Really great to see so much interest in this session so thank you for signing up and for attending today.
0:14
On the agenda today we're going to start by giving a bit of an introduction to who we are, so introduction to your presenting team and an introduction to Aon and our food and industry group.
0:27
We're then really pleased and excited to have Maxwell Green of the FDF joining us today to present the key findings of the latest trade snapshot and then we've got Damon from Aon who is going to be talking about how companies in the food and drink industry can use credit strategies to unlock and enhance their growth and then at the end we'll have a Q &A so please do feel free to put your questions through the questions panel throughout the session.
0:58
There's also going to be some poll questions during the webinar, so they will come up on screen during the session and you can vote and then we'll see what the votes come in as.
1:09
And there'll be a follow-up email with the slides and some relevant content coming through in the next couple of days after the webinar.
1:20
So just to start with introductions then, so I'm Richard I work for Aon as our industry leader for food, agribusiness and beverage.
1:30
I've been with Aon for about six years now and coming up for two years in that industry leader role.
1:36
And in that role, I'm responsible for bringing the best of Aon's expertise to our clients in the UK food and drink industry.
1:43
Max, would you like to go next?
1:48
Good morning, everyone. So I'm Max Green. I work at the Food and Drink Federation.
1:51
so we're the voice of UK manufacturing across the UK, working on food and non-alcoholic drink.
1:56
I specialize in international trade, the international trade team, so I work mostly on international trade negotiations, non-European, sorry, non-EU trade and trade statistics, and as Richard kind of outlined, I'll be looking through the latest trade snapshot, which looks at trade statistics for the first half of this year. I'll hand over to Damian. Hi, good morning.
2:18
I'm Damian Hello, I am a Trade Credit Business Development Director.
2:24
It's a national role for Aon Credit Solutions.
2:27
I'm also the Food and Drink Industry Food Leader for the UK NRB talking today about how Trade Credit can help enhance growth and protect your business.
2:39
Ian, thank you gents.
2:42
So yeah, great to have everyone here.
2:43
And I think it's a really topical subject that we're gonna be talking about today.
2:48
you know, the political situation and the global situations changing pretty much on a daily-day basis at the moment.
2:56
The impacts of tariffs and conflicts having a major impact on the industry.
3:03
And when coupled with sort of constrained levels of growth in the UK and sort of restrictions on consumer spending and a lot of focus that a lot of our clients are talking to us about on cost management of costs, We are seeing that clients are now starting to look further afield and looking at opening up new export markets and selling their goods to new customers as well, both in the UK and overseas.
3:31
So yeah, really timely session.
3:39
So just to start, first of all, then, just as an introduction for those who haven't come across Aon before.
3:45
So just as a high level introduction to who Aon are.
3:47
So, A, on our global risk insurance, pensions, and employee benefits advisors, we're a global company with 160 ,000 colleagues globally, and over 120 countries that we operate in.
4:03
And our business is structured across two primary categories, risk capital, which helps our clients protect and grow their businesses through risk management and insurance, and human capital, which effectively, which helps our clients manage their pensions and employee benefits and use those as a strategic lever to attract and retain talent and to grow their business as well.
4:29
And as it says at the top, we're structured around industry, so we have 16 industry groups for the industry sectors that we focus on and are sort of keen to look to grow and support clients in and the next slide just gives a bit of an overview of our food agribusiness and beverage industry practice group and so globally we have over 1500 clients in that sector and we're proud to have more than 90 retention rate of those clients and some stats on there of some of the the large global companies that we have strong and long-standing relationships with.
5:08
In the UK, So I lead our practice group in the UK where we represent 61% of the top 100 food manufacturers.
5:16
So good penetration, but always scope to do more.
5:20
And the key part of our food and drink practice really is to bring together the expertise that's relevant to our clients.
5:27
We share insights on new solutions. We share success stories as a group.
5:35
And we have key partnerships with industry bodies and the main one really being the Food and Drink Federation.
5:41
So we've been FDF professional affiliate members for over 10 years now and we hold events and we do webinars like today and that's a key part of our strategy for growing and enhancing our reputation as a leading advisor to the food and drink industry in the UK.
6:05
Okay, so having done those introductions, I'll now pass over to Max to give the headlines from the Trade Snapshot.
6:15
Thanks, Richard. And yeah, as Richard highlighted, it's a very volatile situation out there.
6:21
Lots of new export markets coming field and recent political events such as US tariffs and things like that has really changed the landscape of international trade.
6:34
So this, I'll go through the latest headlines of the trade snapshot, which looks at the first six months of 2025, which kind of shows all these changes.
6:45
We release this report every quarter.
6:47
So the next one I believe is out in November.
6:51
So keep an eye out for that.
6:52
But if we go on to the first slide, which looks at exports, just more generally.
7:00
So the first thing to notice here is exports have increased this year.
7:03
this is the first time it's increased for the last couple years which is a good sign.
7:08
Non-EU share is increasing quite rapidly and this has been the case since about 2021 actually increasing a lot more than EU exports as you would expect with UK departure from the EU.
7:21
So non-EU exports are up over 10% in the first six months of this year which is quite substantial.
7:27
There remains so many opportunities in the next few years in terms of different free trade agreements and other kind of agreements that we've already signed so you can see that exports are doing really well to markets such as the UAE, so the upcoming trade agreement with the GCC. I'll just wait a minute while we figure out the slides.
7:55
Is that showing now? Not for me, but I can continue talking. I can wait for a second.
8:06
Yeah. Just stuck on the first page, Richard.
8:10
Okay, just bear with me a second.
8:22
There we go. Perfect.
8:24
So you can see there's the markets, which we're currently negotiating for trade agreements with.
8:28
So you've got good growth to the UAE and the upcoming GCC, Gulf Corporation Council, FTA, which is in negotiation at the moment.
8:36
We've got negotiations potentially starting with Canada as well, hopefully in the next few months.
8:42
but other than that we've got the CPTPP which we also joined last year so slightly better access to markets like Canada, Mexico, Malaysia, those kind of places.
8:54
You would have also seen the free trade agreement signed with India a few months ago looking to come into force mid-2026 but you can see there that Indian exports from India are up over 11% in the first half this year.
9:08
Since the UK left the EU we've signed a couple of agreements and some have come into force So we have the UK-Japanese agreement and we've also got the brand in Australia and New Zealand coming in two years ago.
9:20
And although Australian exports are down in the first half of this year, they're actually up since the agreement was signed with particular growth in specific markets, ice cream, sauces, et cetera.
9:35
A lot of those markets also have quite high remaining, especially India.
9:40
So we're looking at any increase in tariffs there in soft drinks, chocolate, salmon, those kind of things to kind of boost exports, as well as places like the GTC and so on.
9:50
If we go on to the next slide, the next slide covers imports into the UK and obviously important for exporting, you need to import to get your products out in a lot of cases.
10:00
so what we're seeing here is pretty much the same, a massive increase in non-EU imports, so this is up 15, over 15 percent in the first half this year, but this has really been increasing over the last five years as you would expect, especially in places like Brazil and China, Thailand as well, they've really increased.
10:22
This is because the border target operating model puts on the EU exports, sorry, imports on the same kind of level as EU ones.
10:32
And traditionally importing from the EU is a lot easier and there's a lot more paperwork now that has to go into it.
10:37
So people are looking further afield, kind of diversifying their supply chains.
10:42
The SBS agreement, which is coming up with the EU, does put the kind of rest of world import growth at risk.
10:48
it puts all that progress made on the board target operating model back to where it was previously.
10:56
So we should expect over the next few years as the SPS agreement with the EU comes into force a higher growth in EU imports and potentially a lower increase in the rest of the world imports.
11:09
We do have some things that we've done in the last few years such as kind of going through the global tariffs, so reducing import tariffs on certain products and commodities.
11:19
We've got a duty suspension program, which is different to the EU.
11:23
So not all of that progress in non-EU imports will be at risk, but it will definitely be impacted.
11:30
What's really interesting is the first half of this year, we're seeing a very large increase of imports from very close American allies, as you would expect.
11:40
So we are seeing a lot of imports places like Canada, Mexico, China, and I'll come on to it a little bit later.
11:49
I think after this actually, but you'll probably have guessed that the increase in tariffs both ways of those countries have led to these markets looking elsewhere or us looking elsewhere away from the USA.
12:01
So next I've got a slide on the US. So very topical at the moment.
12:08
So The first thing to notice is there's been a huge increase in the exports to the US.
12:16
Originally we thought that this was a stockpiling, people stockpiling, American businesses stockpiling UK products, but actually what we saw was even after the tariffs came into effect in early this year, that growth in exports has been sustained.
12:34
This is probably because the UK has quite a low tariff compared to other markets around the world.
12:40
So we are at that 10% baseline tariff.
12:43
And we were also the first countries to come to an agreement with the US, which I know it didn't change much in terms of food and drink tariffs, but it did give some what the tariff would be in the future.
12:54
So it came to a kind of trusted market that it would maintain at that 10%, which helped.
13:01
The issue ongoing, a couple of things.
13:04
So we're seeing other countries and other markets getting a deal with the US.
13:09
So as you probably would have noticed, the EU has come to an agreement with the US where there's a 15% tariff.
13:15
The difference here, though, is it's a baseline tariff.
13:17
So there's a couple of products which will be better preferential treatment if you're sending it from the EU.
13:23
This is particularly the case if the previous tariff you were paying was over 5%.
13:29
So an example of this is ice cream where we're looking at almost a 30% tariff from the UK, but only 20% from the EU.
13:38
Now, where it comes a bit tricky, we have all these different tariffs, but we don't have any agreement in force with the US. So we have a very strange situation when it comes to rules of origin.
13:52
So trying to get things into the US where it would be claimed as a UK origin and because it's so different between different markets going into the US, there may be some misrepresentation at the US border.
14:07
So what we're seeing is a lot of companies are claiming origin because it's not particularly clear how to get trans volume product to get that origin.
14:21
So we're UK into the US using Chinese origin or Chinese goods or inputs into their products, claiming it as UK origin, but actually due to the kind of non-preferential origin treatment, it would actually come under a Chinese origin, so that would be a 50% tariff instead of a 10%.
14:39
So there's a little bit of confusion still around how this works, and I think this is where we're going to see some issues at the US border, and I think we're already starting to see that, especially with EU exports to the US.
14:50
I've not heard of any issues on the UK side yet, but just be careful if you're using ingredients from non-UK sources that you're getting the rules of Oregon correct.
15:03
What's also really interesting around US tariffs is we are seeing a huge export growth to, again, markets which are historically close to the US, so Canada, Mexico, and also China.
15:16
So as you can see on the bottom table there, you've got the imports from the US of those markets, and you can see they're all pretty much down.
15:24
So with Canada imports from the US down almost 9%, Mexico down 4%, and China down almost 50% or just over 50%.
15:33
At the same time, you can see a massive increase in UK exports to those markets as well.
15:39
So the Canadian exports were up over 15% with particularly strong growth in products like cereals, animal oils and vegetables as well.
15:50
So you can see that those trade wars and uncertainty and although a lot of those markets specifically Canada have come to some kind of agreement to the US it still is very unpredictable and very uncertain so they're looking at more stable markets such as the UK.
16:06
I'll move on to Next slide, we also looked at Turkey in our snapshot.
16:13
So what's interesting about Turkey is there's been a huge increase in the exports.
16:17
So almost 70% increase in exports to Turkey.
16:22
You can see there's been quite high growth in products such as whiskey, gin, those alcoholic drinks, but also in products like coffee and sugar confectionery up quite healthy growth there as well.
16:36
And there is a current negotiation for updated free trade agreement with Turkey, so we're expecting round two a couple of months ago.
16:45
You can see that there's quite high tariffs and tariff rate quotas.
16:49
If you look at the bottom left-hand side of your screen, you will see that in a lot of times we exceed the quota amount that we're allowed where we get that kind of production tariff.
17:00
So hopefully a new update will increase the tariff fixed quota amounts or reduce the kind of rate of the tariff within those. So we're looking at that.
17:13
There's a couple of issues, ongoing issues with Turkey outside the tariff space.
17:17
So there's been a lot of reports of kind of border processes and damaging products at the border. So just be wary of that as well.
17:27
That is it from me. I'll pass over to Dim to go through the rest of the presentation.
17:37
Thanks, thanks. Brilliant, thank you very much.
17:42
Firstly, thank you very much for the opportunity. It's great to talk about some of the positives with trade credit insurance.
17:49
I'm going to start off with simply what is it just for those people who may not know.
17:55
But whenever any business sends an invoice for goods or services, there's a risk that they're not going to get paid when they're being asked to be paid within a certain period time essentially offering credit and this can impact cash flow ability to operate and can affect a business's ability to pay their own suppliers and the credit insurance policy will reimburse the supplier in the event so essentially bad debts can be paid by the insurance company ensuring that the business can continue to meet its obligations and I think the next slide is the first poll question so do you know how the trade credit insurance market views your business as a risk Okay, that's interesting. Richard finds the next slide again as we go back to the...
19:15
Okay, so that's interesting because often the way that the trade, I mean 100% no from what I could see unless that's updated since, but the way that the trade credit market look you as a business is often, or look at any business, is often very different to the way that maybe a trade, sort of a status agent, you know, a credit rating agency might look at it.
19:38
There's a wider picture that's taken into account always, but we'll come on to that a little bit more shortly.
19:45
Just go on to the next slide, Richard.
19:48
There are a lot of issues and pressures affecting the industry at the moment and these won't be unfamiliar and you probably come across these and face them all the time.
19:58
But if a balance sheet is weak for a business, then any or a combination of these risks can lead to problems.
20:04
We've got increases in living wages and higher NI costs.
20:09
There's sort of energy-intensive issues that food manufacturing businesses face.
20:13
Economic uncertainty and consumer demand issues are constant.
20:17
Supply chain disruption, political disruptions.
20:20
We've seen a lot of cyber attacks recently, which is a different risk, but it can affect a business's ability to operate and to meet payment obligations. Inflation, operational risks such as factory shutdowns.
20:32
Max touched on the tariff on certainties. There's been a lot of impact from Liberation Day.
20:38
I mean, a lot of US businesses have shifted to local suppliers, which has caused demand surges and certain shortage issues over there.
20:45
But that said, we are seeing an increase in food and drink exports to the US, which is a good But another positive spin on this is amongst this volatility, which is another keyword that's already been used today, there's not a lot of sort of knee-jerk reaction from insurers, which is a good thing, but suggesting that lessons have been learned from previous situations such as the crisis in 2008, where, you know, there was a pretty drastic reaction to the issues that the economy faced and seems to be a little bit more sort of attracted and and sort of more not so knee-jerk, let's say.
21:22
We have seen a lot of failures in the sector and it's worth noting some of the bigger ones over the last two, three years, people like Wilco, Typhoo, TGI Fridays, you know, Jamie's Italian names that everybody knows, just sort suggesting that too big to fail mantra doesn't really apply.
21:45
We could move on to the next slide, Richard, please.
21:52
So in terms of what are the key benefits, we know the protection piece against losses to bad debt, that's what most people think of when they're looking at trade credit, but there's loads of growth benefits that are often overlooked.
22:04
The importance of accurate market data just can't be underestimated.
22:09
As I said before, how were you viewed as a risk?
22:12
The latest accounts that companies have, the trial one's out of date, they reflect the previous period.
22:17
We often see failed businesses showing positive ratings at status agencies that insurers have to work with much more recent information than this, or they're gonna face heavy claims.
22:26
So if you're looking to an insurer to write a credit limit on one of your clients, and they can't write it based on the current information that's in the public domain, that insurer or we as a broker, we can contact that buyer and request some up-to-date management information.
22:42
And if this can be obtained on a private and confidential basis and it's positive, then a limit can often be approved.
22:48
And in that scenario, everyone's happy because the policyholder gets the business, the buyer gets the credit terms, the insurer gets the premium.
22:54
And quite often insurers will set up an arrangement to receive that information on a regular basis, so they're getting a quarterly flow maybe of this up-to-date information, which can then be looked at much more positively and sort of an old set of accounts and if it suddenly stops that information coming in for whatever reason it can be indicative of cash issues.
23:15
The profitability and the growth benefits go hand in hand.
23:19
You can for example get a traffic light report from your credit insurer highlighting high low risk areas and you can increase your exposure potentially to clients sitting in that green section and additionally new clients can be onboarded quickly with confidence and risk check before even starting a sales process, which can save you time and give you a competitive edge.
23:40
Export markets access, we'll discuss shortly in a little bit more detail.
23:46
The funding element, ensuring your debtor ledger makes it a protected asset, which can be borrowed again.
23:52
So transferring your risk to an AA rated insurer can lead to lower borrowing costs and higher funding lines, but I'll cover that in a little bit more detail in a minute too.
24:02
And on the cash flow front, One of the most positive pieces of feedback I get when I put a policy in place for someone who's not credit insured before is they're surprised at how much credit more quickly they're starting to get paid and how that has a positive impact on the cash flow.
24:15
Clients who do have trade credit in place get paid more quickly.
24:19
Their buyers don't want these insurers seeing them as a poor payer and that can potentially access their credit.
24:26
So policies work within a timeline where most invoices must be paid within 60 days of the due date be reported, so your payment gets prioritized over non-insured sellers.
24:38
Obviously, you can also unlock bad debt reserves with putting a policy in place.
24:43
Finally, on another benefit in terms of cost, some insurers offer heavily subsidized collection services.
24:52
They're really good at this space because if they can't collect the debt, then they'll often have to pay a claim.
24:56
This can be sort of 20, 30 percent and legal costs can be even higher than this and certain policies will reimburse you for usually sort of 90 odd percent of those fees so it puts you in a position where you can trade in a export market where you might not be so familiar with the local laws or you know how to take something to court and the insurer will deal with that side of things for you like I say, heavily subsidize those costs. Move on to the next one, please, Richard.
25:35
So at the moment, we've got a few barriers, and there are opportunities coming from those barriers.
25:42
Since Brexit, we've seen many EU buyers being reluctant to deal with UK exporters due to the red tape delays, but agri-food has been the worst hit sector in this area.
25:52
The US is 10% of our food and drink exports and the problem there is obviously the ever-changing volatile tariff situation.
26:01
As I said, things are alright at the moment with that increase, but again things can change.
26:08
Continuing a new conflict can impact supply chains and lead to losses through inflation, loss of perishable goods, global events like lockdown.
26:18
We know that exports have been struggling to return to pre-pandemic levels.
26:21
talking to our clients we know some have decided to stop exports to the US and explore other markets.
26:27
Although trade negations have been positive you know things can change very very quickly.
26:32
On the opportunity side though you know the the SPS area which should be rolled out next year that's going to remove most checks and certificates for food and drink trade.
26:42
Potentially will boost our exports, certainly should boost the exports but it's a good opportunity to kind of relationships but are those buyers as reliable or the same risk as they were when you last traded?
26:54
Again that's something that an insurer can can give you up-to-date information on and again it's more likely to be to the better value than the status agents and then you've got places like India where you've got the growing middle class which is a prime market for food and drink products like chocolate and biscuits and then you've got places like China, UAE, Malaysia, Singapore, huge growing markets for food and drink products again with growing, middle-class, consumer-based and trade credit insurance can be valuable for sourcing buyers and suppliers in these export markets by assessing the risk of potential partners before engagement, having you navigate those different legal systems when collecting overdue money and, you know, react quickly to a downturn with anybody that you happen to be trading with.
27:38
Next slide please.
27:43
So have you ever decided not to pursue an export opportunity just because didn't have enough information about that buyer or the market that they were in.
27:57
Just while those poll results are coming in, just a reminder from me about the Q &A at the end.
28:04
So if any questions come up from either of Max or Damon's content, if you can put those in the questions panel and we'll make sure they're covered at the end of the session.
28:21
Okay, so absolutely, yes, 100%. Are we able to just move on? Yeah, brilliant.
28:38
Okay, so this is an example of a client that was in that exact position, a soft drink manufacturer.
28:45
They had a single distributor in several overseas territories.
28:49
They were quite happily working away with these guys on credit terms, but they had a large Christmas order from their US distributor, which they had the capacity to fulfill, but it was a huge order.
29:01
Not only did they want credit, but they wanted further extended credit terms than they already had, and due to wanting to sell it before they wanted to pay for it.
29:10
They wanted extended credit terms and a huge single order. They came to us and said, look, is this insurable?
29:18
It's the only way we can this particular risk. There's more to this slide Richard if you keep them.
29:25
So we approached the market and we did find capacity for that individual risk and we said yes we can ensure that.
29:31
But the concentration nature of a single risk is you know no insurer likes everything to be in one pot.
29:37
So you can actually ensure a lot more by and not much more premium by putting additional buyers in.
29:43
So we said let's have a look at everything.
29:45
Why don't we have a look at of those export markets that you're dealing with so we then sort of investigated all the buyers in all of those different countries where they had distributors and we managed to find a policy just for a small additional premium we placed a policy diluted that risk and got cover on most of those distributors and now whenever they're looking to to hit a new export market the first thing they'll do is come to us and say like you know who these are the people we're looking at in this particular country who do you suggest we go with and we can come back to them with a list of the ones that are really good risk and the ones that are maybe to avoid and it helps them in that selection process and you know helps them sort of enter into a deal where they're very likely to have no problems at all so you know as much as they're you know they're paying for a low risk but you know we've sort of guided them towards that low risk so it's peace of mind and collection support challenging territories.
30:41
Damon can I just ask on that if they were going into a new territory that they hadn't exported to before would that need to be approved by the insurers?
30:50
It would depend so often policies will have a list of markets on their different territories that will automatically be included but yeah sometimes if it's out of scope of that standard policy wording then yeah but that can often be done it's not usually a problem you know as long as it wasn't a massively challenging market, then often that wouldn't be a problem.
31:13
Great, thank you.
31:17
So in terms of other services that we can offer, you've got advanced payment protection, which is maybe you're required to pay a deposit upfront for a service.
31:27
If you're buying some goods in from another country or even in the UK and somebody wants a huge deposit, then there are policies that can cover that deposit.
31:37
Single buyer covers available just for one client.
31:40
Non-cancellable cover, essentially the insurer cannot remove the credit limit unless you're in a terrible non-payment situation that haven't paid you for an agreed period of time, but that's great for a certainty of cover if you use it in funded solutions, for example, from a bank, it gives them that extra security.
31:59
We can get from all of the different insurers regardless of who you're using, regular economic reports on the sector.
32:07
Our insurance partners risk functions produce these and local economic reports.
32:12
Political risk cover is crucial in certain markets.
32:16
You can buy individual political risk policies, but credit insurance policies will generally cover political risk in markets where it's required.
32:23
This is where government actions or instability could jeopardize your receivables.
32:27
We did have one client that had good sat in Italy.
32:30
They were destined for Russia, they couldn't be moved when the sanctions replaced low salvage value so they were deemed unrecoverable and we negotiated a claim of over five million dollars on a political risk basis to our clients.
32:43
Surety, so this is to replace when you're using bank bonds for security, so such as advanced payments, rural agency guarantees, duty deferment movement, fuel guarantees, performance bonds, those sorts of things.
32:56
The insurance industry can offer these as solutions which negates the requirement to ring fence collateral or use up the credit lines with the bank which can ultimately free up working capital.
33:08
A reverse credit option is where we present your business's risk to the market so if you're struggling to get the credit lines you think you that you should have and maybe there's been changes in your business that your accounts your older accounts aren't reflecting we can present you with a risk to the market to try and improve your credit rating and free up those There's information only products for supply monitoring, a fairly new product.
33:34
There's only a couple of major insurers offer these, but it's basically giving you the information but without having to pay for the actual insurance themselves.
33:42
It's keeping a monitoring service in place. You can obviously use this for your suppliers as well as your buyers.
33:52
I touched the collections earlier, but it's worth mentioning again, difficult legal systems, heavily subsidized costs for certain insurers for collections. Finally, e-commerce credit insurance.
34:08
This is another relatively new product. A couple of insurers are offering this now.
34:13
This is a business to business buy now, pay later solution that plugs into your website.
34:18
The buyer's checked in background and then offers credit terms when the buyer gets to the basket.
34:24
It can increase sales because no one's got to go and look for a credit card, abandon their basket.
34:29
It's actually cheaper than paying the credit card fees and if they don't pay then the client is actually insured as well.
34:35
So that's a sort of new sort of innovative solution offered by the market.
34:40
Can we move on please Richard? So finally, a final poll question.
34:45
How would you rate the credit risk of your customers on a scale of one to five.
34:58
Too many choices here, so.
35:04
I mean, we're asking about sort of views on the average credit risk, aren't we, of all customers?
35:10
Absolutely, yeah, absolutely.
35:12
It was just, yeah, instead of a simple yes or no, we put some one to fives on this just to get an idea of how.
35:18
So most people have gone in the middle, not surprisingly.
35:23
There's a specific reason for asking that question.
35:29
Again, Richard, if we could just move on, which is onto the final case study.
35:40
This was quite specific to ASDA, and obviously ASDA was a risk that was thought of to be a very decent risk.
35:54
We had a lot of insurers, so a lot of clients, who chose to exclude ASDA from their policy for a good while.
36:01
And then in 2020, there was a change in ownership, very well documented, and the credit rating just absolutely plummeted due to the way that the company was refinanced.
36:11
We had a client who was supplying into them, and they were using the ASDA supply chain finance facility.
36:17
So they were drawing down their invoices early for a fee via Asda's bank.
36:23
But due to that change in ownership, the bank said, right, well, the rates are changing and put these up quite significantly and on a 50 million balance it was a huge, huge impact on the client's finances.
36:36
At the same time, another lender withdrew their facility as well, which was just bad timing but it left a large funding gap.
36:44
So we went away and found the capacity in the insurance market to support both of those risks.
36:51
And then we couldn't find any appetite in the UK at the time for banks willing to lend against ANSTER.
36:58
So we went into Europe where we have our colleagues over there have a finance broken license.
37:06
So they could work with some European lenders for us.
37:09
They put a factoring facility together, supported by non-cancellable credit insurance on both of those buyers, which kept the rates low, and a much lower cost than would have been available in the UK market anyway.
37:25
End result was that the client was now in charge of the funding arrangement, rather than the bank being able to change it on a whim.
37:39
Annually lender and additionally they made a significant saving against the bottom line and we did that in 60 days so there's a smooth transaction no interruption to cash flow and obviously the clients walked away pretty pretty happy with that solution so again not typical what you might think trade credit insurance is all about but it was very specifically to support a funding arrangement keep those costs low and we wouldn't have achieved the funding without the trade credit and then finally I wanted to touch on trade credit versus bad debt protection.
38:16
And the reason for this is it's a bit of a misconception that they're equal products.
38:21
Often, I'll speak to a business and they say, no, no, I'm credit insured.
38:24
We've got something in place, but it's because they've got some sort of funding facility, whether it's invoice financing, and it's got a bad debt protection facility attached to it.
38:35
So without spending too much time running through all of these, because we will share these slides afterwards, but there are a lot of reasons why it's worth.
38:45
If you have a bad debt protection attachment to your funding facility, it's always worth getting a credit insurance review.
38:55
You know, you can access pop-up cover for where you can't get cover.
38:58
You can also market the policy every year.
39:02
It's tailored to your needs.
39:05
And you've got a broker generally to support you.
39:07
We can support you in all aspects of that as well, which is what we do.
39:14
Believe it or not, it's often cheaper as well.
39:16
It often costs less money to actually put a comprehensive trade credit policy in place instead of using a band-aid protection facility.
39:25
That's something to come and have a chat with us about.
39:27
If it's something that you do, no obligation, but just have a look at a trade credit policy.
39:32
You'll see how it measures up against what you're actually using in terms of coverage, in terms of price, and in terms of how Wallet supports your business.
39:49
Sorry, Richard, if we could just move on to the last slide. How can we support you now?
39:55
All of these are completely complementary services, but we can review your key clients and suppliers and give you a rating on them.
40:04
We can help you with your own credit rating as a business, certainly give you an assessment initially and tell you how the market views you.
40:12
You can review your accounts to see if you can up cash with a surety solution.
40:16
If you've already got a trade credit insurance policy, particularly if it's directly with an insurer, let's do an audit on that policy for you and we can support with access to funded solutions as well.
40:26
And like I say, all of those are complimentary services. And I believe that is me. Thank you very much for your time.
40:38
I'm happy to take any questions. Thanks, Damon.
40:42
Yeah, well, if anyone wants to discuss any of these options or ways that we can support our contact details will be on screen at the end of the presentation and included in the follow-up email that will be coming out in the next couple of days.
40:55
But now we've reached the point for Q &A.
40:59
So it's still time to get your questions in.
41:01
If there's anything that's come up from the content that we've presented that you've got any queries on, please put those through the questions panel.
41:11
I can see that we've had a couple of questions come in initially.
41:16
The first one, I think probably for Damon, says, is it right that credit insurers only want to insure low-risk businesses?
41:30
I mean, it's a pretty common misconception.
41:33
If insurers only covered low-risk business, then they wouldn't place money policies.
41:38
I mean, it's our role to negotiate that and to make sure that clients have the best coverage position, we can leverage our relationships and the sides of our business to achieve this.
41:47
Especially now, you know, Christmas, there's like much higher orders coming through on some of the difficult risks.
41:53
So it's something I'm actually doing a lot of at the moment is negotiating high levels of cover on challenging buyers.
42:00
But anyone out there struggling with that, again, more than happy to take a look at, if you're looking at trying to get some cover on a challenging buyer and you're not getting anywhere, then we'd be happy to look at that.
42:12
Thank you, Damon.
42:15
And I think one for you, Max, has come in that has asked, what are the main types of products where imports from outside the EU have increased?
42:26
It's pretty much all round. It's mostly non-meat and fresh produce, so things manufactured.
42:34
We've seen a huge increase in things like fruit juices and things in South America particularly.
42:40
But if you have a look on, I'll send the reports link afterwards, it'll have a good indication of what's increased from non-EU countries as well.
42:52
Thank you.
42:55
And Damon, probably another one for you.
42:58
Is credit insurance available in all countries?
43:04
In terms of insuring clients or buyers in other countries, export risks, I presume that means.
43:10
um not not quite I mean you probably struggle struggle in Sierra Leone or somewhere like that but there are very specialist markets that can review the highest territories I mean they show or place risks in Nigeria one in Iraq on open trade credit cover um and that said if um open credit isn't covered often an insurable take the political risk cover side of things on whilst the if the policy holder can get a letter of credit to cover the credit risk, then they can cover the political element of that which wouldn't be covered by the LOC.
43:47
So again, always worth asking the question. Great, thank you. And a couple more popped up now.
43:58
How do insurers have better data than credit rating agencies?
44:04
Okay, so part of that is because They reach out directly to to buyers who then will voluntarily supply up to the management information to those Trade credit insurers and as much as that information is kept confidential.
44:18
They will use it to to underwrite that business Okay, as I mentioned earlier if they underwrite it It means that the that buyer was getting the credit line So often they're quite happy to be compliant with that.
44:29
So that will be you know accounts that Haven't yet been published or information hasn't yet been published on top of that They are privy to payment performance information because also as I mentioned briefly, you generally have dependent on the market, but it's usually about 60 days, 30 days, sometimes repurchaseable products before people have to report an overdue account after the due date, so the insurers got that constant stream of information coming in so they can spot patterns in terms of who's paying on time and who's slowing down a little bit, or if people are showing their credit about, et cetera.
45:07
And they have in-house risk teams and analysts and people all over the world, so that they have their own function.
45:13
It just operates at a much more in-depth level, because a status agent isn't privy.
45:20
They don't have to pay out if they get it wrong.
45:23
It's a much more serious impact for the insurer if they get their information wrong.
45:30
All right, great.
45:31
Thanks, Tom.
45:31
I think the last one we've got is, how do credit insurers assess and price the risk and what information is required to quote?
45:41
So it's based on a number of things.
45:44
So you've got your turnover, insurable turnover, the amount of turnover you're covering, the risk of the client base that you're actually trading with, the territories that you're trading in, bad debt history.
45:56
There are quite a few factors, but to get in that ballpark area, all we really need is last three years turnover and bad debt history and top 10 clients.
46:06
If there's a lot of export in there, then a rough breakdown of which markets are being traded in globally.
46:12
We've got a simple questionnaire that can be completed to get an idea of that.
46:17
That ties in with the... I mentioned earlier that we can do an assessment of your top clients.
46:22
If you can complete that form, then not only will you get the assessment, but you'll also get an idea of pricing as well, and how the policy would work, and again, no obligation, free service every time on that.
46:38
Brilliant.
46:39
Thank you, Damon.
46:40
I think that's all the questions we've had in, so I'll just move the slide onto our contact details and wrap up.
46:46
So yeah, just wanted to share thanks to Damon and Max for presenting today, really fantastic presentations.
46:52
Max, great to have your trade snapshot to set the scene, and Damon for such a clear explanation of the benefits of credit insurance for the industry.
47:04
Just a final plug before we finish, we have our results from our Aon Global Risk Management Survey that have just been released.
47:12
The industry findings have been released today, so we'll send a link through with the follow-up email to those findings, and we will be hosting a webinar with the FDF towards the end of November to discuss those findings, so please look out for the invite for that.
47:28
But I think that's all that we wanted to cover today, so thank you all for attending and thanks again to Damon and Max for presenting. I hope everyone has a great day.
