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World’s Largest Trade Credit Insurer Hermes Expands Into South Africa

World’s Largest Trade Credit Insurer Hermes Expands Into South Africa

From BusinessDayLive. Story by Phakamisa Ndzamela.

The world’s largest trade credit insurer, Euler Hermes, has expanded into South Africa with ambitions to use the country as a base to start operations in Mozambique next year.

Euler Hermes’s decision to set up office in South Africa in May will see it compete with South Africa’s largest trade credit insurer, Credit Guarantee Insurance, which is majority owned by Mutual & Federal, Coface, Lombard Credit Insurance and Credit Insurance Solutions , which operates under Rand Merchant Insurance’s RMBSI.

Trade credit insurance is targeted at businesses that supply goods and services on credit.

The supplier then takes on the insurance to protect itself from a client who may default on the payment of goods.

Trade credit insurers are also taking advantage of South African companies looking to do business in the rest of Africa.

Annual trade credit insurance premiums in South Africa are estimated to be about 1.2 billion rand ($89.06 million) said Gregory Nosworthy, managing director of Euler Hermes in South Africa.

The expansion of France-based Euler Hermes comes soon after Santam sold its stake in South Africa’s largest trade credit insurer, Credit Guarantee, to Mutual & Federal.

“We are the fifth player to enter the South African market. South Africa has always been a spot that we have missed. It’s obviously a competitive market but we come with capacity,” Nosworthy said.

The company plans to leverage off its global capacity and information about the trade credit insurance market.

Globally, Euler Hermes, which is part of the Europe-based Allianz group, had turnover of 2.5 billion euros ($2.8 billion) and insured global business transactions worth 860 billion euros ($962.73 million) in 2014.

Nosworthy said many people believe the South African market is saturated, but he thinks there’s growth potential with medium-sized businesses.

“We are looking at the Southern African countries, especially Mozambique, Zambia and Namibia,” Nosworthy said. “We will probably do Mozambique first. There is a lot of business that is happening there. There is a lot of South African activity where multinationals are starting to operate.”

Read more at BusinessDayLive.