Dubai: Euler Hermes, majority owned by Europe’s biggest insurerAllianz Group, is eyeing double digit growth in trade credit insurance in the GCC for the next six years and it aims to achieve this by opening three more offices in the region next year, taking the total to seven, the company’s top executive in the region told Gulf News.
The company, which protects its clients against non-payments, has a exposure of $13 billion (Dh47.7 billion) in the GCC region, and has been in the business since 2007. The company monitors about 50,000 companies in the Gulf region, and screens transactions worth over €50 billion (Dh234.4 billion).
“Ahead of Expo 2020, we are expecting to grow and support the businesses based on their requirements in the region... We are expecting GCC countries to grow very fast. On average the GDP of GCC countries is growing by approximately 5 per cent, so we are expecting double-digit growth in this region,” GCC chief executive Mahan Bolourchi told Gulf News.
Bolourchi said the Dubai crisis saw a lot of people get to grips with the need for trade credit insurance and added that the market still needs to be penetrated heavily as there is huge potential owing to trade credit insurance being largely a new product in the region.
The World Expo 2020 is expected to draw investments worth close to $20 billion directly in the UAE and is expected to benefit many sectors of the UAE economy, including retail, construction and tourism.
“Some sectors need to be monitored more closely like [the] construction [and] steel sectors. Some sectors are in a better position [and these include] fast moving goods, machinery [sectors],” Bolourchi said. “The GCC represents an ideal location as it’s a fast-growing market providing huge opportunities.”
Investments, diversification
“This [trade credit insurance] product is new [with] less than 10 years in the market. Credit management was not done properly in this region. We are putting a huge investments in place to meet the challenges,” Bolourchi said. “We need to have people on [the] ground from different sectors with knowledge and expertise,”
Bolourchi said his clear mandate from the board is to recruit people and work very closely with Allianz, the company’s owner.
The company doesn’t see any impact from falling crude oil prices, which could hit the profitability of petrochemicals, as their portfolio is much diversified.
The US benchmark crude oil price dropped to $79.78 a barrel on October 16, the lowest since June 2012 after lagging demand didn’t keep pace with rising supplies.
“Crude oil prices depend on [the] supply situation in Opec [countries],” Bolourchi said. “The petrochemical sector might be getting impacted, but other sectors like FMCG, tourism won’t get impacted.”
