07/05/2010 16:30:00

Euler Hermes results for the first quarter of 2010 Turnover: E505.5 million Technical result: E24.5 million Operating income: E6

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Press release  

Paris, 7 May 2010.

Euler Hermes results for the first quarter of 2010

Turnover: E505.5 million

Technical result: E24.5 million

Operating income: E67.1 million

Net income: E47.6 million

Despite the fragile economic recovery Euler Hermes posted a quarter on quarter increase in turnover of 3.5% compared to the fourth quarter of 2009. The group achieved a positive net income development of E47.6 million versus E16.5 million for the first quarter of 2009. The combined ratio improved significantly from 103.0% to 90.0% due to decisive management actions to handle the global financial crisis and improvement in economic environment.

The Group Management Board presented the consolidated results for the first quarter of 2010, as reviewed by the Audit Committee, to the Euler Hermes Supervisory Board on May 7, 2010.

Wilfried Verstraete, Chairman of the Euler Hermes Group Management Board, commented: "In the first quarter of 2010, Euler Hermes reaped the rewards of the action plans it has implemented, enabling the group to achieve a combined ratio of 90% at end-March 2010 and a positive technical result of E24.5 million in the first quarter of 2010, as against a loss of E11.1 million in the first quarter of 2009. However, it will take some time to emerge from the crisis. In many industries, a large number of companies have seen their revenues flatten out well below their 2008 levels, and the rate of business failures remains high. For Euler Hermes, this has meant a decline in its insured turnover, which explains the 8% fall in its premiums and service revenues."

I. Results for the first quarter of 2010 (unaudited)

Key figures

In E million  
Q1 2010  
Q4 2009  
Q1 2009  
 
Change  
 
 
Change  
 
 
 
         vs Q4 2009      vs Q1 2009        
                       
                       
Earned premiums  417.4  398.5  448.3    18.9  +5%    -30.9  -7%      
Services  88.1  90.0  100.2    -1.9  -2%    -12.1  -12%      
Total turnover  505.5  488.5  548.5    17.0  +3%    -43.0  -8%      
                       
Net technical result  24.5  6.3  -11.1    18,2  +289%    35.6  -321%      
Net financial income  42.6  29.5  54.2    13.1  +44%    -11.6  -21%      
Operating income  67.1  35.8  43.1    31.3  +87%    24.0  +56%      
                       
Net income  47.6  18.1  16.5    29.5  +163%    31.1  +188%      
                       
Net loss ratio  58.1%  71.8%  83.8%                  
Net cost ratio  31.9%  24.4%  19.2%                  
Net combined ratio  90.0%  96.2%  103.0%                  

The net technical result was supported by a fall in claims. However, the decline in insured customers' sales, witnessed in most countries in the last three quarters of 2009, was confirmed in the first quarter of 2010, as reflected by an 8% fall in Euler Hermes' turnover, at constant scope and exchange rates, compared with the first quarter of 2009.

In this low interest-rate environment, Euler Hermes generated net financial income of E42.6 million, down by E11.6 million against the first quarter of 2009. This was due to a E15.7 million decrease in realised capital gains in the first quarter of 2010 compared with the first quarter of 2009.

Net income for the first quarter of 2010 was not affected by any exceptional items and was taxed at 28.9%, owing to positive tax rate differences between the parent company and its subsidiaries.

First-quarter 2010 net income amounted to E47.6 million, up by E31.1 million compared with the first quarter of 2009.

Business activity

Turnover for the first quarter of 2010 totalled E505.5 million, falling by 7.8%% (or 8.4% at constant scope and exchange rates) from E548.5 million in the first quarter of 2009.

Turnover by country (based on earned premiums)

In E million  
31/03/2010  
31/03/2009  
Change  
31/03/2009  
Change  
 (1)  (2)  (1)/(2)  (3)  (1)/(3)  
           
Germany  175.5  190.9  -8.1%  190.9  -8.1%  
France  91.3  100.6  -9.3%  100.6  -9.3%  
Northern Europe  108.2  107.6  +0.5%  112.2  -3.6%  
Southern Europe  57.7  69.9  -17.3%  69.9  -17.4%  
Americas  45.3  51.9  -12.8%  49.8  -9.0%  
Asia  14.5  12.3  +17.8%  12.5  +16.3%  
Captive + others  13.0  15.3  -15.0%  16.0  -18.8%  
Euler Hermes  505.5  548.5  -7.8%  551.9  -8.4%  

Notes: (1) Turnover taking into account geographic reclassifications (average rate as at March 2010)

(2) Turnover taking into account pro forma geographic reclassifications (average rate as at March 2009)

(3) Turnover taking into account pro forma geographic reclassifications corrected for exchange rate and scope effects

Turnover in all regions, except Asia, was down compared with the first quarter of 2009, due to: (i) a 7% drop in earned premiums, owing to the decline in Euler Hermes' insured turnover; and (ii) lower service revenues resulting from weaker demand for new credit limits from insured customers.

This decline in insured turnover is affecting France, the Americas and Germany to a similar degree, but is less pronounced in Northern Europe.

Southern Europe experienced the sharpest fall in turnover, owing to the additional impact of its 2008-09 business plan, resulting in an intentionally smaller business portfolio.

Operating income

Operating income for the Euler Hermes group increased by 56% to E67.1 million. This improvement was driven by a lower combined ratio of 90%, which was down by 6.2 points compared with the fourth quarter of 2009 (96.2%) and by 13 points compared with the first quarter of 2009.

The loss ratio and the cost ratio - the two components of the combined ratio - changed as follows:

- the net loss ratio decreased to 58.1%, a 25.7-point improvement compared with the first quarter of 2009 (83.8%);

- the net cost ratio increased to 31.9%, from 19.2% in the first quarter of 2009.

The 12.7-point increase in the net cost ratio mainly stems from the decline in net earned premiums and the rise in reinsurance expenses.

Net financial income for the first quarter of 2010 amounted to E42.6 million, owing in particular to E17.6 million in capital gains, which were mainly generated by the equity and property portfolios. However, net financial income was down compared with the first quarter of 2009, as realised capital gains in the first quarter of 2010 were E15.7 million lower than in the first quarter of 2009.

Exceptional charges and events

Euler Hermes did not record any exceptional charges during the first quarter of 2010.

Investment portfolio

With the uncertain outlook on the financial markets, Euler Hermes maintained its very cautious investment management policy. At end-March 2010, the fair value of the investment portfolio, including cash and cash equivalents, held steady at E3,463 million, compared with E3,339.1 million at year-end 2009.

Despite the quarter's sales and market movements, unrealised capital gains and revaluation reserves stood at E97 million, virtually unchanged from end-December 2009 (E102 million).

Net income

Euler Hermes' net income after tax and financial expenses came to E47.6 million, up by 188% compared with the first quarter of 2009.

Shareholders' equity

The group's shareholders' equity stood at E1,893 million at the end of the first quarter, an increase of 4.3% from E1,816 million at year-end 2009.

II. Outlook

In spite of an uncertain environment, the actions taken in 2009 should continue to deliver their full impact in 2010, enabling Euler Hermes to improve its results progressively.

The first signs of the end of the crisis have not cancelled out the effects of the unprecedented recession through which developed countries have come. A direct repercussion of this fragile recovery is that the rate of business failures is unlikely to fall significantly in 2010, after having peaked in 2009.

***

Euler Hermes is the worldwide leader in credit insurance and one of the leaders in the areas of bonding, guarantees and collections. With 6,200 employees in over 50 countries, Euler Hermes offers a complete range of services for the management of B-to-B trade receivables and posted a consolidated turnover of E2.1 billion in 2009.

Euler Hermes has developed a credit intelligence network that enables it to analyse the financial stability of 40 million businesses across the globe. The group protects worldwide business transactions totalling E700 billion.

Euler Hermes, a member of the Allianz group, is listed on Euronext Paris. The group and its principal credit insurance subsidiaries are rated AA- by Standard & Poor's.

www.eulerhermes.com

Contacts:

Investors Relations / Euler Hermes Group :  
Press Relations / Euler Hermes Group :  
Nicolas Hein: +33 (0)1 40 70 54 65  Raphaële Hamel: +33 (0)1 40 70 81 33  
nicolas.hein@eulerhermes.com  raphaele.hamel@eulerhermes.com  
   

These assessments are, as always, subject to the disclaimer provided below.

Cautionary Note Regarding Forward-Looking Statements: Certain of the statements contained herein may be statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. In addition to statements which are forward-looking by reason of context, the words 'may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential, or continue' and similar expressions identify forward-looking statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (i) general economic conditions, including in particular economic conditions in the Allianz SE's core business and core markets, (ii) performance of financial markets, including emerging markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) the extent of credit defaults (vii) interest rate levels, (viii) currency exchange rates including the Euro-U.S. Dollar exchange rate, (ix) changing levels of competition, (x) changes in laws and regulations, including monetary convergence and the European Monetary Union, (xi) changes in the policies of central banks and/or foreign governments, (xii) the impact of acquisitions, including related integration issues, (xiii) reorganization measures and (xiv) general competitive factors, in each case on a local, regional, national and/or global basis. Many of these factors may be more likely to occur, or more pronounced, as a result of terrorist activities and their consequences. The matters discussed herein may also involve risks and uncertainties described from time to time in Allianz SE's filings with the U.S. Securities and Exchange Commission. The Group assumes no obligation to update any forward-looking information contained herein.

Réserve: Certains des énoncés contenus dans le présent document peuvent être de nature prospective et fondés sur les hypothèses et les points de vue actuels de la Direction de la Société. Ces énoncés impliquent des risques et des incertitudes, connus et inconnus, qui peuvent causer des écarts importants entre les résultats, les performances ou les événements qui y sont invoqués, explicitement ou implicitement, et les résultats, les performances ou les événements réels. Une déclaration peut être de nature prospectif par nature ou le caractère prospectif peut résulter du contexte de la déclaration. En plus, les déclarations de caractère prospectif se caractérisent par l'emploi de terme comme " peut ", " va ", " devrait ", " s'attend à ", " projette ", " envisage ", " anticipe ", " évalue ", " estime ", " prévoit ", " potentiel ", ou " continue ", ou par l'emploi de termes similaires. Les résultats, performances ou événements prospectifs peuvent s'écarter sensiblement des résultats réels en raison, notamment (i) de la conjoncture économique générale, et en particulier de la conjoncture économique prévalant dans les principaux domaines d'activités du groupe Allianz et sur les principaux marchés où intervient la Société, (ii) des performances de marchés financiers, y compris des marchés émergents, (iii) de la fréquence et de la gravité des sinistres assurés, (iv) des taux de mortalité et de morbidité, (v) du taux de conservation des affaires, (vi) de l'évolution des taux d'intérêt, (vii) des taux de change, notamment du taux de change EUR/USD, (viii) de la concurrence, (ix) des changements des législations et des réglementations, y compris pour ce qui a trait à la convergence monétaire ou à l'Union Monétaire Européenne, (x) des changements intervenants dans les politiques des Banques Centrales et/ou des Gouvernements étrangers (xi) des effets des acquisitions (par exemple de la Dresdner Bank AG) et de leur intégration et (xii) des facteurs généraux ayant une incidence sur la concurrence, que ce soit sur le plan local, régional, national et/ou mondial. Beaucoup de ces facteurs seraient d'autant plus susceptibles de survenir, et éventuellement de manière accrue, suite à des actes terroistes.  
Les questions abordées dans le présent document peuvent en outre impliquer des risques et des incertitudes dont les sociétés du groupe Allianz sont régulièrement amenées à faire état dans les documents qu'elles soumettent à la Securities and Exchange Commission. Les sociétés du groupe Allianz ne sont pas obligées de mettre à jour les informations prospectives contenues dans le présent document.  
 

Copyright Hugin

The appendixes relating to the press release are available on:

http://www.hugingroup.com/documents_ir/PJ/CO/2010/166217_88_B2WI_PRQ12010May10EN.pdf

Information réglementée :

Type : Nouvelle information

Thème(s):

Communiqués au titre de l'obligation d'information permanente - Communiqué sur comptes, résultats, chiffres d'affaires

This announcement is originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.

[CN#166217]

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