The North American energy sector's volatility coupled with stricter banking regulations have made it increasingly difficult for energy companies to facilitate liquidity to propel growth. To provide those companies with essential credit support and risk management solutions, a global provider in trade credit insurance, Euler Hermes, has launched Euler Hermes Energy.
Credit support and risk management solutions are vital both to maximizing opportunities and mitigating risks. Euler Hermes Energy has designed tailored solutions to empower businesses throughout the energy supply chain, with offices based in Houston and Dallas, Texas; Calgary, Alberta, Canada; and Stamford, Connecticut. Using energy credit insurance, customers are protected against payment default and can transact on open credit, the preferred method of global business. Should a default occur, clients can execute a claim for payment with Euler Hermes Energy.
"Credit is the fuel of growth," said Jay Rose, managing director of Euler Hermes Energy. "Business managers staying current with the global energy sector's evolution require a comprehensive suite of credit tools to capitalize on opportunity and maintain competitive advantage. Better harmonization of risk mitigation and commercial aspirations supports safe, aggressive bottom line growth."
In addition, Euler Hermes Energy has developed Spread Risk Loss coverage (mark to market) – bridging the gap between the contract and the market. When a buyer becomes insolvent, Spread Risk Loss ensures that the energy provider is covered for the lost sale at the original contract value, regardless of market price. Spread Risk Loss augments complex risk mitigation strategies, providing a simple solution to a frequent problem.
Euler Hermes Energy has combined over 110 years of energy and trade credit industry experience to provide clients with competitive advantages through:
- Safer growth. New counterparties and new destinations are emerging for energy products. When receivables are insured, a company can confidently and securely expand open credit to new and/or existing customers.
- Credit management support. Energy credit works in conjunction with credit and commercial teams to enhance a business' ability to offer increased credit lines, optimizing margin without compromising risk positions.
- Reduced concentration risk. By securing receivables, high-volume risk is eliminated, strengthening the balance sheet and protecting shareholders.
- Maximize leverage. Banks adhere to strict lending principles based on concentration and the probability of default of the underlying receivable. When domestic and international receivables are insured, they assume Euler Hermes' AA- S&P rating, enabling a company to borrow more while providing Basel III-compliant capital relief to the bank.
The new division will be led by seven industry professionals, including:
- Jay Rose, managing director – Rose began his career at Euler Hermes in 2004 and has held several managerial roles in the Texas market.
- Pat McKinnon, senior director – McKinnon's career spans more than 30 years in every facet of the energy supply chain. Most recently, he was a partner at Buffalo STX Energy and associate director of Natural Gas – Chicago Mercantile Exchange Group.
- Todd Lines, senior director – Lines combines 26 years of experience in both Calgary and Houston in crude oil, liquids and natural gas trading and marketing as an analyst, trader, trading director and energy consultant.
- Jon Hammond, senior director – Hammond has managed risk in the energy sector for 25 years, 20 of which were on the floor of the New York Mercantile Exchange.
- Chris Jackson, senior director – Jackson has more than 20 years of experience in business development, origination, and trading for companies such as Duke Energy, TXU, and NYMEX.
- Fritz Fowler, head of credit risk – Fowler has spent decades as a risk analyst and credit manager for companies including Cima Energy, Compass Bank, Amegy Bank, and Reliant Energy.
- Michael Rapp, head of commercial underwriting – Rapp has more than a decade of experience working with insurance, energy, and technology companies. His experience spans large multinational corporations to venture capital-funded companies.