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Carrier financial results and market update

Loss Ratio evolution

Combined Ratio evolution

Insurer results are based on 2019-22 company financial reporting, available industry information and Aon data.

* Cumulative year-to-date

Key carrier results

  • Continued low levels of business insolvency during 2022 reflect the support measures provided to businesses by governments in most advanced economies during the pandemic period and had the effect of supporting weaker trade sectors and buyers who might otherwise have not survived the economic downturn. Frequency claims have started to return to pre-pandemic levels although owing to the absence of severity losses these losses are yet to translate in carrier's results. Following the tapering of this support and the economic headwinds and inflationary effects brought about by the war in Ukraine, the energy crisis in Europe and now recessionary effects we expect a significant increase in global insolvencies in 2023 that will happen in countries and trade sectors at different speeds and times.
  • As a result of the artificial economic environment created over the past couple of years, credit insurers have experienced extremely low levels of loss. Increased trade volumes combined with inflationary effects have seen overall premium levels increase throughout the past 12 months. As a result of these factors, financial reporting at the end of Q3 2022 showed Loss and Combined ratios that have continued at a lower than pre-pandemic level, although these are now starting to trend upwards.
  • Even though we do expect a future “normalization” of loss ratios as insolvencies inevitably return, the impact and timing of these also remain so uncertain that it is unlikely to impact carrier results until well into 2023 at the earliest. Whilst these more favorable underwriting conditions exist, credit insurers have continued to adopt a much more pragmatic position on both their risk and commercial strategies, whilst attaining high levels of client portfolio retention and profitable growth. The pricing environment reflects these current realities with overall renewal premium rates seeing low single digit reductions offset by effects of higher insured volumes.

Coverage trends

  • Insurers' appetite and capacity (Total Potential Exposure) have continued to increase, rising to meet client needs in the post-pandemic trading environment, reflecting higher commodity pricing and inflationary pressure effects.
  • Aggregate credit limit capacity from carriers now exceeds pre-pandemic with a rebound seen in all geographic regions and notably the Americas, APAC, and in trade sectors of electronics, chemicals, metals, construction, and transportation/logistics.
  • Credit Insurers are now preparing for a return to more normal underwriting conditions related to the business cycle and in the face of the economic headwinds and recessionary effects that are starting to be realized.
  • This upward and increased expansion trend of coverage may continue at a lower rate in the short-term and plateau at these all-time high levels during 2023.
  • At the same time, the market continues to innovate to provide capacity and solutions related to some of the more complex and larger risk exposures, through the adoption of new technologies to improve process and decision making, also in the face of ESG themes as the industry seeks to support the transition to net-zero.

Limit Capacity evolution

Insurer results are based on 2019-22 company financial reporting, available industry information and Aon data.

Trade Credit Insurance – Insured Exposure¹

Trade Credit Insurance – Premium, Claims, and Claims Ratio¹

¹Source: ICISA-Press-Release-Industry-Results-2021-1.pdf ²Source: https://www.berneunion.org/DataReports

ICISA and Berne Union Data

The International Credit Insurance & Surety Association (ICISA) current members account for over 95 percent of the world’s private market trade credit insurance business. For 2021 ICISA¹ reported:

  • Insured exposure increased to €2.7 trillion (€2.4 trillion)
  • Increased premium written €7 billion (€6.3 billion)
  • Claims paid decreased to €1.6 billion (€3.9 billion)
  • Claims ratio decreased to 23 percent (62 percent)

The Berne Union² is an international not-for-profit association representing the global export credit and investment insurance industry. Berne Union Members include government-backed export credit agencies, private credit and political risk insurers and multilateral institutions from across the globe who provide direct and indirect support for international trade and cross-border investments, through insurance, guarantees and various direct financing instruments.

  • Collectively, members provide payment risk protection for approximately 14 percent of world annual cross-border trade in goods and services, amounting to $2.6 trillion in 2021.
  • Short term export credit growth was mainly driven by public providers who saw their turnover covered rise by 20 percent in 2021, whereas private insurers’ cover rose by 4 percent YoY meaning they have just surpassed their 2019 volumes.
  • Short term export credit claims continued to fall in 2021 (-19 percent) with just $2.5 billion indemnified and resulting in the lowest short-term claims ratio recorded in more than 10 years. This follows the overall trend in global insolvencies and corporate bond defaults, despite some government support measurers being phased out during 2021.