Market overview

Carrier financial results & credit insurance market update

Key carrier results

• Preliminary results released by the principal trade credit carriers showed exceptional trends in 2021.
• Gross Written Premium grew by +10 percent reflecting the increased demand for trade credit solutions but also the rather short-lived hard market cycle and repricing effects carrying forward from 2020 linked to the uncertainties that the pandemic brought. Also, the rebound in client trade and activity as well as the inflationary effects has contributed into higher overall premium volumes.
• Lower levels of business insolvency reflect the support provided by governments in most advanced economies during 2020/21. These measures also had the effect of supporting weaker trade sectors and buyers who might otherwise not have survived the economic downturn. During the later part of 2021, we observed a higher frequency of losses and some new severity cases as government support measures tapered.
• Overall Loss Ratio levels were at historic lows in 2021, significantly below the trends of pre-pandemic years. The Combined Ratios followed the same trend yielding significant operating profits for the carriers.
• A previously expected return to a more “normal” business cycle has been thrown into doubt now by persistent global inflationary pressures and the ripple effects that will be felt throughout the global economy following the actions taken by Russia in Ukraine. Clearly, this has created significant uncertainties for global trade as supply chain disruption continues and interest rates set to rise to combat inflation.
• For now, favorable underwriting conditions do exist, until such time as the effects of the crisis start to affect insurers capacity, appetite and performance. In this respect the market remains cautiously pragmatic whilst expecting a deterioration later in 2022.