Confusion reigns in the insurance market as GTR hears from numerous sources that Zurich will be exiting the trade finance space in some capacity or other.

While some tell GTR that the insurer has stopped doing bank credit risks on trade finance, others (including the CEO of a large European insurer) say that it has pulled out of the structured trade credit (STC) business.

A spokesperson from the firm tells GTR that the information received is “overly broad and purely speculative”.

While the insurer has denied the claims, it admits that it is currently reviewing its risk appetite for this business and has already made certain unspecified “adjustments”.

GTR has heard from one ex-Zurich employee that the firm is “out of all STC business, everything”. He says that the insurer has been having meetings with certain brokers and clients to inform them of what is happening.

According to this source, Zurich has exited all STC business, and is now only covering all contract frustration business (from letters of credit to buyer credits) involving state-owned enterprises, sub-sovereigns and sovereigns – all of which are not affected and will continue to be underwritten. Our source says the firm is also still covering traditional trade credit business, and is potentially still able to do bank-to-bank business (but only if the transaction is confirmed).

Zurich denies these claims.

Zurich’s spokesperson counters that it will “continue to insure STC solutions that fall within Zurich’s risk appetite”.

Another anonymous source tells us that Zurich is no longer doing any bank-led deals; previously the majority of its business. “It’s an odd message to put out,” says the source. “The reason is likely that they would rather do higher-level business – not because they have had a lot of losses.” He adds that one could argue that the lack of a clear message could mean that Zurich doesn’t want to affect its overall position in the markets.

Zurich tells GTR that while they have made certain changes, the firm continues to offer credit and political products that are “meaningful” for their customers and brokers. A Zurich spokesperson says that the firm will “inform the market accordingly and help customers and brokers understand any changes once they have completed their review”.

Zurich issued the following statement to GTR:

“Zurich is evaluating its risk appetite in this space, which we do regularly as a normal course of business. We have always been innovative and thoughtful as the market leader in defining and reviewing our risk appetite. This current review is an ongoing step in this practice. Our risk appetite will focus on transactions that are directly related to trade

“Zurich continues to offer credit and political risk products that are meaningful to our customers and brokers, as we put their needs first and in line with Zurich’s risk appetite.”