Euler Hermes: Successful extension of supply chain protection

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The German government, Euler Hermes and other German credit insurers have jointly decided to extend their protective shield for the German economy by six months until June 30, 2021. The agreement is still subject to approval by the EU Commission.

Coverage commitments for companies that were economically sound before the pandemic will thus be maintained. In this way, companies, the economy, trade, production and supply chains can be further stabilized. The coverage commitments of the German credit insurers amount to over 400 billion euros (bn EUR), almost half of which is attributable to market leader Euler Hermes.

Protective shield for the economy creates maximum security in difficult times 

"We fought to ensure that our clients will be able to continue their business virtually unchanged in the coming six months – despite significantly increased risks," says Ron van het Hof, CEO of Euler Hermes in Germany, Austria and Switzerland. "This is not a matter of course in such a crisis. In order to achieve this goal, we played a major role in shaping the supply chain protection shield and in recent weeks, we advocated for its extension. We are thus continuing to make a considerable contribution to the economy. In doing so, we are laying one of the most important foundations for a rapid further stabilization of the local economy and companies, especially in the SME sector. In the current very volatile situation, it is important to continue the recovery. We assume that this will put many companies back on the road to success by the end of June".

Specifically, the agreement provides for the Federal Government to provide a counter-guarantee of up to 30 billion euros to the ECAs until June 30, 2021, to secure business transactions of German companies with their domestic and foreign customers. 

The ECAs again make a significant contribution of their own to this protective shield for the German economy: they cede just under 60 percent of the premium income of the first half of 2021 to the Federal Government and bear proportionate losses of 10 percent as well as the default risks that exceed the guarantee of the Federal Government. 

Protective umbrella as a basis for sustainable economic recovery and predictability

The protective shield continues to largely disregard the negative changes in customers caused by corona, such as a slump in sales or additional loans. Once the protective shield expires on June 30, 2021, the usual market mechanisms and business processes will again take effect and the credit insurers will again determine the individual credit rating on the basis of the actual situation at the individual companies, as is customary in the market. 

"By extending the protective umbrella by six months, we have given German companies the best possible planning capability," says Van het Hof. "They now have sufficient time to prepare for the new normality, to adapt their business models to the current situation and to make them as crisis-proof as possible. That was an important issue for us. We are already offering our customers solutions for the time after the end of the protective shield. This gives them maximum transparency and planning security. This is particularly important in times of greatly increased risks, and companies have a very good starting position for a return to the road to success. On this path, we are accompanying the economy and our customers as a strong partner."

The extension of the protective shield for the German economy is a measure that continues to pursue the goal of protecting economically well-positioned companies from the pandemic in these difficult times. Companies that are in financial difficulties unrelated to the Corona pandemic are still not covered by the agreement now reached between the credit insurer and the federal government. Euler Hermes decides on credit based on the provisions of the guarantee contract. As usual, this is done on the basis of an individual assessment that takes into account a large number of factors: In addition to individual financial indicators such as turnover, profitability, financial result, debt, liquidity or cash flow, other factors such as country and sector risks, market position, diversification, sales markets, management, client structure, strategy or unique selling propositions also play a role.

About Euler Hermes

Euler Hermes is the global leader in trade credit insurance and a recognized specialist in the areas of surety, collections, structured trade credit and political risk. Our proprietary intelligence network analyses daily changes in corporate solvency representing 92 percent of global GDP. We give companies the confidence to trade, and be paid. We compensate your company in the event of a bad debt, but more importantly, we help you avoid bad debt in the first place. Whenever we provide trade credit insurance or other finance solutions, our priority is predictive protection. But, when the unexpected arrives, our AA credit rating means we have the resources, backed by Allianz to provide compensation to maintain your business. Headquartered in Paris, Euler Hermes is present in 50+ countries with 5,800 employees. In 2019, our consolidated turnover was 2.9 billion euros and insured global business transactions represented 950 billion euros in exposure.

The Allianz Group is one of the world's leading insurers and asset managers with more than 100 million retail and corporate customers in more than 70 countries. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from property, life and health insurance to assistance services to credit insurance and global business insurance. Allianz is one of the world’s largest investors, managing around 774 billion euros on behalf of its insurance customers. Furthermore, our asset managers PIMCO and Allianz Global Investors manage 1.7 trillion euros of third-party assets. Thanks to our systematic integration of ecological and social criteria in our business processes and investment decisions, we hold the leading position for insurers in the Dow Jones Sustainability Index. In 2019, over 147,000 employees achieved total revenues of 142 billion euros and an operating profit of 11.9 billion euros for the group.

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

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Antje Wolters
Euler Hermes Germany
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Further Information

Euler Hermes announces an extension to the protective shield scheme

The global pandemic continues to create a volatile environment for the German economy, especially its many SMEs. So, last week’s announced extension of the protective shield is a welcome boost for businesses and welcome news for the German economy.

Euler Hermes: Successful extension of supply chain protection

The German government, Euler Hermes and other German credit insurers have jointly decided to extend their protective shield for the German economy by six months until June 30, 2021. The agreement is still subject to approval by the EU Commission.

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