Exclusive interview with Andrew Potts, Head of Surety and Guarantee, Northern Europe, and Sean McGroarty, Global Head of Surety and Guarantee.
Euler Hermes’ bonding division is updating its name to ‘surety and guarantee’. What can you tell us about why you made this change?
Sean: ‘Bonding’ is an outdated term that no one in the industry uses. We have 23 countries around the world with local Surety and Guarantee teams and, while the precise term they use locally may vary, we wanted a more consistent and market-oriented approach. Surety and Guarantee is a much better way of delivering that.
Andrew: We’re rolling out the new name currently, but it’s important to note that we are not fundamentally re-imagining what we offer.
So how would you define the strategy of the Surety and Guarantee team, moving forward?
Sean: We are focusing on three growth areas. First, there is our traditional, domestic business in local markets. We plan to continue to invest in this business to support the high level of service and expertise that we provide to our customers. Second, we intend to maximise the extensive relationships we have with banks and other insurance companies to help customers who require Surety and Guarantee services in multiple countries. We have the ability to issue bonds in 34 countries through the Euler Hermes and Allianz network – it’s by far the biggest geographical footprint in the industry. We’re also expanding and launching in Greece – our 24th market – this year. Third, we are focusing on providing digital products and e-bonding capabilities for customers.
What more can you tell us about the digital solutions you offer?
Sean: We’re still in the early stages of our digital journey. E-bonds are becoming more accepted by beneficiaries in many of our European countries. More and more of our customers are making bond requests via our online portal. In fact, a high proportion of requests in Germany, France and Denmark are made this way. One of the major goals is to offer the best possible experience for our customers.
Andrew: Yes, that’s right. In France, we have now launched an offering focused on SMEs in the construction market. It’s an automated solution where customers can go onto our portal, apply for bonds and automatically get a response, including pricing limits. Once the bond contract has been finalised, we issue an e-bond. The process is automated end-to-end.
Sean: It is something we are looking to replicate in other markets, where appropriate.
What are some of the other challenges and opportunities that the Surety and Guarantee business faces over the next 12 months or so?
Sean: Geographic expansion is a big part of our growth plans. The US, Canada and Brazil – where we launched last year – all had a strong first 12 months of performance. Now, we’re further investing in our teams and infrastructure to provide the best possible service. In Asia – particularly places like Singapore, Hong Kong and China – there is further room for growth as a large part of those markets is dominated by the banks. In our traditional business in Europe, we have strong market positions. However, they are highly competitive markets and there are challenges from an economic perspective. As a result, the more geographic diversification we have, the better. In 2019, Greece is our only new market. We are trying to leverage our strong trade credit insurance position in that country.
Andrew: We had a very good year in the UK and Ireland last year as we met or exceeded all of our targets. Obviously there is Brexit to navigate and I see two sides to it: there is the economic uncertainty that is leading to reduced volumes as investment decisions are deferred, but on the flip side we’ve had enquiries from multinationals looking for large customs bonds, as they are not sure how things are going to pan out.
Sean: There is also a war for talent out there, so we are doing everything in our power to retain and develop our key people. This is a relationship business, so we rely on the experience and expertise of our teams.
Are there any other key messages you would like to share?
Andrew: Our NPS scores in the UK for 2018 were again very strong, demonstrating the hard work the team puts in to servicing key clients and relationships. There were of course some areas highlighted to address. A common theme seemed to be around the availability of underwriters and we have sought to address this and welcome a new senior underwriter to the team from April. The big plus is that we’re AA rated with Standard and Poor’s. That gives our customers a lot of confidence and, as we enter into a period of economic uncertainty, people do focus more on that.
Sean: It’s an exciting time for our Surety and Guarantee business. We are investing in the business and delivering profitable growth. It’s also important to stress that from a Group perspective, we’re making sure we have the right structure in place to support our business units and ultimately provide the best possible service and expertise to our customers. Our goal is to be a premier provider in each of our markets.