Credit Insurance—The Key to Successful Risk Management

JAN-FEB 2018|BY BUSINESS PARTNERS
Gerasimos Tzeis, Managing Director of Atradius Greece, analyzes the credit insurance mechanism, the opportunities that arise for Greek companies in global markets, and Atrium, the new customer platform from Atradius.

Tell us a bit about Atradius.

Atradius is a leading global trade credit insurer and provides credit insurance, bonding and collections services worldwide through a strategic presence in more than 50 countries. The company has access to credit information on more than 200 million companies worldwide and annual revenues of €1.8 billion. With more than 3,700 employees all over the globe, Atradius contributes to the growth of businesses, protecting them against the risk of non-payment or default. Atradius is part of Grupo Catalana Occidente (GCO.MC), one of the leading insurance groups in Spain and one of the biggest credit insurers worldwide.

Atradius Greece, the Hellenic branch of Atradius, was established in January 1998 and provides trade credit insurance and collections services aiming to reduce customers’ exposure to the risk of non-payment from buyers to which they sell their products and services on credit. Ever since, Atradius Greece has maintained its steady upwards trajectory, becoming one of the foremost choices for Greek entrepreneurs, corporations and insurance mediators.

The company’s strategy focuses on profitable growth. By doing so, Atradius has not only succeeded in increasing its topline but also in ensuring the loyalty of its clientele, even during the period since 2009 that has been marked by severe economic downturns in Greece. Especially throughout this period, Atradius Greece stood by its clients, maintaining the insurance limits and trade credit protection and, selectively, bearing additional credit risks. This resulted in Atradius becoming the leader in the Greek credit insurance market.

With unwavering confidence in the potential of Greek businesses, Atradius is committed to providing its clients and partners with world-class services and cutting-edge insurance products, providing a framework that protects its customers against payment defaults and the increased insolvency risks inherent in trading today. At the same time, Atradius safeguards the cash flow of Greek companies, thus enabling them to expand their operations.

In a nutshell, what is credit insurance and how useful is it?

Trade credit insurance protects companies against the risk of non-payment of their buyers for delivered goods or services. It can also be used as a risk management tool, allowing companies to pursue their growth strategies, while controlling risks and exposures. For instance, trade credit insurance plays a key role in facilitating successful business expansion and international trade. It is particularly useful in enabling exporters to move into new, unfamiliar markets and makes the process of trading with new, as well as existing, customers less risky.

Trade credit insurance is also very helpful for risk prevention. Having real time access to the financials of more than 200 million companies worldwide, Atradius has deep insights to the credit-worthiness of all these companies and the potential payment risks involved. Consequently, in case of risk deterioration, Atradius will instantly notify the relevant suppliers and discuss the next steps with them in order to protect them from any potential damage.

The latter reveals another benefit of credit insurance, which is no other than a neutral, independent view on the payment risks of a buyer. Not only via the real time access to the financials of the above-mentioned companies but also via retrieving the empirical information of the market, Atradius is in a position to offer an unbiased view on the credit-worthiness of these companies, which it, in turn, shares with their customers.

Last but not least, credit insurance may also act as a tool for the customer to acquire access to easier and cheaper financing of his working capital. The credit limits of Atradius that have been provided to the supplier, serving as A rated collaterals, may be offered as guarantees to financial institutions (e.g. factoring houses, banks, funds) for reasons of discounting the insured receivables, or else getting easier and cheaper working capital.

How does this work in the Greek context? Which foreign markets should Greek companies looking to grow internationally turn their attention to?

The nature of the goods and services being exported determines the opportunities that become available in new markets. Foodstuffs and agricultural products comprise one of the country’s largest export product groups, and olive oil is one of the country’s top-grossing exports. When it comes to food and beverage products such as olive oil, even mature markets can present excellent business opportunities for Greek companies. New markets in countries such as South Korea that offer great business opportunities, stable markets in developing countries, as well as niche markets with specialized needs for Greek products and services are the safest bets for Greek companies looking to establish export activities. In each of these cases, and thanks to having a strategic presence around the world, Atradius supports Greek exporters to safely and successfully grow in new markets.

How does Atradius work to support businesses in their endeavors to grow and expand into international markets?

With our global presence and more than 90 years of experience in the credit insurance business, Atradius has a thorough understanding of risks in new markets and the way businesses of various sizes and with varying degrees of presence in these markets operate. Very often, we also have access to additional information related to the credit behavior of specific buyers, especially in cases in which our clients have a long-standing business relationship with them. We are in the position to share this kind of information because we have access to accrued data on their payment behavior in dealings with various suppliers. This kind of information can help entrepreneurs and corporations to avoid buyers who are classified as high-risk, enabling them instead to turn their portfolio to quality buyers and the potential to build long-standing business partnerships.

Can you give us the main factors for the assessment of credit insurance limits?

Credit insurance and limits are affected by the general state of a country’s economy and the economic performance of a company. Countries such as Greece can expect greater flexibility in terms of credit insurance, if the ongoing stabilization of the macroeconomic outlook continues. Assuming a successful end to the bailout program, liquidity will slowly return to the market, supported by banks and new investments, and credit insurance will further support the ongoing recovery of the Greek economy.

How companies are evaluated depends on their financial situation and the setting of sectors and countries in which they operate. Short-term demand volatility can affect a company’s rating. Sudden fluctuations in commodity prices may impact the company’s operations in the corresponding industries or sectors, and that, in turn, determines our assessment. High seasonality in an industry, for instance, can indicate increased cash flow for businesses operating within it, contributing to favorable ratings.

Atradius recently unveiled a new platform, Atrium. What is this and how do companies stand to benefit from it?

As a key player at the heart of global trade, Atradius has always been open to new developments and is constantly evolving. We continue to do so by embracing innovation and providing high-quality, seamless online experiences to ensure excellent customer service. Our new customer portal, Atrium, is one result of this work.

Atrium is built to deliver a faster, more efficient user experience, focusing on our clients’ everyday needs. It has been designed to bring together credit insurance policy information and business intelligence, including our portfolio management tool Atradius Insights, into a single secure portal, that enables clients to easily search for key information such as buyer ratings, current cover and claims. In a nutshell, it supports better risk management and growth potential while helping to minimize the amount of time companies spend on administration. By saving precious time and making important information easily accessible, Atrium enables companies to conduct their business more securely and more efficiently. Of course, the specific needs of brokers and agents are also built into this tool, providing credit insurance professionals with invaluable tools for managing multiple policies and customer portfolios. With Atrium you can manage your daily policy activities and analyze your portfolio of customers with only one login.

Looking to the future, what does Atradius Greece hope to achieve in 2018?

The Hellenic branch of Atradius has remained on a profitable growth orbit, since its establishment in 1998. We aim to continue on this course in the coming year, supporting Greek businesses in their endeavors to expand both to domestic and international markets and achieve sustainable growth. We are going to achieve this by offering state-of-the-art insurance products as well as investing into cutting-edge technology and solutions for our policyholders and business partners.

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