Top insurer pulls cover for exports to Greece

Reuters
May 30, 2012

The world's biggest trade credit insurer, Euler Hermes, has suspended cover for exporters shipping to Greece because of the mounting risk of them not being paid in the event the debt-laden nation is forced out of the euro.

"Euler Hermes has decided no longer to cover deliveries to Greece for the foreseeable future," a Euler Hermes spokesman told Reuters on Wednesday.

Existing contracts will be honored, but Euler Hermes will not underwrite any new Greek business, the spokesman said, adding that the insurer would reconsider "as soon as the situation improves".

A Greek exit from the euro zone would force companies there to revert to the drachma, which would likely fall sharply against the single currency to reflect Greece's fiscal crisis.

That would restrict Greek importers' ability to pay euro-denominated invoices, potentially inflicting big losses on European suppliers that would be recoverable from their trade credit insurers.

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