'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Last month, suppliers to McCains saw their insurance cover withdrawn when the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.

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more on trade credit insurance.