Companies that already had financial problems before the pandemic are not covered by the agreement now reached between credit insurers and the German federal government. The decision on credit limits is made by Euler Hermes. As usual, this is done on the basis of an individual assessment in which numerous other factors play a role in addition to creditworthiness.
"The protective shield for German companies agreed with the German Federal Government is a joint measure to explicitly protect previously well-positioned companies in these difficult times," says Van het Hof. "It enables us to maintain the majority of our cover commitments and even take on new ones. For some companies, however, Corona does not act as a primary cause, but rather as a catalyst for existing financial problems. For these companies there is no general free pass. However, the detailed analysis is carried out individually for each company - that is exactly what our expertise is."
Euler Hermes' more than 1,600 risk analysts worldwide assess the creditworthiness of 80 million companies worldwide every day, more than three million of them in Germany alone.
This analysis is carried out individually for each company. In addition to individual financial indicators such as creditworthiness, debt, liquidity or cash flow, it also takes into account country and sector risks, as well as factors such as market position, diversification, sales markets, management, strategy or unique selling propositions.
If economic parameters change, as is now the case with Covid19, this can lead to adjustments in the risk assessment, but does not necessarily have to be the case. It is part of the daily business of a credit insurer to adjust limits - upwards and downwards. Euler Hermes always seeks a close dialogue with our clients and partners, their customers and other stakeholders - even in times of a coronavirus pandemic.
However, a negative economic development affecting all sectors of industry and all countries, and the associated sharp deterioration in the creditworthiness of companies, can have a signal effect and ultimately lead to suppliers no longer being able to supply the companies affected. This can now be avoided in major parts.