European credit insurance group Credendo has increased the share capital of its Credendo – Single Risk subsidiary from €25 million to €65 million as it looks to capitalise on opportunities in the single-risk insurance business segment.
The €40 million capital increase will allow Credendo to further explore a market with high growth potential and better to respond to rising global demand for protection against geopolitical risks.
The decision to increase the share capital of the Credendo – Single Risk subsidiary was made at the company’s 60th Annual General Meeting (AGM) of Shareholders, held in Vienna on 16 May.
Michael Frank, General Manager of Credendo – Single Risk, commented: “This decision provides a great opportunity to grow our business in a competitive but also promising market environment. Our growth strategy is based on our business development plan which aims at generating sustainable returns on a solid capital base.”
Referring to the business development plan, Frank explained that there is a growing demand for insurance cover for single contracts, transactions, and investments in the context of international trade, against a large spectrum of political and commercial risks.
He added that there may be additional potential in seizing cross-selling business opportunities between the different entities of Credendo due to their complementary range of credit insurance solutions.
“This capital increase is the key to unlocking existing market opportunities and growth potential as future growth will need to be based on a level of capitalisation that not only meets regulatory requirements but also meets target customers’ criteria for selecting their insurers in the private market. We identified the additional capital requirement at a level of EUR 40 million, allowing us to meet these customer criteria,” said Frank.
“Furthermore, it enables us to keep the Solvency II ratio above the Credendo target of 150% over a medium-term horizon and to achieve defined profitability targets at the same time.”
Commenting on the capital increase, Dirk Terweduwe, Group Chief Executive Officer (CEO) of Credendo and Chairman of the Supervisory Board of Credendo – Single Risk, said: “We clearly see rising opportunities in the single-risk insurance business. Credendo – Single Risk is operating in a market with high potential growth shaped by the development of international trade with non-OECD countries and the growing role of the private sector.
“On the supply side, increased capacities (increased products lines, longer tenors and new entrants) demonstrate how much the political risk insurance market looks attractive.”
