Trade Credit
Catlin is a London market leader for trade credit insurance. The account is approximately split among the following classes of business: 3% Insolvency only, 12% Insolvency and Protracted Default, and 85% Insolvency, Protracted Default & Contract Frustration.
The account is written generally through specialist trade credit and political risk brokers in the Lloyd’s market. It is approximately split among the following sources of premium: 44% Facultative, 44% Lineslip, and 12% Treaty.
The majority of risks are located overseas, particularly emerging markets where the risk selection is more stringent and rates are considerably higher. There is a limited amount of US / UK domestic exposure as this market is quite saturated and dominated by the large, very competitive mono-line credit insurers. The account is approximately split among the following risk locations: 28% South America, 24% Other, 13% Far East, 12% Middle East, 9% North America, 9% Western Europe, and 5% Eastern Europe.
The policies provided insure against the insolvency or protracted default (i.e. inability to repay within six months) of a specified counterparty / obligor.
The account is comprised mainly of single risk policies but with a small number of long standing whole turnover policies. Whilst the former are generally more volatile; due to higher premium rates, lower administration and careful risk selection, this sector has produced better results overall. There is also much more aggressive competition on the whole turnover business, which continues to drive prices down in this area.