Despite losses, outlook positive for ONDD

Belgium’s export credit agency ONDD has revealed a €40mn loss in 2009, but claims that the first quarter of 2010 bodes well for the rest of the year.

Last year was a tough period for ECAs, as credit insurers found themselves making increased payouts as more buyers defaulted on their payments, highlighted by ONDD’s 2009 payouts totalling €227mn.

Despite the loss, ratings agency Standard & Poor’s renewed ONDD’s AA+ rating, possibly influenced by the ECA gaining a record amount of over €220mn in premiums, which prevented liquidity problems.

Furthermore, ONDD enforced more stringent assessments of insurance clients in an effort to keep losses to a minimum.

Frank Vanwingh, deputy chief executive officer of ONDD, explains the problems faced: “The extremely tough general economic climate naturally played an important role in the development of the claims rate. The credit crisis of 2007 spread to the real economy in 2008, and the consequences of this for us as a credit insurer once again made themselves felt with a certain time lag, as is the case with any recession.”

When asked if the losses of 2009 will lead to the ONDD group adjusting its strategy, Vanwingh adds: “Not fundamentally, no. Our core task is to support Belgian exporters on difficult markets and in difficult conditions, and that will remain the case in the future too. We believe that over the past year we fulfilled this role to everyone’s satisfaction.”

ONDD’s chief executive officer, Dirk Terweduwe, remarks that dealing with the crisis has strengthened the company’s ability to deal with potential problems in the future: “The crisis has brought about enhanced synergies between departments, more expertise in terms of risk policy and an even closer collaboration with our insurance clients and partners.”