions), or between insolvencies and social unrests (looting, profit loss) are increasing over time. That is why Euler Hermes decided to include ESG-related risks of non-payments by companies, especially environmental vulnerabilities and rising societal risks, in its country risk rating methodology.