• Record full year revenues at €2.5 billion up by 5.0% at constant exchange rates (+3.7% at actual exchange rates) • Robust operating income at €458.6 million, up by 6.2%, an outstanding performance in the context of the difficult economic environment • Net income rose 2.7% to €313.7 million • Proposed dividend of €4.2 per share, up by 5%
“Euler Hermes reinforced its industry leadership in 2013 and posted record revenues,” said Wilfried Verstraete, chairman of the Euler Hermes Board of Management. “As anticipated, non-mature markets and our multinational segment, as well as the new product offering, drove growth. Sound risk management in all regions generated strong operating income. We believe further growth opportunities are beginning to emerge after nearly six years of economic crisis and uncertainty. To meet the increasing demand for trade credit insurance, and to deliver our growth strategy, we continue to strengthen our product range, distribution channels and international presence.”
I. Results 2013
A. Key figures
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Shareholders’ equity increased by €116.7 million, with €313.7 million of positive net income being partially offset by the €176.0 million dividend paid in May 2013 and a €29.2 million negative revaluation of the investment portfolio following a recent rise in interest rates.
At €2,486 million, revenues increased by 3.7% versus the previous year and by 5% without foreign exchange (FX) headwinds.
See chart in the PDF
While turnover growth from non-European markets slowed somewhat (12% at constant FX rates versus 18% at constant FX rates in 2012), growth in Europe began to rebound, fuelled not only by the Solunion joint venture with MAPFRE, but also by Germany, Italy and Eastern European countries.
The multinational segment remained very strong (+38% premium growth) while growth also picked up in other lines of business: bonding, trade finance cover and excess of loss (XoL).
C. Operating income
Operating income is very solid at €458.6 million, up 6.2% versus 2012.
The net claims ratio at 50.5% is 1.2 points below last year, due to sound risk management that resulted in lower claims activity despite increasing business volumes and still-high insolvency levels in European markets.
While the gross expense ratio improved again in 2013, by 0.4 point, the net expense ratio is up 1.9 points against 2012, when most of the remaining positive run-offs on reinsurance commissions linked to previous attachment years were booked.
The net combined ratio is slightly higher than last year at 75.3% versus 74.6%, but the net technical result is up by €13.9 million to €345.3 million, driven by top line growth.
Lower average bond yields, combined with reduced realized gains from investment activities, decreased net investment income by €22.9 million to €86.2 million.
However, the reduced realized gains from investment activities are offset by an exceptional profit of €37 million linked to the contribution of Euler Hermes’ Spanish and Latin American entities to the Solunion joint venture.
D. Investment portfolio
By year-end 2013, the market value of the Group’s investment portfolio had decreased by €71 million to €4,163 million compared to year-end 2012. Positive operating cash flows were offset by the payment of €176 million in dividends, the revaluation of the bond portfolio following rising interest rates and the negative currency fluctuations vs euro.
E. Net income
Net income reached €313.7 million, up 2.7% against 2012. Realized gains on the contribution of entities to Solunion were partly compensated by higher taxes.
On the basis of a net result of €7.12 per share, the Euler Hermes Management Board will propose the distribution of a dividend of €4.20 per share, a 5% increase compared to last year’s €4.00 dividend per share and representing a payout ratio of 61%.
After falling to +2.3% in 2013 – the slowest pace since 2009 – world GDP growth should progressively gain traction in 2014 and is expected to reach +3.1%. This modest upturn should support another year of positive growth for Euler Hermes, and enable the company to penetrate new markets and segments more deeply. However, insolvencies will remain at a high level. The company will draw on its demonstrated ability to be both agile and robust in volatile environments, and will retain its dual focus on helping clients to trade safely while managing their risks effectively.
II. Results for the fourth quarter of 2013
See chart in the PDF
The financial documentation section includes the press release, the consolidated financial statements and the presentation of the full year results to analysts.
On Thursday, 13 February 2014, the Group Management Board of Euler Hermes (ELE.PA), a worldwide leader in credit insurance and in the areas of bonding, surety and collections, presented its consolidated results as of 31 December 2013 to the Euler Hermes Supervisory Board. The results have been reviewed by the external auditors and the Audit Committee.