'Insolvencies are not our fault,' says Euler chief

Fabrice Desnos, CEO of Euler Hermes UK

The CEO of Britain’s biggest credit insurer has dismissed accusations that companies have been driven into administration by the withdrawal of cover from suppliers, and warned that businesses can no longer rely on statutory accounts for their credit ratings.

Fabrice Desnos, CEO of Euler Hermes UK, said: ‘It’s got nothing to do with us. If anything, it proves how difficult it is to analyse credit risk based on statutory accounts, because some statements in the public domain are not as strong as they first look.

‘Historical accounts are getting too old to be meaningful. In a time of crisis, you can’t rely on performance figures on a period two years in the past.’

Desnos’s remarks follow claims that companies would be forced out of business because insurers were beginning to withdraw trade credit insurance if management accounts were not made available instead of statutory accounts lodged with Companies House.

Last month, suppliers to McCains saw their insurance cover withdrawn when the frozen food giant refused to open up its management accounts to Euler.

Clothing retailer Bay Trading collapsed recently after a chain reaction was set in motion when its auditors were about to issue a financial red-flag with an emphasis of matter paragraph. Euler Hermes withdrew credit insurance from its suppliers and the company announced it had folded soon after. Desnos would not discuss individual cases, but said the credit insurance community had been made a scapegoat.

‘Some businesses would like to create smokescreens by blaming somebody else,’ he said.

Desnos said he was not unsympathetic to the plight of companies in the current climate, and the most timely set of figures could only help companies secure cover.

‘Not disclosing information to the credit insurer means you don’t think your suppliers need to know up-to-date information about the company.’

He added: ‘Companies have to realise that when they are sharing this information with the credit insurer they are sharing it confidentially.’

Last week, the government rolled out its £5bn credit insurance scheme, which will let companies apply for a top-up if the UK’s three biggest insurers Euler Hermes, Atradius or Coface reduced their cover.

Accountancy Age revealed that the government would rely on the same documentation as private sector insurers.

Read more on trade credit insurance.