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Energy Risk Management

 

Tailored risk management solutions for the Energy Sector



The changing environment of the global energy sector presents corporate leaders with unprecedented opportunities and associated risks. As the world leader in credit insurance, Euler Hermes created EH Energy to provide tailored solutions that empower businesses to maximize opportunities and transform risk to reward.

Our solutions: Euler Hermes’ energy sector expertise is unrivaled in the credit insurance market. Our in-house energy industry specialists understand the specialized needs of companies throughout the energy supply chain and work with companies to structure tailored risk management solutions to meet market needs. Our solutions offer: 


Energy Trading Insurance
Safer growth. New counterparties and new destinations for products are emerging. When receivables are insured, a company can expand open credit to new and/or existing customers with the confidence of security.
   
Energy Trading and Risk Management

Credit management support. Energy credit works in conjunction with credit and commercial teams to enhance a business’ ability to offer increased credit lines to optimize margin without compromising risk positions.
   
Receivables Insurance Reduced concentration risk. By securing receivables, we eliminate high-volume risk to strengthen the balance sheet and protect shareholders.
   
Risk Management Insurance



Spread Risk Loss Coverage. (mark to market) Spread Risk Loss ensures that when a buyer becomes insolvent, the energy provider is not only covered for the lost sale, but is also covered at the original contract value - regardless of market price. Spread Risk Loss augments complex risk mitigation strategies, providing a simple solution to a common problem. 
   
Open Account Trading


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 the Euler Hermes’ AA- S&P rating, enabling a company to borrow more while providing Basell III compliant capital relief to the bank.

Euler Hermes created its EH Energy team to leverage our unique expertise in providing the risk mitigation and credit enhancement needs of the energy sector. Their expertise comes from direct energy industry experience in various executive, commercial, and credit backgrounds. The EH Energy team’s vast knowledge of the industry’s sophisticated and ever-evolving operations allows us to create solutions to enhance a company’s ability to safely and aggressively move transactions throughout the global supply chain.

The volatility of the North American energy sector coupled with stricter banking regulations have made it increasingly difficult for energy companies to facilitate liquidity to propel growth. Critical to today’s energy markets, credit enhancement and risk management options must be applied to maximize opportunities as well as mitigate risks. 

 

Manage Receivables Risk


With Euler Hermes’ solutions to manage receivables risk, business can be grown with counterparties that: 

 

  • Have been turned away from open credit
  • Have a cap on credit based on internal credit guidelines, leaving untapped revenue 
  • Are non-investment grade 
  • Are privately held 
  • Are foreign domiciled 
  • Represent large concentrations within accounts receivable 
  • Are trading companies with limited “hard” assets 
  • Are currently on L/C, bank confirmation, options, or other protection alternatives


Euler Hermes’ industry expertise allows us to provide a wide range of customized solutions for the energy sector: Trade Credit Insurance, Transactional Cover Unit (TCU), and Excess of Loss (XoL).

Trade Credit Insurance 

Euler Hermes’ core offering protects companies’ receivables from unforeseen buyer defaults both in the U.S. and abroad. With a credit insurance policy in place, companies from all segments of the energy supply chain can aggressively grow sales to new and existing buyers without increasing risk on their balance sheet.

Credit insurance helps you:

 

  • Safely extend more credit to new and existing counterparties 
  • Provide market favorable alternatives to letters of credit to maximize commercial opportunities 
  • Provide an extra layer of support to credit teams

 

Transactional Cover Unit (TCU) 

Euler Hermes’ TCU safeguards investments in foreign markets against unpredictable losses due to specified political risk perils. This type of insurance extends peace of mind against major receivables losses that may occur due to high-impact events such as contract interruption, non-payment, confiscation, political violence, etc. This coverage enables energy companies to take advantage of attractive investment, financing, and trade opportunities in international markets.

TCU provides: 

 

  • Pressure relief of financial institutions’ country lines 
  • Capital relief for financial institutions 
  • Balance sheet protection for investors against political uncertainty 
  • Typically more favorable lending terms for investors and exporters  

 

Excess of Loss (XoL)    

Energy companies typically have mature and robust internal credit departments that can handle most credit underwriting scenarios. But for certain large exposures, extra protection against extraordinary, unpredictable loss is critical for the balance sheet. That’s where an XoL policy comes in. XoL provides long-term, non-cancellable limits and a program designed for a company’s specific needs. With the ability to manage credit risk through a tailored program and a dedicated team of strategic risk underwriters, energy companies can improve their balance sheet efficiency, which translates into safe and successful growth.

XoL features:

 

  • Large credit and country limits 
  • Group buyer limits 
  • High levels of discretionary credit limit authority 
  • An experienced global solutions team 
  • The proven infrastructure of Euler Hermes and Allianz

 

The new division will be led by industry professionals that include:

 

  • 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 at 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 boasts 26 years of experience in both Calgary and Houston in the crude oil, liquids and natural gas trading and marketing business, as an analyst, trader, trading director and energy consultant.
  • Jon Hammond, Senior Director – Hammond holds 25 years managing risk in the energy sector, spending 20 of those on the floor of the New York Mercantile Exchange.
  • Chris Jackson, Senior Director – Jackson has more than 20 years’ 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 multi-national corporations to venture capital funded companies.

 

–EH Energy Offices–

 

Euler Hermes Energy headquarters - Houston

2000 West Loop South 4th Floor
Houston, TX 77027 | United States
Phone: +1 972-581-0511

Dallas
1530 Dallas Parkway Suite 1060
Addison, TX 75001 | United States
Phone: +1 972-581-0511

Stamford, CT / New York City Office 
One Penn Plaza, Suite 3325
New York, NY 10119 | United States 
Phone: +1 713-851-9673 

 

Calgary
600,630 8th Ave SW
Calgary, Alberta t2p1g6 | Canada
Phone: + 1 403-585-5954

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