The DNA of Atradius
Leading the future
Annual Report 2018 Atradius N.V.
Annual Report 2016 Atradius N.V.

Contents
This is Atradius .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 3The evolution of Atradius .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 4Our performance at a glance .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 5Business profile

Ten years in figures.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 7

A message from the Management Board

8

Business profile .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 11
Products and services. .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 12
Global footprint.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 15
General Atradius group organisation .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 17

Corporate governanceCorporate governance .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 18
Report of the Supervisory Board. .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 19
Shareholder structure. .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 21
Corporate governance. .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 24

Consolidated management report. .  .  .  .  .  .  .  .  .  .  .  . 0029
The global economic environment .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 30
Excellent performance and solid results . .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 33
Atradius Academy - shaping tomorrow together .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 41
Consolidated
management report

Securing future financial stability.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 44
Responsibility as part of our DNA .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 45

Financial statements . .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 48
Other information . .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 148
Glossary.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 149
 Overview of subsidiaries, branches, associatedcompanies and minority shareholdings .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 152
Financial statements

Disclaimers. .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 153

Click on the arrow  

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to go straight to that section of the reportAtradius | This is AtradiusThis is Atradius
At Atradius, we strengthen our customers’
credit management, allowing businesses
around the world to trade confidently andcompetitively. No matter how complex atransaction is, where in the world it is, or withwhom, we want to help make it a success.
We do this by understanding each customer’s business, and by getting toknow the people behind it and their goals. With this knowledge we are able todeliver first-class insurance cover, trusted intelligence and business insight,
and services that are tailored to suit each customer’s needs.
Our ability to build strong customer relationships is in our nature. It evenhelps shape the services we provide. This is why we invest heavily in forging
mutually beneficial partnerships - not only with customers, but also withagents, brokers, information providers, insurance partners, reinsurers andcollections networks.
As our customers’ businesses grow and the world they’re trading in evolves,the demands on our business increase too. That’s why we continue to find
new and better ways to help customers manage the trade credit risks inherent
in business. At the same time, we are keeping up with the challenges of digitaltransformation in what is an increasingly fast-paced and interconnected world.
We are continually evolving to provide customers and partners with thevital tools, technology, information and services they need to manage risk.
For example, simplifying and streamlining every-day tasks like credit limit
applications and claims submissions. This allows our customers to focus on
activities that add value to their business.
Of course, developing deeper relationships, means being ‘present’. We are inover 50 countries across six continents. Wherever we do business, we are
attuned to the local cultural, political, regulatory and economic nuances of themarkets our customers trade in.
Bring all this together and you can see how, by increasing the value of theservices we provide, we help our customers expand, innovate and grow theirbusinesses. Their success stories are what Atradius is built upon. It’s in our DNA.

3

Atradius | This is Atradius

The evolution of Atradius
1925 –	NCM (Nederlandsche Credietverzekering Maatschappij) is founded in
the Netherlands, with the aim of improving trading conditions for |Dutch companies.
1929 – Crédito y Caución is founded, becoming the first credit insurer in the
Spanish market.
1932 –	NCM partners with the Dutch government to provide export credit
services to Dutch companies on behalf of the Dutch State. This
relationship continues to be successful.
1954 –	In Germany, Gerling Kreditversicherung (Gerling Credit) is establishedas the credit insurance arm of the Gerling Group.
1962 – Gerling Credit opens its first international branch office, in Switzerland,
and is the first private credit insurer to offer export credit protection.
1991 –	NCM acquires the short-term export credit arm of the UK’s Export Credit
Guarantee Department (ECGD), itself a long-standing credit insurer.
2001 –	NCM and Gerling Credit combine to form Gerling NCM.
2004 – Gerling NCM rebrands to Atradius.
2008 –	Grupo Catalana Occidente S.A. becomes the major shareholder ofAtradius. Crédito y Caución becomes a key part of the Atradius Group.
2011 –	Atradius launches its Roadmap for Success, a strategy to help its
regional teams across the globe be even more responsive to theircustomers’ needs.
2013 – Atradius redefines its corporate guiding principles with a clear focus onproviding tailor-made solutions in each of its markets.
2014 –	Grupo Catalana Occidente S.A. celebrates its 150th anniversary, and the10th anniversary of the Atradius brand.
2016 –	Atradius merges its two European insurance carriers, consolidating
its leadership in the market and strengthening information services
by acquiring Graydon Holding N.V. (Graydon) in the Netherlands
and IGNIOS Gestão Integrada de Risco S.A. in Portugal (now named
Iberinform Portugal).
2017 – Atradius acquires 25% of Credit Guarantee Insurance Corporation of
Africa Ltd .
2018 – Atradius further continued to expand and strengthen the geographic
footprint in 2018 by opening new offices in Bulgaria, Romania,
Indonesia, Taiwan and Vietnam, as well as strengthening our presencein Thailand and Malaysia . Atradius Collections opened a new office inTurkey and Atradius Bonding expanded into Portugal.

4

Atradius | This is Atradius

Our performanceat a glanceContinuous group-wide growthand profitability.

Management Board
Isidoro Unda, Chairman
Andreas Tesch
Christian van Lint
Claus Gramlich-Eicher
Marc Henstridge

Supervisory Board		
Ignacio Álvarez, Chairman
Francisco Arregui, Vice-Chairman
Bernd H. Meyer
Dick Sluimers
Xavier Freixes
Hugo Serra
Désirée van Gorp
John Hourican
Carlos Halpern
José María Sunyer

Supervisory Board Committees
Audit Committee
Remuneration, Selection and Appointment Committee(1) he combined ratio is calculated using the insurance industry standard; the total sum of claimsTand expenses divided by insurance revenue

5

Atradius | This is Atradius

Total Revenue

In EUR million

2018

1,898
1,837

2016

1,761
1,718

1,627

2014
1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

1,800

1,900

Net Investment Result (1)2,000

In EUR million

2018

22

2017

25

2016

23

2015

36

2014

38
0

5

10

15

20

25

30

35

40

Claims Ratio
2018

43.7%
41.7%
41.6%

2016

43.5%

40.7%

2014
20%

25%

30%

35%

40%

45%

50%

Expense Ratio
2018

35.5%
35.7%

2016

36.4%

37.1%
36.6%

2014
35%

36%

37%

38%

Result For The Year (2)In EUR million

203

2018
186

212

2016
178
161

2014
0

50

100

150

(1)

 et Investment Result consists of net income from investments and share of associated companies
N(excluding realised gains & losses, and impact of valuation of associated companies in 2016 and 2017).

(2)

Result	
for the year includes impact of associated companies (minus EUR 11.7 million 2017 impairment
and EUR 22.2 million 2016 realised gains).

6

200

250

Atradius | This is Atradius

Ten years in figures
Financial information(in EUR million)

2018

2017

2016 (1)

2015

2014

2013

2012

2011

2010

2009

Insurance premium revenue

1,648.5

1,588.1

1,557.6

1,458.2

1,458.2

1,412.1

1,439.8

1,403.4

1,345.6

1,468.6

Service and other income

249.5

249.1

203.1

169.0

169.0

166.4

161.8

150.5

155.1

197.8

1,898.0

1,837.2

1,760.7

1,717.8

1,627.2

1,578.4

1,601.6

1,553.8

1,500.7

1,666.4

22.1

24.7

22.8

36.0

37.8

35.1

30.3

31.1

22.7

68.3

1,920.2

1,861.9

1,805.6

1,753.8

1,665.0

1,613.5

1,632.0

1,584.9

1,523.4

1,734.7

202.7

186.2

211.8

178.2

161.2

134.5

113.6

129.8

124.9

(113.3)Equity1,821.4

1,753.2

1,625.5

1,500.2

1,393.0

1,286.9

1,196.3

1,129.8

1,035.2

905.0

Total assets

4,725.3

4,519.2

4,391.5

4,250.2

4,130.9

3,697.8

3,737.2

3,580.1

3,285.2

3,389.7

Insurance contracts

1,619.9

1,530.3

1,561.2

1,648.8

1,572.2

1,486.3

1,592.8

1,549.3

1,311.8

1,508.1

Return on equity (3)

11.3%

11.0%

13.6%

12.3%

12.0%

10.8%

9.8%

12.0%

12.9%

(12.0%)

Outstanding ordinary shares(at year-end, in million)

79.1

79.1

79.1

79.1

79.1

79.1

79.1

79.1

79.1

79.1

Dividend paid (in EUR million)

83.9

76.7

71.2

64.9

53.8

43.5

43.5

25.3

-

-

Total revenue
Net investment result (2)Total income
Result for the year
Balance sheet information(in EUR million)

Shareholders information

Technical ratios
Gross claims ratio

43.7%

41.7%

41.6%

43.5%

40.7%

45.6%

51.2%

49.7%

38.6%

85.2%

Gross expense ratio

35.5%

35.7%

36.4%

37.1%

36.6%

35.9%

35.0%

35.2%

35.4%

36.6%

Gross combined ratio

79.2%

77.4%

78.0%

80.6%

77.3%

81.5%

86.2%

84.9%

74.0%

121.8%Net claims ratio

44.7%

41.4%

42.0%

42.0%

42.6%

46.4%

49.1%

50.3%

44.6%

76.6%

Net expense ratio

32.0%

34.2%

35.4%

35.9%

35.8%

37.4%

37.5%

34.2%

39.3%

46.2%

Net combined ratio

76.7%

75.5%

77.4%

77.9%

78.3%

83.8%

86.7%

84.5%

83.9%

122.9%

3,545

3,596

3,586

3,161

3,139

3,107

3,143

3,149

3,171

3,488

Employees
Full-time equivalents(FTE), at year-end
Financial strength ratings
Moody’s (4)A2, outlook stable

A.M. BestA (excellent), outlook stable

(1)

(2)

(5)

Including Graydon, Iberinform Portugal, Gestifatura and Informes Mexico since Q3 2016.
Consists of net income from investments, excluding extraordinary impact of associated companies (minus EUR 11.7 million 2017 impairment,
and EUR 22.2 million 2016 realised gains).

(3)

Return on equity is defined as the result for the year divided by the time weighted average shareholders’ equity.

(4)

On 7th March 2018, Moody’s upgraded the Insurance Financial Strength rating of the Atradius rated entities to ‘A2’/outlook stable from ‘A3’/on review.

(5)

On 19th October 2018 A.M. Best affirmed the Financial Strength Rating of A (excellent) / outlook stable and upgraded the Long-Term Issuer Credit Ratings(Long-Term ICRs) of the Atradius rated entities to “a+” from “a”.

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Atradius | A message from the Management Board Atradius N.V.

A message from theManagement Board

Left to right: Christian van Lint, Isidoro Unda, Marc Henstridge, Andreas Tesch, Claus Gramlich-Eicher.

Dear stakeholder,2018 has been a successful, transformative and exciting year for Atradius,
producing financial results that the whole Atradius family can be proud of andlaying the foundations for the years to come. We have performed well in all areasof the business. Our insurance premium revenue has increased 3.8% to EUR
1,648.5 million, we have kept claims under control with an excellent ratio of 43.7%
and the expense ratio has decreased to 35.5%. Our commitment to provide bestin-class service has been recognised, with an exceptional 94% customer retention
rate. Our result for the year has grown 8.8% to EUR 202.7 million and our capitalbase, at EUR 1,821.4 million, is strong and steadily growing.
These excellent results are due to our approach to the market and to our values;
to provide high-quality service by working closely with customers and treatingthem as partners. We have woven these values tightly into the fabric of the whole
Atradius family.
While the world around us changes, our values do not, which is what makes
Atradius such a reliable partner. Looking to the world, we see new global
trade patterns, a burgeoning digital trade economy, a plethora of data that cantransform businesses, and technological trends that are changing and merging at
an alarming rate. This fast-evolving landscape brings opportunities, efficiencies,

8

While theworld aroundus changes, ourvalues do not.

Atradius | A message from the Management Board Atradius N.V.

new services and new business models. However, it can also bring turmoil,
instability and disruption. Therefore, we initiated a new strategic focus in 2018,
which addresses these trends and the opportunities and threats they present.
This new strategic focus aims to transform our business to future-proof
our organisation and support our customers and partners in new andexciting ways.
The Big Data trend offers exciting opportunities to make Atradius a smarterand more efficient business. We are exploring innovative ways to enhance ourunderwriting and lead generation activities using new analytical techniques
and tools. In 2018, this has included a ground-breaking pilot using the IBM
Watson tool which can automatically read massive volumes of unstructured
financial information and alert underwriters when negative developments
are identified.
We are finding ways to tap into the new digital trade economy, creating
new ways of working with our customers. In 2018 we have established acooperation with Kemiex – the world’s first online trading platform forcompanies in the pharmaceuticals, veterinary food and feed sectors.
This enables direct access to Atradius’ services in a dynamic online
trading environment.
Connectivity is another important trend that we are tapping into to innovate
in credit management. This year we have invested in new underlying API
technology to upgrade our connectivity capabilities for core processes (suchas limits, rating and claims). We will make these available to customers
and partners in a digital ‘shop’, so they can easily connect and automate
processes and data flows. The same connectivity capabilities also open up
new distribution opportunities through the growing platform and ecosystem
market, where we are integrating our products and services with trading, credit
management, financing and Enterprise Resource Planning (ERP) platforms.
For example, in 2018, we launched a credit insurance ‘app’ called ‘Atradius
Flow’ in Denmark with Microsoft Dynamics – a world leading ERP package.
This innovative app integrates Atradius’ credit insurance services directly into
the customer’s ERP system, allowing them to manage their credit insurance
policy from within their financial systems seamlessly alongside their
day-to-day business.
In 2018 we continued our journey to refresh our core applications in Credit
Insurance and Bonding with state-of-the-art-technology and streamlined
processes. We also continued to deliver new features for our customer portal‘Atrium’, which is now being recognised by the industry, winning the Insurance
Technology Award in Hong Kong in 2018. The Atradius Collections platform(Agora) was launched in 2018. This platform allows customers to purchaseCollections services and receive payments online – making the collecting of
overdue payments more efficient and effective.
The Atradius family is pivotal to the success of our business and in 2018, wesetup several initiatives to promote continuous learning and development andfoster a culture focused on ‘shaping tomorrow together’. Technological change
and innovation are key themes we have addressed with initiatives such as the
Digital Ambassador Programme and Innovation ‘tribes’ for key trends like Big
Data, Platforms and Blockchain.

9This new strategic
focus aims totransform ourbusiness, tofuture-proof ourorganisation,and support ourcustomers andpartners in newand exciting ways.

Atradius | A message from the Management Board Atradius N.V.

In 2018, Atradius’ Insurance Financial Strength Rating was upgraded to ‘A2’
(outlook stable) by Moody’s. Atradius’ Long-Term Issuer Credit Ratings from
A.M. Best has also been upgraded from ‘a’ to ‘a+’ with a stable outlook. These
upgrades reflect Atradius’ very strong consolidated balance sheet, strong
operating performance, favourable business profile and appropriate enterpriserisk management.
We have continued to expand and strengthen our geographic footprint in 2018
to improve the service we can offer to customers and build our local expertise.
After obtaining licenses in 2017, we opened new offices in Bulgaria and Romania
in March 2018. We invested further in Asia, with new offices in Indonesia,
Taiwan and Vietnam, as well as strengthening our presence in Thailand andMalaysia. We have also expanded our Atradius Collections presence to Turkey.

Outlook for 2019
The economic outlook for 2019 is uncertain with global growth rates expected toease to 2.8% (down from 3.0% in 2018). Tightening global monetary conditions,fading US fiscal stimulus and increased volatility in financial markets are allcontributing to the slowdown. In line with easing GDP growth, we expect tosee insolvencies stagnate in advanced economies. After nine straight years ofdecreasing insolvencies, recovering from the sharp increase at the time of the
global crisis, we forecast a negative change in 2019. The impact of Brexit is still
uncertain, but Atradius is well prepared for various scenarios and will continue
to support customers who may be affected. Atradius customers can be confident
we have the underwriting knowledge and skills to steer them away from risks
and towards opportunities, enabling trade and managing risks on their behalf.
We will continue our innovative company-wide multi-year programme,
focused on enhancing our business processes, modernising our IT systems
and strengthening our value proposition. We remain committed to developing
our processes and applications, and the way we expect to interact with ourcustomers, distribution channels and cooperation partners in the coming years.
We would like to thank our customers, business partners, brokers, agents,
reinsurers and employees for their contribution to our success. We look forward
to continuing to work alongside you in the years to come.

The Atradius Management Board
Isidoro Unda, Chairman
Andreas Tesch
Christian van Lint
Claus Gramlich-Eicher
Marc Henstridge

10

We havecontinued to
expand andstrengthen ourgeographic
footprint in 2018.

Business profile

11

Atradius  |  Business profile Atradius N.V.

Products and services
Flexible Credit Insurance productswith excellent service built in
Credit Insurance products have more to offer than simply protection against
losses arising from non-payment for goods sold on credit. Each policy is
supported by an account manager, credit limit underwriting and our online
tools and services. The account manager is a day-to-day contact person who will
support customers and help them get the most from their policies. Hundredsof experienced underwriters carry out our credit limit underwriting acrossthe globe. They assess the risk of our customers’ buyers, and set safe trading
limits. They are based in the country of the buyer, bringing local knowledge
and language skills to provide the best possible risk assessments. Our online
tools provide additional credit management support services such as ‘Insights’,where customers can analyse the risk in their portfolios, as well as perform
administrative tasks such as applying for a credit limit or submitting a claim.
Our Credit Insurance products are based on a concept called ‘Modula’. This is aworldwide aligned catalogue of modules (or policy conditions) which we can
combine flexibly to meet each customers’ needs. This means every policy canbe tailored, with no superfluous terms, and provide protection for a customer’s
entire turnover.
Atradius has solutions for all sizes of business: offering credit insurance
for small and medium-sized enterprises (SMEs), large local companies, andmultinational corporations.
As a market leader and pioneer, Atradius Global has developed an excellent
understanding of the needs of multinationals, with 20 years of experiencein this segment. We offer a sophisticated and tailored credit management
solution in our Global policy, which will meet their requirements whether
they have centralised or local credit management. Our Global account teams
and key account underwriters around the world provide extensive crossborder customer service and consistent high-quality decision making on ourmultinational customers’ buyer portfolios.
For medium-size and large local companies, using the Modula concept we canadapt our cover to fit all kinds of businesses, in any sector, doing businessdomestically or internationally.
For SMEs, we have created a range of products built from the Modula concept,
packaged to be easy to understand and use.
In addition to traditional credit insurance for a customer’s whole turnover, weoffer a range of structured credit risk solutions for specific large and complex
transactions. These address a range of circumstances, from enhanced credit
protection for single contracts or buyers, to pre-export finance, and can be
combined to meet multiple needs.

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Atradius has
solutions forbusinesses ofall sizes.

Atradius  |  Business profile Atradius N.V.

Specialised reinsurance for credit and bonding
Atradius Reinsurance DAC (Atradius Re) is the leading monoline credit
and bonding reinsurer in the market, offering reinsurance solutions for
credit insurance and bonding business of primary insurers around theglobe. Through its team of underwriters in Dublin, Ireland, Atradius Re
supports over 100 clients in 68 countries. The strength of Atradius Re is in its
combination of access to the Atradius underwriting skills in its key businesscredit and bonding, and highly specialised reinsurance skills for the needs ofsmall and mid-sized credit and bonding underwriters.

Leading European bonding solutions
Present in 12 European countries, Atradius Bonding serves an extensive
portfolio of businesses in a wide range of industries, helping them secure
their performance and support their business development. We help ourcustomers do more than just manage risks and protect against worst-casescenarios. We provide tailor-made solutions that fit their needs and strategy.
Our long-standing bonding expertise and in-depth market knowledge has
allowed us to grow steadily in recent years, and gain the trust of majororganisations, making us a leading bond supplier in Europe.

Risk protection for instalment-based credit agreements
Atradius Instalment Credit Protection (ICP) covers short-term and mediumterm risks involved in instalment-based credit agreements with private
individuals and businesses. It offers its services to financial and corporate
policyholders in Belgium and Luxembourg. The main product offering covers
consumer credit, leasing and renting risks. More recently, we have extended
the product range to offer residential real estate insurance products forco-ownerships and for rental guarantees, as well as products for privatecar leasing arrangements. We offer the latest new product ‘B2C Protect’ tocustomers in the construction sector, to protect against payment default
by homeowners.

Professional and reliable debt collections
With worldwide expertise, and staff in 30 countries, Atradius Collections
helps businesses - both insured and uninsured - collect domestic andinternational trade debts, while maintaining sound business relationships
with their clients. It has built a strong reputation as a business-to-businessspecialist, using the strength of Atradius Credit Insurance, combined with its
own integrated international network of collectors, lawyers and insolvency
practitioners, in addition to its online capabilities.
Since 2015, Atradius Collections has also offered a first-party collections
service, so customers can outsource their reminder process immediately
after due date. We have created a range of services for the financial industry,including back-up servicing, cross-border collection and invoice verification,
allowing factoring companies and asset-based lenders to investigate whether
the business transactions or invoices from clients are acknowledged by
the buyer.

13

We provide
tailor-madesolutions that fit
our customers’
needs andstrategy.

Atradius  |  Business profile Atradius N.V.

Working with the Dutch state
Atradius Dutch State Business (ADSB) is the export credit agency of theNetherlands. To minimise the risks of non-payment not covered by theprivate market, and to enable the financing of Dutch export, ADSB offers awide range of insurance and guarantee products to Dutch exporters of capital
goods, internationally operating construction companies, and their financiersor investors. ADSB works on behalf of the Dutch state, making sure exporttransactions can be completed successfully.

Information services
Atradius offers information services through the following companies:
Iberinform in Spain and Portugal, Graydon in the Netherlands, Belgium andUK and Informes in Mexico. These companies support our customers withbusiness intelligence solutions that help them to manage risk and grow theirbusinesses by making smart decisions in their credit management, risk
and compliance management and marketing. They also support Atradiusby providing information to underwrite buyer risks for our core credit
insurance business.

14

Business
intelligencesolutions that canhelp customers
manage risk
and grow theirbusiness.

Atradius  |  Business profile Atradius N.V.

Global footprint
EuropeAustria
Belgium
Bulgaria
Czech Republic
Denmark
FinlandFranceGermany

ViennaNamur, Antwerp
Sofia
PragueCopenhagen, Århus
Helsinki
Paris, Bordeaux, Compiègne, Lille, Lyon, Marseille,
Rennes, Strasbourg

GreeceHungary
Iceland
Ireland
Italy
Luxembourg
Netherlands
NorwayPolandPortugal
Romania
RussiaSlovakia
Spain

Cologne, Berlin, Bielefeld, Bremen, Dortmund,Düsseldorf, Frankfurt, Freiburg, Hamburg, Hanover,
Kassel, Munich, Nuremberg, Stuttgart
Athens
Budapest
Reykjavik (1)DublinRome, Milan
Luxembourg
Amsterdam, Ommen
Oslo
Warsaw, Krakow, Poznan, Jelena Gora
Lisbon, Porto
Bucharest
Moscow
Bratislava
Madrid, Alcalá de Henares, Alicante, Barcelona, Bilbao,
A Coruña, Castellón, Girona, Las Palmas de Gran
Canaria, Málaga, Murcia, Oviedo, Pamplona, Seville,
Tarragona, Terrassa, Valencia, Valladolid, Zaragoza

SwedenSwitzerland
TurkeyUnited Kingdom

Stockholm
ZurichIstanbul
Cardiff, Belfast, Birmingham, London, Manchester

Middle East
IsraelLebanonSaudi Arabia
United ArabEmirates
Americas
Argentina
BrazilCanadaChile
MexicoPeru
USA

Tel Aviv (1)Beirut (1)Riyadh (1)Asia

Dubai (1)
Buenos Aires (1)São PauloA lmonte (Ottawa), Mississauga (Toronto),
Pointe Claire (Montreal)
Santiago de Chile (1)Mexico City, Guadalajara, Monterrey
Lima (1)	
Baltimore(Maryland), Carmel (Indiana), Chicago (Illinois),
Los Angeles (California), Morristown (New Jersey),
New York (New York), Plano (Texas)

15

China	Beijing, Guanzhou, Nanjing,
Shanghai (2)Hong Kong
Hong Kong
India
Mumbai, New Delhi, Kolkata (2)Indonesia
Jakarta (2)
Japan
Tokyo
Malaysia
Kuala Lumpur (1)Philippines
Manila (1)Singapore
Singapore
South Korea
Seoul (2)TaiwanTaipei (1)Thailand
Bangkok (2)VietnamHanoi (1)AfricaKenya
South Africa
Tunisia

Nairobi (1)Johannesburg (1)Tunis (1) Associated company, minority interest or
co-operation agreement with local partner(1)

Oceania
Australia	Sydney, Brisbane, Melbourne, Perth
Auckland
New Zealand

 Service establishment and co-operationagreement with local partner

(2)

16

Atradius  |  Business profile Atradius N.V.

General Atradiusgroup organisation
General overview of the main holding andoperating companies as at 31 December 2018

Atradius N.V.
The Netherlands

Atradius Collections
Holding B.V.
The Netherlands

Atradius Insurance
Holding N.V.
The Netherlands

Atradius Collections
operating companies
and branches

Atradius Crédito y
Caución S.A. de Seguros y
Reaseguros
Spain

Office locations:
Australia
Ireland
Belgium
Italy
BrazilMexicoCanadaNetherlands
PolandChina
Czech Republic Spain
Denmark
Singapore
FranceTurkeyGermany
United Kingdom
Hong Kong
USA
Hungary

Atradius Finance B.V.
The Netherlands

Atradius Crédito y Caución
Seguradora S.A.
Brazil
Iberinform Internacional S.A.u.
Spain

Atradius Investments Ltd.
IrelandBranches:
Australia
Japan
Austria
Luxembourg
Netherlands
Belgium
Bulgaria
New Zealand
NorwayCanadaCzech Republic Poland
Denmark
Portugal
Romania
FinlandFranceSingapore
Slovakia
Germany
SwedenGreeceHong Kong
Switzerland
Hungary
TurkeyUnited Kingdom
Ireland
Italy

Atradius Reinsurance DAC
IrelandAtradius Trade Credit
Insurance Inc. USA
Atradius Credit Insurance
Agency Inc. USA

Atradius Seguros
de Crédito S.A. Mexico
Operating companies& branches:

Atradius Rus Credit
Insurance LLC Russia

Belgium
China
Denmark
FranceGermany
India
Indonesia
IrelandItaly
Japan
MexicoAtradius Information
Services B.V.
The Netherlands
Atradius Dutch StateBusiness N.V.
The Netherlands

NorwayRussiaSouth Korea
Spain
SwedenSwitzerland
TaiwanThailand
United Kingdom
VietnamGraydon Holding N.V.
The Netherlands
Office locations:

Graydon operatingcompanies

Belgium
Netherlands
United Kingdom

17

Atradius Participations
Holding B.V.
The Netherlands
Atradius
Participations

Operating company:
BrazilCorporate governance18

Atradius | Corporate Governance Atradius N.V.

Report of theSupervisory Board
The global economy has kept its momentum
in 2018, whereby both emerging markets
and advanced economies continued to
grow at a rate which was more or lesscomparable to 2017.
Tit-for-tat trade restrictions have been implemented by the US and China, andthere is a high probability of further escalation. This has created uncertainty forfirms, leading to lower investment. It will also hamper trade, given the tradeintensity of investment. Global trade growth remains strong but is decelerating.
After a 4.7% expansion in 2017, the highest since 2011 on a rolling 12-month
basis, trade growth has eased to 3.8%. Amid increasing uncertainty and lower
investment, new export orders have also contracted for the first time in over
two years, boding ill for the trade outlook. Global insolvencies continued to
decline in 2018. The strongest improvement was seen in the Eurozone countries
although the financial conditions are still a far from the benign environment of
2008.
In 2018, Atradius once again produced strong results. The profit for the year
was EUR 202.7 million, which was supported by a 3.6% increase in insurance
revenue compared to 2017. The performance in Spain, Atradius’ largest credit
insurance market, continues to be strong. Total revenue increased 3.3%
including service income. Also risk acceptance remained high in 2018 as we
continued to provide comprehensive coverage to our customers. The claims
ratio of 43.7% reflects our prudent underwriting approach in a challenging risk
environment. Profit generation further strengthened our shareholder’s equity
by 3.9%.
As a clear recognition of the company’s strong results, continuous financial
strength and proper risk management, Atradius’ Insurance Financial Strength
Rating was upgraded in 2018 to ‘A2’ (outlook stable) by Moody’s. Atradius’ LongTerm Issuer Credit Ratings from A.M. Best have also been upgraded from ‘a’ to‘a+’ with a stable outlook.
Also in 2018 Atradius continued to cement its ambition to be a smarter, more
efficient company and to further raise its high-quality service to its customers
and distribution channels. There are several projects that have been in place
during the year. In particular investments in state-of-the-art technology forthe core credit insurance and bonding applications to create efficiencies inbusiness processes and to evolve our value proposition to the market througha new platform.

19

In 2018 Atradiusagain produced
strong results.

Atradius | Corporate Governance Atradius N.V.

In regards to distribution channels, during the year Atradius introduced newtools and functionalities to increase its business opportunities (GinaMaps), toprovide services to their customers, to monitor its portfolio and to build a strong
presence on the Internet (agent’s websites in Spain).
Moreover, Atradius keeps attention on innovation and entrepreneurshipprogrammes. It is delivering relevant initiatives like the Digital Ambassador
Programme, Innovation ‘tribes’ (for trends like Big Data, Platforms andBlockchain) and the successful collaboration with Kemiex - the world’s first
online trading platform for companies in the pharmaceuticals, veterinary foodand feed sectors - offering a credit insurance proposal to their customers byaccessing Atradius’ services online.
In 2018, Atradius also enhanced its global footprint by adding a local presencein three countries in Southeast Asia (Thailand, Indonesia and Vietnam) andtwo countries in Eastern Europe (Bulgaria and Romania), confirming the
growth potential of this region and enabling credit insurance support for its
international customers.
Regarding corporate governance, the Supervisory Board ensures that Atradiusruns its business and manages risk for stakeholders in a transparent andethical way. In 2018, the full Supervisory Board convened 4 times, the Audit
Committee 4 times, while the Remuneration, Selection and Appointment
Committee convened 3 times.
As in previous years, both the Management Board and the Supervisory Board
participated in Atradius’ annual Permanent Education Programme. In 2018, thisprogramme covered, amongst other topics: Leading by Culture and Atradius’
Credit Insurance Business Transformation (CIBT) Project. The Supervisory
Board was also involved in the annual review of the Remuneration Policy.
Furthermore, in 2018 Mr. Dick Sluimers was re-appointed as a member of theSupervisory Board.
Atradius N.V.’s Annual Report contains the financial statements for the financial
year 2018, audited by PricewaterhouseCoopers Accountants N.V., and has beenpresented to the Supervisory Board by the Management Board. The Supervisory
Board has approved the Annual Report and advised the General Meeting to
adopt the financial statements for 2018.
The Supervisory Board would again like to thank the Management Board andall Atradius employees for the outstanding results achieved in 2018 as well
as all customers for their continued confidence in us. Finally, the Supervisory
Board trusts that the Atradius management team, the stakeholders as well as
the employees will contribute in making the year 2019 rewarding as well.
The Supervisory Board,
Ignacio Álvarez
Chairman

20

Atradius runs
its business andmanages risk forstakeholders in atransparent andethical way.

Atradius | Corporate Governance Atradius N.V.

Shareholder structure
Atradius is part of Grupo Catalana
Occidente. It is the international brandof the credit insurance business.
Shareholder structure of Atradius N.V., since 2011:
Shareholder structure of Atradius N.V.

Percentage ofShares

Grupo Catalana Occidente, S.A.

35.77%

Grupo Compañía Española de Crédito y Caución, S.L.

64.23%

Grupo Catalana Occidente, S.A.

73.84%

Consorcio de Compensación de Seguros

9.88%

Nacional de Reaseguros

7.78%

España, S.A. Compañía Nacional de Seguros

5.00%

Ges Seguros y Reaseguros

3.50%

Total

100.00%

Grupo Catalana Occidente is the main shareholder with an economic stake of 83.2% (35.77% directly and 47.43%
indirectly through the holding Company Grupo Companía Española de Crédito y Caución, S.L.).
The shares of Grupo Catalana Occidente are listed on the Continuous Market of the Barcelona and Madrid stock
exchanges. Currently, 38% of its capital is floating and the main shareholder is INOC, S.A., holding 62% of thecapital of Grupo Catalana Occidente.
Thanks to the stability of the results and the prudent investment policy, Grupo Catalana Occidente has a solid
solvency position.

Key figures(EUR million)

2018

2017

% change
2018/2017

Long-term capital market value

3,908.6

3,755.5

4.1%

Equity3,204.1

3,078.6

4.1%

Subordinated debt

200.4

200.2

0.2%

Return on long-term capital

12.3%

11.8%

Funds under management

12,323.5

11,988.2

Total revenue

4,345.2

4,254.3

2.1%

386.4

357.3

8.1%

Consolidated result

21

2.8%

Atradius | Corporate Governance Atradius N.V.

Grupo Catalana
Occidente
One of the leaders in the Spanish insurance sector and in global credit insurance. Founded more than 150 years ago,
it has experienced constant growth, thanks to its capacity to adapt to change and remain loyal to its principles, which
are truly insurance oriented.
Grupo Catalana Occidente is committed to the professional development of its employees and insurance agents,
its personalised customer service and the trust its shareholders have in the organisation.

More than
19,000 insurance
brokers

More than
1,600 offices

Presence inmore than 50
countries

More than
7,300 employees

More than€4,300 million
turnover

Strategic goal
To be leaders in the field of risk protection and long-term savings of families and SME’s, and to be international leaders
in commercial risk coverage.

Profitability

GrowthRecurrent and sustained profitability
based on technical and actuarial
rigour, investment diversificationand processes that allow tight cost
ratios and quality service.

Defining markets targeted by
the Group, appropriate productand service development andestablishing suitable distribution
channels to reach the customer.

Solvency
Prioritise own resources generation andcontinued growth in order to support theGroups expansion, ensuring compliancewith commitments and ensuring appropriate
shareholders returns.

22

Atradius | Corporate Governance Atradius N.V.

Traditional BusinessCharacteristics

Lines of Business

Focused on Spain

Multi-risk

Families and small and medium sizedcompanies

Automobile

Professional agency network

Other non-lifeMore than 1,500 offices

Life and financial products
HealthFuneralCredit Insurance
Business

Service offered in more than 50 countries

Credit insurance

Business to businessBonding

Agents and brokers

Credit and bonding reinsurance
Debt collection
Instalment credit protection
Business information

Fundación Jesus Serra
Fundación Jesús Serra, named after the founder of the Grupo Catalana
Occidente, was created in 2006 in order to channel the philanthropic actionsof the Group and to drive the human and professional values that werecharacteristic of its founder. For this reason, the foundation participates inmore than seventy projects in the areas of business, teaching, investigation,
culture, sport and social action. In this way the Group contributes to theconstruction of a fairer, more united and more developed society, in which
values such as initiative, effort, healthy competition and continuous
improvement prevail.

23

Atradius | Corporate Governance Atradius N.V.

Corporate governanceAtradius endorses the importance ofsound corporate governance.
Key elements of independence, accountability and transparency create a
relationship of trust between Atradius and all its stakeholders; customers,
shareholders, employees, suppliers and the general public.
Atradius N.V. is a limited liability company organised under the laws of
the Netherlands, with a Management Board and a Supervisory Board. The
Management Board is responsible for achieving the Company’s objectives,
strategy, policy and results, and is guided by the interests of the Company
and the business connected with it. The Supervisory Board supervises theCompany’s general affairs and the policy pursued by the Management Board,as well as the performance of the management duties by the Management
Board members, taking into account the interests of the Company and thebusiness connected with it.

The Management Board
Composition
The Management Board of Atradius N.V. currently consists of five members.
Isidoro Unda - Chairman and Chief Executive Officer
Andreas Tesch - Chief Market Officer
Christian van Lint - Chief Risk Officer
Claus Gramlich-Eicher - Chief Financial Officer
Marc Henstridge - Chief Insurance Operations Officer
CVs of each of the Management Board members, showing their roles,
background and experience are available on our website.

24

Atradius | Corporate Governance Atradius N.V.

Role and procedures
The Management Board as a whole is responsible for the management andthe general affairs of Atradius and is supervised by the Supervisory Board.
The Management Board determines Atradius’ operational and financial
objectives, and the strategy designed to achieve these objectives. It ensures
Atradius has an effective risk management system, internal control system
and internal audit function in place. It submits the annual business plan andbudget of Atradius to the Supervisory Board for approval. The Management
Board rules describe the allocation of duties and the decision-making processof the Management Board.
The General Meeting has the authority to appoint the members of theManagement Board on the recommendation of the Remuneration, Selection
and Appointment Committee of the Supervisory Board. A Management Board
member may be suspended or dismissed by the General Meeting at any time.
The Management Board shall consist of at least three members. Management
Board members are appointed for an undefined term. In the event of avacancy, the management of Atradius N.V. will be conducted by the remaining
members or sole remaining member of the Management Board.
Remuneration
The Supervisory Board determines the remuneration and further
employment conditions of each member of the Management Board,
based on the recommendation of the Remuneration, Selection andAppointment Committee of the Supervisory Board and in accordance withthe remuneration policy adopted by the General Meeting. You can findinformation regarding the amount of remuneration received by Management
Board members in the explanatory notes to the consolidated financial
statements of the Annual Report 2018.
Conflict of interest
A member of the Management Board with a potential conflict of interest
with the Company will immediately report this to the Chairman of theManagement Board, who will determine whether the reported case qualifies
as a conflict of interest. A member of the Management Board will notparticipate in any deliberations or decision-making of the Management Board
if that member has a direct or indirect personal interest that conflicts with
the interest of the Company or its business. In such a case, the other nonconflicted members of the Management Board will pass the resolution. If
all members of the Management Board are conflicted, then the Supervisory
Board will pass the resolution.

25

Atradius | Corporate Governance Atradius N.V.

The Supervisory Board
Composition
The Supervisory Board of Atradius N.V. currently consists of ten members.
Ignacio Álvarez, Chairman
Francisco Arregui, Vice-Chairman
Bernd H. Meyer
Dick Sluimers
Xavier Freixes
Hugo Serra
Désirée van Gorp
John Hourican
Carlos Halpern
José María Sunyer
CVs of each of the Supervisory Board members, showing their backgroundand experience are available on our website.
Role and procedures
The Supervisory Board supervises the Company’s general affairs andthe policy pursued by the Management Board. The responsibilities of theSupervisory Board include, among others, supervising, monitoring andadvising the Management Board on the Company’s strategy, performance andrisks inherent to its business activities; the design and effectiveness of theinternal risk management and control systems and the financial reporting
process. The Supervisory Board rules describe the decision-making process
and the composition and committees of the Supervisory Board.
The General Meeting has the authority to appoint the members of theSupervisory Board on the recommendation of the Remuneration, Selection
and Appointment Committee of the Supervisory Board. A Supervisory Board
member may be suspended or dismissed by the General Meeting at any time.
The Supervisory Board shall consist of at least five members. Supervisory
Board members shall resign according to a rotation scheme determinedby the Supervisory Board, by which each Supervisory Board member shallresign after a maximum of four years after the date of appointment. A
resigning Supervisory Board member may be reappointed. A Supervisory
Board member will resign early in the event of inadequate performance or inother circumstances in which resignation is deemed necessary by the othermembers of the Supervisory Board.
The composition of the Supervisory Board
The composition of the Supervisory Board shall be such that the combined
experience, expertise and independence of its member enables it to best
carry out its various responsibilities. The current members of the Supervisory
Board have extensive experience in insurance and reinsurance, investmentbanking, strategic consulting and regulatory matters.

26

Atradius | Corporate Governance Atradius N.V.

Role of the Chairman and the Company Secretary
Among other things, the Chairman of the Supervisory Board co-ordinates
the decision making of the Supervisory Board, draws up the agenda of theSupervisory Board meetings, chairs the Supervisory Board meetings and theGeneral Meetings of Shareholders. The Chairman also ensures the adequate
performance of the Supervisory Board and its committees, ensures the annual
evaluation of the functioning of the members of the Management Board andthe Supervisory Board, and acts on behalf of the Supervisory Board in serving
as the principal contact person for the Management Board. The Chairman of
the Supervisory Board is assisted in his role by the Company Secretary.
Committees of the Supervisory Board
The committees of the Supervisory Board are set up to reflect both Dutch
corporate standards and the specific interests of the business of Atradius. As
risk management is considered a key area for attention, the Supervisory Board
considers it important that this subject is discussed by the full Supervisory
Board, rather than a specific risk committee. All risk subjects dealt with inmeetings of the Supervisory Board are chaired by Mr. Bernd H. Meyer.
Conflict of interest
A member of the Supervisory Board with a potential conflict of interest
with the Company will immediately report this to the Chairman of theSupervisory Board, who will determine whether the reported case qualifies
as a conflict of interest. A Supervisory Board member will not participate inany deliberations or decision-making process of the Supervisory Board, if
that member has a direct or indirect personal interest that conflicts with theinterest of the Company or its business. In such a case, the other non-conflicted
Supervisory Board members will pass the resolution. If all Supervisory Board
members are conflicted as referred to above, then the General Meeting willpass the resolution.
Audit Committee
The Audit Committee supports the Supervisory Board in fulfilling its
supervisory and monitoring duties for the assurance of the integrity of theCompany’s financial statements, the external auditor’s qualifications and theperformance of internal and external auditors. The Audit Committee monitors,
independently and objectively, the financial reporting process within Atradius
and the system of internal controls. The Audit Committee also facilitates theongoing communication between the external auditor, the Management Board,the internal audit department and the Supervisory Board on issues concerning
the Company’s financial position and financial affairs. In 2018, the Audit
Committee met four times. The Audit Committee currently consists of Xavier
Freixes (Chairman), Francisco Arregui and Dick Sluimers.

27

Atradius | Corporate Governance Atradius N.V.

Remuneration, Selection and Appointment Committee
The Remuneration, Selection and Appointment Committee supports theSupervisory Board in fulfilling its supervisory and monitoring duties for
proposals for the appointment of members of the Management Boardand the Supervisory Board, the remuneration policy, the remuneration ofsenior management and other corporate governance matters. In 2018, theRemuneration, Selection and Appointment Committee met three times. The
Remuneration, Selection and Appointment Committee currently consists ofFrancisco Arregui (Chairman), Ignacio Álvarez and Hugo Serra.
The General Meeting determines the remuneration of the members of theSupervisory Board based on the recommendation of the Remuneration,
Selection and Appointment Committee, and in accordance with the
remuneration policy adopted by the General Meeting. Members of theSupervisory Board’s expenses are reimbursed. You can find information
regarding the amount of remuneration received by Supervisory Board
members in the explanatory notes to the consolidated financial statements of
the Annual Report 2018.

General Meeting
The General Meeting is the body of the Company formed by the shareholders
and other persons entitled to vote. The General Meeting can exercise its rights
at the General Meeting of Shareholders. The General Meeting is also authorised
to approve important decisions regarding the identity or character of Atradius,
as well as major acquisitions and divestments.

The internal and external auditor
Internal auditor
The internal auditor fulfils an important role in assessing and testing theinternal risk management and control system. The Director of Internal Audit
reports to the Chairman of the Audit Committee and, with respect to day-to-day
activities, to the Chief Executive Officer of Atradius.
External auditor
The General Meeting appoints the external auditor on the recommendation of
the Audit Committee of the Supervisory Board. The Audit Committee evaluates
the performance of the external auditor and also pre-approves the fees foraudit and permitted non-audit services to be performed by the external
auditor. The Audit Committee ensures the external auditor is not appointed torender non-audit services that are listed explicitly as prohibited services in the
Atradius Compliance Policy on Auditor Independence.
The General Meeting appointed PricewaterhouseCoopers Accountants N.V. as
the Company’s external auditor for the financial year 2018 on 9 March 2018.

28

Consolidated management report29Atradius | Consolidated management report

The global economic
environment
Global growth upholds momentum
The global economy kept up the pace in 2018, with both emerging
markets and advanced economies growing at more or less the samerate as in 2017. GDP growth remained the same in 2018 as it was in theprevious year (3.0%). It is expected to reduce slightly to 2.7% in 2019.

Advanced markets

Eurozone growthcontinues tobe distributed
unevenly.

Growth in advanced markets remained on par with 2017. However,there was a greater divergence between growth in the US, which
continues to lead the pack, and the Eurozone and UK, where growth
was somewhat lower.
Eurozone growth in 2018 was still reasonable at 1.9%, and domestic
demand remained the main pillar of this growth. The rate of job
expansion strengthened further and wages picked up, particularly incountries with relatively tight labour markets, such as Germany, theNetherlands and Ireland. The Eurozone-wide unemployment rate
declined further in 2018, to 7.9% in November 2018, compared to 8.6% at
the start of the year.
While all member states’ economies grew last year, Eurozone growthcontinues to be distributed unevenly, with Southern European states
lagging behind their Northern European counterparts. In Southern
Europe, the economies of Spain and Portugal performed much better
than those of Italy and Greece.
Financial conditions remained accommodative in 2018, despite theEuropean Central Bank scaling back its bond-buying programme andending net asset purchases completely in December 2018. Borrowing
in the Eurozone continued to recover in 2018, with banks relaxing their
credit conditions, making it easier to obtain loans. Southern Europe
remained a weak spot in bank lending, as banks have to cope with
continuing weak balance sheets and high levels of non-performing loans.
The US economy was firing on all cylinders in 2018, with GDP growth
accelerating to 2.9%. Private consumption, which accounts for more than
two-thirds of the US economy, remained the primary growth driver.
Labour market conditions continued to improve throughout the year,with the unemployment rate reaching 3.9% in December 2018. On topof strong consumption, fiscal stimulus helped boost growth further andhigher energy prices continued to underpin investment growth.

30

Global economic growth

GlobalGDP
economic
growthReal
growth,percent change y-o-yReal GDP growth, percent change y-o-y
9

6
3
0
-3
-6

2000

2002

2004

2006

Advanced Economies
Source: Macrobond, Atradius Economic Research

2008

2010

2012

Emerging Markets

2014

2016
World

2018

Atradius | Consolidated management report

Emerging markets
Emerging market economies maintained growth in 2018 . This was
supported by solid global demand, relatively loose financial conditions,improving domestic policymaking in some markets, and higher
commodity prices . A number of emerging economies have recorded sharp
currency depreciations . Among the countries most severely hit were
Argentina and Turkey, which are highly reliant on volatile portfolio capital
to finance large external imbalances.
In Emerging Asia, GDP growth slowed slightly, mostly due to weakening
global trade . The Chinese economy has begun feeling the pain of theescalated trade war with the US . GDP growth slowed to 6 .6% in 2018 .
Stimulative macro policies only partially compensated for weaker export
growth and the consequences of the shift from fixed investment-driven
growth towards private consumption . India was still going strong, withGDP growth of 7 .4% in 2018 . In Latin America, growth slowed in 2018as Argentina suffered from an economic crisis and growth in Brazil
was more muted, due to a truckers strike and uncertainty ahead of thegeneral elections . Eastern Europe enjoyed a stable economic expansion of
3 .1%, but individual country growth rates varied widely . Russian growthincreased slightly in 2018, while the Turkish economy cooled from a highcredit-fuelled GDP growth rate in 2017 .

Emerging market
economies
maintained
growth in 2018.

While financial conditions in emerging markets remain supportiveof economic activity, pressure points have emerged in countries withweaker macroeconomic fundamentals and greater political uncertainty .
For commodity-exporting countries, 2018 was a moderate year . Oil pricedevelopments were volatile: the oil price rose gradually to above USD 85
per barrel in October 2018, before falling to just above USD 50 at the endof the year . Emerging markets that export commodities such as steel,aluminium and copper also felt the effects of lower prices throughout
2018 .

Cautious decline in insolvencies
Global insolvencies continued to decline in 2018, in line with the economic
cycle . The biggest improvements were seen in Eurozone countries withstrong economic growth, like the Netherlands and Ireland, and some of
the Southern European countries such as Spain and Portugal which arerecovering from high insolvency levels . Credit conditions for businesses
remained favourable across advanced markets in 2018, despite amarginal tightening due to monetary policy normalisation in the US
and less monetary stimulus in the Eurozone . However, insolvency levels
remained high in many Eurozone countries and financial conditions
were still a long way from the benign environment before 2008 .
Other advanced markets generally also faced improving conditions . US
insolvencies declined on the back of another year of robust GDP growth .
In the UK, insolvencies increased following a difficult start to the year
in the construction sector and weakening consumer purchasing power,
hurting the retail trade sector particularly . In most other advanced
markets, a firming of domestic demand has pushed up GDP growth
rates, leading to either stable or declining insolvencies .

31

Global commodity prices
Price index, 2010 = 100.

Globalinsolvencies
continued to
decline in 2018,
in line with theeconomic cycle.

32

Atradius | Consolidated management report

Excellent performanceand solid results(EUR thousands)

2018

2017

1,781,037

1,718,925

3.6%(778,337)(717,228)(8.5%)

Gross insurance operating expenses(632,561)(612,910)(3.2%)

Reinsurance result(105,632)(133,683)

21.0%

Insurance result

264,507

255,103

3.7%

Service income

1)

120,099

121,056(0.8%)

Service expenses(116,297)(116,016)(0.2%)

Gross insurance revenue
Gross insurance claims and loss adjustment expenses

1)

Service result

3,803

5,040

(24.6%)Net investment result

22,14524,726

67.9%

Operating result before finance costs

290,455

284,870

6.3%

Result for the year (after tax)

202,655

186,236

8.8%

3,545

3,596

(1.4%)

Employees (FTE)
1)

Overview includes inter-segment revenue and (claims) expenses.

Gross

Net

2018

2017

2018

2017

Claims ratio

43.7%

41.7%

44.7%

41.4%

Expense ratio

35.5%

35.7%

31.5%

34.2%

Combined ratio

79.2%

77.4%

76.2%

75.5%

Revenue by business segment

6.3%
6.9%

6.3%
80.5%

Credit Insurance (including ICP)
Reinsurance
BondingServices

33

Atradius | Consolidated management report

In 2018, Atradius achieved another year of strong performance, increasing
the insurance result by 3.7% through our commitment to customers andbest-in-class service. Insurance revenue increased 3.6% alongside an increasein gross insurance expenses of 3.2%, which allowed for further improvementof the expense ratio. Gross claims ended at EUR 778.3 million for the year,
8.5% above 2017, mainly resulting from continued growth in all of our
insurance products. The net investment result also contributed positively with
EUR 22.1 million, which is substantially more than 2017, which saw
one-off impacts on associated companies. Together with a positive service
result, the profit for the year reached EUR 202.7 million, an increase of 8.8%
on 2017, driven by a very solid gross and net insurance result. The overall
performance generated an excellent combined ratio of 79.2%.
In 2018, our credit insurance business continued to show stable andconsistent growth across almost every region and business unit. Spain, ourlargest market, despite still facing the challenges of continued price pressure
from a highly competitive environment, continues to grow due to strong
activity and volume of insured turnover.
The markets in Northern & Central Europe had some of the strongest revenue
growth within the Group, along with Asia and Oceania, meeting our ambition
for these regions. Overall claims activity in 2018 proved to be stable, moderate
and well within expectations.
The Global unit continues to excel, with strong revenue growth. Our Special
Products unit saw a marginal decline in revenue but managed to further
improve the level of claims compared to 2017. Instalment Credit Protection(ICP) also showed another year of strong performance, with revenue growthand low claims activity.
The Bonding and Reinsurance units showed strong growth while seeing
continued stability in claims activity.
The reinsurance unit of the Group remained under a single quota sharecontract with the retention set at 60%, 2.5 percentage points higher thanin 2017. The cost of reinsurance in 2018 was EUR 105.6 million, a decreaseof EUR 28.1 million from the previous year, largely a result of higher
reinsurance commission.
Services achieved a positive result, with overall stable performancethroughout the different services.

34

Our credit
insurance business
continued toshow stable andconsistent growthacross almost
every region andbusiness unit.

Atradius | Consolidated management report

Credit Insurance including Instalment Credit Protection (ICP)(EUR thousands)
Insurance premium revenue

2018

2017

1,397,309

1,341,173

4.2%

132,510130,829

1.3%

Gross insurance revenue

1,529,819

1,472,003

3.9%

Gross insurance claims and loss adjustment expenses 1)(680,354)(618,736)(10.0%)

Gross insurance operating expenses(530,232)(509,929)(4.0%)

Information income

Result before reinsurance

319,233

343,339(7.0%)

Reinsurance result(80,109)(108,898)

26.4%

Result after reinsurance

239,124

234,441

2.0%

44.5%

42.0%

(2.5% pts)

Total credit insurance and ICP gross claims ratio
1)

Overview includes inter-segment revenue and (claims) expenses.

Credit insurance & ICP revenue by region
7.6%
8.7%

23.4%

Spain & Portugal
Northern & Central Europe

6.7%Western Europe
Southern Europe
Asia

21.6%
32.0%

Americas

Atradius’ credit insurance business performed well in 2018, with a result after
reinsurance of EUR 239.1 million, 2.0% above that of 2017. Gross insurance
revenues grew by 3.9% (5.5% at constant foreign exchange rates). Overall
claims inflow in 2018 remained stable, and while claims expenses increasedslightly compared to 2017, this was well within expected ranges. The
increased claims expenses also generated increased recoveries from claims
ceded to reinsurers.
Our total potential exposure (TPE) in 2018 increased by 4.8% to EUR 680
billion. The top three regions for exposure concentration did not change fromlast year: Europe represents 72.3% of the exposure, whereas Asia and theAmericas account for 14.1% and 12.1%, respectively.
In relative terms, the highest concentration is in Europe, although the region
where exposure grew most (9.5%) was Asia. All buyer regions contributed tothe increase in exposure. In North America the increase was 3.5%. In China,
our exposure continues to increase substantially as we continue to support
our clients’ business growth in the region.
The concentration of exposure by trade sector remained fairly stable. Around
73% of the Group’s TPE is in seven trade sectors: chemicals, construction,
consumer durables, electronics, food, metals and transport.
2018 proved to be another year of excellent customer retention, a reflectionof our commitment to our clients. Overall, our credit insurance portfolio
reported very satisfactory growth. Our local credit insurance units generated
EUR 1,042.4 million in revenues, a 3.0% increase over 2017.

352018 proved
to be anotheryear of excellent
customer
retention, areflection of ourcommitment toour clients.

Atradius | Consolidated management report

In 2018, each of our local credit insurance units grew versus the previous
year. Germany, one of our larger markets within Europe, delivered revenues
3.5% above 2017. Asia and the Nordic region also grew revenue strongly,
and we also saw satisfying revenue growth of 5% or higher in the United
Kingdom & Ireland, the Netherlands, France, and Oceania. Spain and North
America continue to grow, but with greater strain from price pressure in theirrespective markets.
Gross claims expenses of local credit insurance ended at EUR 497.7 million
with a claims ratio moderately higher than in 2017. In Asia the claims ratio
increased more notably in 2018, however this was mainly resulting from a
few large cases. Our Global unit on the other hand kept increases in claims
expenses well below revenue growth, while our Special Products unit showed
substantially lower claims expenses as a result of a more profitable risk
acceptance strategy.
In 2018, Atradius Global achieved one of the highest revenue growth rates
to date, predominately generated from existing customers. We helped ourcustomers trade more and grow their business safely. Our unique Global
service proposition yet again resulted in excellent retention rates.
Performance of our Special Products Unit is highlighted by strong profitablerevenue, low claims, solid recoveries and good momentum with long-term
customers.
ICP revenue increased 12.4%. The claims ratio remained exceptionally low, at
11.9%, due to above-target recoveries.

36

Atradius | Consolidated management report

Reinsurance(EUR thousands)
Gross insurance revenue

2018

2017

131,364

133,697(1.7%)

Gross insurance claims and loss adjustment expenses(72,376)(77,452)

6.6%

Gross insurance operating expenses(51,526)(54,840)

6.0%

7,461

1,405

430.9%(4,306)(592)(628.0%)Result before reinsurance
Reinsurance result
Result after reinsurance

3,155

813

288.1%

Gross claims ratio

55.1%

57.9%

2.8% pts

Reinsurance revenue by region of cedent

16.2%
34.5%
14.2%

EuropeAsia & Oceania
Africa & Middle East
South America

35.1%

Atradius Reinsurance DAC (Atradius Re) is a leading market reinsurer
providing capacity to primary insurance companies in credit insurance
and bonding.
Atradius Re currently assumes business from 118 clients over 65 countries,
maintaining a balanced diversity within the portfolio. The underlying
business consists of around 65% credit insurance and 35% bonding, basedon premium volume. The business is underwritten by a multilingual, highly
trained and experienced, international team, at Atradius Re’s offices in
Dublin, Ireland.
Atradius Re has long-standing relationships with its clients and leads 30% of
its treaties; in addition, it maintains close contacts with specialist brokers. The
quality of these client relationships is underscored by the Company’s uniqueoffering: combining the Group’s skills in the primary underwriting of credit
insurance and bonding risks with its own distinctive approach and expertisein structuring reinsurance solutions. In this way, Atradius Re can anticipate
and respond to the specific and changing needs of our customers.
Total reinsurance revenue for 2018 of EUR 131.4 million, decreased from
EUR 133.7 million in 2017. This is due to maintaining the current conservative,
forward looking underwriting approach, with an emphasis on increasing
profitability thresholds. The claims ratio decreased to 55.1% from 57.9%
in 2017.

37

We can anticipate
and respond to
the specific andchanging needs ofour customers.

Atradius | Consolidated management report

Bonding(EUR thousands)

2018

2017

Gross insurance revenue

119,854

113,225

5.9%

Gross insurance claims and loss adjustment expenses(25,607)(21,040)(21.7%)

Gross insurance operating expenses(42,679)(41,396)(3.1%)

Result before reinsurance

51,56850,789

1.5%

Reinsurance result(21,216)(24,194)

12.3%

Result after reinsurance

30,352

26,59514.1%

Gross claims ratio

21.4%

18.6%

(2.8% pts)

Bonding insurance revenue by region
8.5%

2.2%
34.1%

24.6%

Italy
FranceNordic & Germany
Spain
Other

30.6%

Atradius is a leading bond and surety provider on the European market, withlong standing expertise and deep local-market knowledge.
Atradius Bonding is active in twelve countries: Italy, France, Spain, Denmark,Finland, Norway, Sweden, Germany, Netherlands, Belgium, Luxembourg
and, as from 2018, in Portugal. Our strategic focus is on developing newtechnologies to support and enhance our customers’ business growth.
Insurance revenue in 2018 was EUR 119.9 million, a 5.9% increase on 2017. The
business developed well in Spain, Italy and the Nordic region. In France, we
significantly grew our customer base. In Germany, Belgium, the Netherlands
and Luxembourg performance has been outstanding, with revenue growing
14.0% and the total result after reinsurance increasing 14.1%. This result is inline with the long-term strategy we initiated in 2017.
We are developing a common Bonding platform for our customers, business
partners and staff (the Bonding Business Transformation programme).
This common platform will help us sustain and improve our market position
through the use of new technologies and modern customer and user journeys.
It will support our ambition to enable geographical expansion to countries
where Atradius has a footprint, support the further expansion of our bonding
service portfolio and strengthen our value proposition in the Bonding
business. Italy will be the first focus area for roll out, starting in 2020.

38

Our strategic
focus is to develop
new technologies
to support andenhance ourcustomers’
business growth.

Atradius | Consolidated management report

Services(EUR thousands)

2018

2017

Service income 1)

120,099

121,056

Service expenses(116,297)(116,016)(0.2%)

3,803

5,040

(24.6%)

Service result
1)(0.8%)

Overview includes inter-segment revenues.

Service revenue
46.4%

Information
servicesC ollections & Other
53.6%

Atradius’ services comprises our debt collection operations, the Dutch statebusiness and our information service businesses.

Debt Collection
Atradius Collections’ income increased 4.0% in 2018. Debt placements
increased 4.0%. Collected sums have also increased 5.0% in 2018, a result of
the improved quality and performance of our local teams. Our performanceand underlying increase in our customer base provide a positive outlook forfurther business development and income generation in collections service.
The slowdown in China and the continued emergence of Southeast Asia
contributed to an increase in outstanding invoices and trusted debt
placement. In Western Europe, on the other hand, improvements in
insolvencies led to slow progress of debt placement. Atradius, however,reinforced its presence in the region by opening a branch in Turkey, while
continuing to develop partnerships in other regions such as Morocco andChile. Geographical expansion and enhancing our presence where strategic
opportunities present themselves, remains key, alongside our commitment
to excellence.

39

A positive
outlook forfurther businessdevelopment.

Atradius | Consolidated management report

Atradius Dutch State Business (ADSB)ADSB provides cover for risks related to infrastructure projects, the export ofcapital goods, services to buyers in countries outside the Netherlands as wellas cover for political risks related to investments in other countries .
ADSB also continues to cover development-relevant investments and export
contracts in medium-income and lower-income countries which benefit(local) SMEs . We provide this service under the Dutch Good Growth Fund .
Next to this, the Dutch Trade and Investment Fund enables ADSB to provide
cover on investments and export contracts up to EUR 5 million, for which
financial support by commercial banks is not available. By discounting billsof exchange, ADSB can also finance these contracts.

Information Services
In 2018, information service income decreased 3 .9%, mainly due to a
strategic decision for Graydon to sell its Dutch debt collections business andfocus on business information .
Graydon is one of the leading providers of business information solutions
for credit management, marketing intelligence, and risk and compliance .
Graydon’s markets show modest growth, with fierce competition at the lowend segment and customers moving to value-added services . The company ismoving towards more tailored solutions for its customers, offering scalable
products and services .
In the Iberian markets, Iberinform continued to support our insurance
business as well as our customers, showing both positive growth in revenue
and improved profitability.

40

The company ismoving towards
more tailoredsolutions for
its customers,
offering scalable
products andservices.

Atradius | Consolidated management report

Atradius Academy shaping tomorrow
together‘To developing and growing our people tobe successful’ is part of our DNA.
Atradius Academy supports an environment of continuous learning anddevelopment. Being adaptable to new challenges is important as wetransform our business.
Atradius invests in people by offering a wide choice of development
opportunities. At any time and from any place, employees can connect to ourLearning Management System to find a wide selection of e-learning courses.
In 2018, we organised three management development programmes:
Stepping Forward 1 and 2, and On the Move, all focusing on the management
aspects of business transformation.
For our Management Board and Supervisory Board, we organised apermanent education session covering two topics: Leading by Culture, andCredit Insurance Business Transformation.
To ensure all Atradius employees maintain up-to-date knowledge, we run theannual Atradius Learning Carousel. Topics chosen for this year were General
Data Protection Regulation (GDPR) at Atradius, and Shaping Tomorrow
Together. GDPR at Atradius focuses on how our employees can help Atradius
to be GDPR-compliant. Shaping Tomorrow Together highlights the innovative
activities Atradius undertakes to stay future-proof, and the role our
employees can play. All employees must take part in these e-learning courses.
Atradius is working with universities and other educational institutions to
help develop young professionals and interns in different countries, which we
see as good practice. Here we give two examples: tradius created an ambitious and transformational initiative, the Welsh• A
Financial Services Graduate Programme. This aims to build a centreof excellence in financial services skills, by attracting, developing andretaining high-calibre, graduate talent.
• T he new Insurance Distribution Directive requires minimum training
hours each year for direct sales employees, with a certificate to prove they
have fulfilled the requirements. For Germany and the Central Eastern
Europe region, we developed a training plan in the Atradius Academy
Learning Management System, and keep track of the learning activities
of sales employees.

41

Being adaptableto new challenges
is important
as we transform
our business.

Atradius | Consolidated management report

Evolve+Evolve+ is a multi-year cultural change programme that focuses on increasing
innovation and maintaining our customer-focus. We organised various local andcentral initiatives to establish this. The highlights of 2018 were the Evolve+ quizand Atradius Cares.
The Evolve+ quiz, ‘Together we know’, highlighted the importance of teamwork
and collaboration. 150 teams combining diverse expertise and backgrounds, eachweek answered 20 interactive questions within a limited period.
We also successfully continued the Atradius Cares initiative. This brings together
all caring activities organised by our employees worldwide, to create a powerful
overview of the impact Atradius has on our local communities.

Gender diversity
Dutch legislation, effective from 13 April 2017, requires large Dutch companies,
when nominating or appointing members to their Management Board orSupervisory Board, to take into account, as far as possible, a balance in gender, so
at least 30% of the positions are held by women and at least 30% by men.
The current composition of the Management Board and the Supervisory Board
deviates from these percentages. In 2018, no new appointments were madeto the Supervisory Board or Management Board. For future appointments,
the Management Board and the Supervisory Board will take gender diversity
objectives into account as far as is possible.
Indicators

20182017 2016 (1)

2015

2014

2013

2012

2011

2010

2009

Headcount

3,707

3,756

3,758

3,333

3,298

3,257

3,315

3,304

3,318

3,627

Total average number of employees(full-time equivalent)

3,571

3,591

3,584

3,153

3,132

3,132

3,139

3,159

3,318

3,662

Total year end number of employees(full-time equivalent)

3,545

3,596

3,586

3,161

3,139

3,107

3,143

3,149

3,165

3,470

Retention rate

91.1%

91.1%

92.3%

92.0%

94.9%

91.4%

92.6%

91.1%

85.8%

88.6%

Sick leave

3.8%

3.1%

2.9%

3.1%

2.8%

3.0%

3.1%

3.4%

3.6%

3.4%

Expenses as % of salaries

2.5%

1.8%

1.7%

1.6%

1.5%

1.2%

1.4%

1.3%

1.3%

1.4%

Number of training attendees

9,722

9,228

7,680

6,366

5,646

5,283

1,656

1,952

1,236

1,943

Development and training(1)

Including FTEs from Graydon, Iberinform Portugal, Gestifatura and Informes since 2016.

42

Atradius | Consolidated management report

Atradius’ compliance framework
Compliance practices support our business, our reputation and our integrity.
Complying with relevant laws, rules and regulations, and maintaining a highstandard of ethics and integrity, leads to lower operational risk and morestable business processes. The Group’s Code of Conduct outlines the basic
corporate, legal and ethical compliance principles and guidelines that apply
to all employees of the Group, and that govern the Group’s operations andits employees’ business conduct. Individual Compliance Policies address
specific compliance areas in more detail, and set out the detailed compliancerequirements people across the Group must follow, and which must be
included in existing business procedures. For example, the Customer Due
Diligence Policy addresses potential risks in areas such as sanction regulations
and money laundering. The Compliance Function within Atradius consistsof the Group Compliance Function and the Local Compliance Function andconsists of employees who (partially) perform compliance activities. The
Compliance Function supports the management of Atradius in meeting its
objective of being compliant with applicable laws, rules and external andinternal regulations.

Capital management
Atradius seeks to maintain a strong capital position and well-capitalised
operating entities. This helps us to support the evolution of our insurance
business, withstand financial stress in adverse business and financial markets,meet our financial obligations and, ultimately, create shareholder value.
In 2018, all Atradius’ entities were able to meet their financial obligations
efficiently and to comply with local legal and regulatory requirements.
Shareholders’ funds and subordinated debt
Shareholders’ funds at the end of 2018 amounted to EUR 1,821.4 million, an
increase of 3.9% from EUR 1,753.2 million at year-end 2017, mainly due to thestrong positive results after tax.
Subordinated debt of EUR 325 million (nominal value) at the end of 2018consisted of subordinated notes of EUR 250 million and a subordinated loan ofEUR 75 million (both amounts unchanged versus 2017), which qualify as Tier-2
basic own funds for Solvency II. For further details, please see Note 16 of theconsolidated financial statements of the Annual Report 2018.

Regulatory capitalAt the end of 2018, Atradius’ insurance companies collectively held asolvency ratio well above 200% (1).
Atradius applies a partial internal model to calculate regulatory capitalrequirements under Solvency II. For further details on themain Solvency II regulatory capital requirements, please see theSolvency and Financial Condition Reports of Atradius’ European regulated entities.
(1)

Subject to finalisation of any audit procedures.

43

In 2018, all
Atradius’ entities
were able to meettheir financial
obligations
efficiently.

Atradius | Consolidated management report

Securing futurefinancial stability
As a global insurance company, Atradius
is exposed to many and varied risks
linked both to the nature of our businessand to the external environment.
Atradius classifies its main risk types as insurance, financial and operational.
Insurance risk is predominantly the risk of non-payment by a buyer coveredby a policy (credit insurance) or the risk of non-performance of a customer(bonding). Financial risks arise out of developments in financial markets
and with counterparties - including market risk, credit risk and liquidity
risk. Operational risk means the risk of loss arising from inadequate or failed
internal processes, personnel systems, or from external events.

Risk management
The boards of the Group companies have ultimate responsibility andaccountability for risk management and internal control within theirrespective companies. The Management Board implements and oversees
Atradius group-wide risk governance through the Risk Strategy Management
Board (RSMB) and a number of committees that support the RSMB. These
are in specific risk-related areas such as underwriting of buyer exposures,country risk, provisioning, asset composition and investment policy,
reinsurance, quantitative modelling, and approval of new products. In
addition, all employees have well-defined authorities specifying the level ofrisk they can accept. This framework ensures we assume and manage risks
in a controlled way, and in line with the risk appetite of the company. For thedescription of the main risks and uncertainties and how these are managed
please refer to Note 4 Risk and Capital Management of the consolidated
financial statements.
The relationship between risk and capital is fundamental for Atradius.
Understanding how taking risks consumes capital allows management tosteer Atradius and to take strategic decisions with the interdependence ofrisk and capital in mind. These decisions are substantially informed by theoutcomes of Atradius’ internally developed economic capital model. Thismodel contributes to a multitude of risk assessment activities and risk profile
measurement and enhances Atradius’ ability to monitor and manage risk
levels within the organisation through the allocation of risk-based capital.
In addition, we use the model for calculating regulatory capital requirements
under Solvency II.

44

Atradius | Consolidated management report

Responsibility as
part of our DNA
Atradius intensified cooperation with
Grupo Catalana Occidente in the field of
Corporate Social Responsibility (CSR). We
are bringing into line not only our strategy,
but also our key performance indicators
to measure our progress on CSR.
We follow the principles of responsibility, ethics, transparency andcommitment to the law in all our activities, and try to maximise thecreation of sustainable social value for stakeholders across the globe. We
will minimise and, if possible, prevent potential negative impacts on socialand environmental matters arising from our activities, by taking pro-active
measures. It is in the interest of our stakeholders and ourselves to safeguard
our reputation and, where possible, improve it further.

Principles
We will apply the following principles to all our stakeholders:• I ntegrity and honesty: complying with regulations and professional ethics
and avoiding any form of corruption.
• I mpartiality: treating with respect, avoiding any type of discriminationand guaranteeing the fulfilment of the rights recognised in the Universal
Declaration of Human Rights.
• T ransparency and confidentiality: commitment to clarity and accuracy in
information, respecting people’s privacy and confidentiality.
• P rofessionalism: professional seriousness, diligence, dedication to service
and quality of products, respecting free competition.

45

We follow the
principles of
responsibility,
ethics,transparency andcommitment to
the law in all our
activities.

Atradius | Consolidated management report

Stakeholders
Our stakeholders are our:• E mployees: our most important asset. We provide equal opportunities,
with fair wages for all employees. Once employees are hired, they will haveample opportunity for on-the-job training and appropriate education toincrease their employability. Furthermore, we ensure a proper work-lifebalance to maintain a healthy working staff.
• C ustomers: the central link in our activity. Newly developed competitive
products for our clients, with personal advice and our customer service
centre geared toward providing customer excellence.
• S hareholders and investors: the key to sustainability. We provide an
attractive return on investment. Due to our prudent risk management,
transparency of information and focus on a long-term strategy, we ensure
additional value and continuity in our shareholder structure.
• A gents and brokers: enablers of growing sales volumes. We treat themequally, to ensure trust and security. We also provide continuous support
through professional development and training.
• S uppliers: long-term service providers such as lawyers, but also officesuppliers and housing providers. We ensure objectivity and impartiality inselection, transparency in management and equal treatment.
• S ociety: covers the whole of public opinion, the media and the publicauthorities. We cooperate with entities in the insurance sector and otherassociations. We also provide voluntary contributions to charitableorganisations. Our tax policy promotes a cooperative relationship with the
tax authorities.

Channels of communication, participationand dialogue
The UN Global Compact requires us to produce an annual Communication on
Progress (CoP) report on the required incorporation of CSR Principles into ourstrategies and operations, as well as efforts to support societal priorities. The
CoP is a visible expression of our commitment to sustainability. This report isavailable on the UN website under www.unglobalcompact.org
We have developed a system of measuring key performance indicators for eachcountry we operate in, to accurately gauge our consumption of energy andother resources. We also monitor how much of that is derived from renewable
and recycled sources. In addition, we monitor our greenhouse gas emissions
and our methods of disposal of waste materials. While our measurement
methods do have some limitations, due to the diversity of our offices anddata collectors meaning not all our data are measured the same way, we arecontinually looking to make improvements.

46

Atradius | Consolidated management report

Our compliance with the UN Global Compact
Environmental KPIs (1)

2018

2017

2018/2017

KPI

Total

Total

ChangeNumber of reporting countries

32

32

-

Number of offices

98

99

decrease

102,491

101,429

increase

Electricity from non-renewable source (kWh)7,673,245

7,730,922

decrease

Electricity from renewable source (kWh)2,965,137

2,794,747

increase

Total office space (m2)Energy (gas & electricity) usage% of renewable electricity

27.9%

26.6%

increase

10,638,382

10,525,669

increase

410,955

361,173

increase

14,624,645

13,709,761

increase

Employee air travel (km)14,902,324

15,780,012

decrease

Employee rail travel (km)3,131,502

3,042,574

increase

Total electricity (kWh)Gas (m3)
Total energy
TravelCompany lease car travel (km)10,294,129

10,614,257

decrease

Total travel (km)28,327,955

29,436,843

decrease

Energy (CO2)

8,577

6,870

increase

Travel (CO2)

6,323

7,871

decrease

Total (CO2)

14,90014,741increase

Non-recycled paper (sheets A4)

13,761,563

15,206,023

decrease

Recycled paper (sheets A4)

3,744,505

4,225,298

decrease

CO2 footprint (tonnes of CO2)Paper used

% recycled paper
Total paper
Water usage (m3)

21.0%

21.7%

decrease

17,506,068

19,431,321

decrease

39,21039,237decrease

5

6decrease

1,408

532

increase

1,413

538

increase

Waste -per type
Hazardous waste (tonnes)
Non-hazardous waste (tonnes)(2)

Total waste(1)(1)

This table does not include information from Graydon, Gestifatura, Informes Mexico and Iberinform Portugal
Increase due to refurbishing old buildings47

Financial statements

48

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

Consolidated financial statements 2018
Contents
Consolidated
statements..................................................................................................................................................................50
Consolidatedfinancial
financialstatements................................................................................................................................ 46
Notes
financialstatements
Notestotothe
theconsolidated
consolidated
financialstatements
General information.....................................................................................................................................................................................54
Generalinformation......................................................................................................................................................62
accounting
policies.......................................................................................................................................54
accounting
policies..........................................................................................................
6
2 Summary
Summaryofofsignificant
significant
Criticalaccounting
accounting
estimates
judgements
in applying
accounting
policies ....................................... 2573
estimates
andandjudgements
in applying
accounting
policies ....................................................................
33 Critical
4 RiskRiskandandcapital
capitalmanagement................................................................................................................................ 2775
4
management..................................................................................................................................................................
5
Segment
information................................................................................................................................................
48
5 Segment information ...................................................................................................................................................................................96
6 Intangible
Intangibleassets
assets......................................................................................................................................................... 526..........................................................................................................................................................................................100
plant
and
equipment& investment
property ................................................................................... 54
77 Property,
Property, plantandequipment& investment
property.................................................................................................................102
8 Subsidiaries
Subsidiaries...................................................................................................................................................................................................104................................................................................................................................................................. 56
8
9 Investments in associated companies ...................................................................................................................57
9 Investments in associated companies ................................................................................................................................................. 105
10 Financial investments .............................................................................................................................................. 59
10 Financial investments ............................................................................................................................................................................... 107
11 Receivables .................................................................................................................................................................. 59
11 Receivables .................................................................................................................................................................................................... 107
12 Deferred acquisition costs ........................................................................................................................................ 60
12 Deferred acquisition costs ........................................................................................................................................................................108
13 Miscellaneous assets and accruals ......................................................................................................................... 60
13 Miscellaneous assets and accruals ........................................................................................................................................................108
14 Cash and cash equivalents ........................................................................................................................................ 61
14 Cash and cash equivalents .......................................................................................................................................................................109
15 Capital and reserves.................................................................................................................................................... 61
15 Capital and reserves ...................................................................................................................................................................................109
16 Subordinated debt ...................................................................................................................................................... 63
16
Subordinateddebt ........................................................................................................................................................................................111
17 Employee
benefit
assets and liabilities ................................................................................................................. 63
17
Employeebenefit
assetsand liabilities .................................................................................................................................................111
18 Insurance contracts ...................................................................................................................................................
69
18
Insurance
117
contracts.....................................................................................................................................................................................
19 Provisions ......................................................................................................................................................................73
Provisionsand
19.......................................................................................................................................................................................................121
20 Deferredcurrent income tax ........................................................................................................................... 74
20
122
current income tax ..........................................................................................................................................................76
21 Deferred
Payablesand........................................................................................................................................................................
22 Otherliabilities............................................................................................................................................................ 76
21
Payables124.........................................................................................................................................................................................................
23 Netpremium................................................................................................................................................... 77
Other............................................................................................................................................................................................
124
22
liabilitiesearned
24 Service
and other.......................................................................................................................................... 77
23
Net premium
125
earnedincome..................................................................................................................................................................................
25
Net
incomefrominvestments.................................................................................................................................
78
24 Service and other income ......................................................................................................................................................................... 125
26 Insurance.........................................................................................................................................................
25
Net income claims
126
from investments................................................................................................................................................................80
27
Net
operatingexpenses.............................................................................................................................................
80
26 Insurance claims ......................................................................................................................................................................................... 128
28 Finance expenses ........................................................................................................................................................ 81
27 Net operating expenses ............................................................................................................................................................................ 128
29 Income tax ..................................................................................................................................................................... 81
28 Finance expenses ........................................................................................................................................................................................ 129
30 Dividends per share ................................................................................................................................................... 82
29 Income tax ..................................................................................................................................................................................................... 129
31 Assets not freely disposable..................................................................................................................................... 82
30 Dividends per share ................................................................................................................................................................................... 130
32 Capital commitments and contingencies ............................................................................................................. 82
31 Assets not freely disposable .................................................................................................................................................................... 130
33 Operating leases .......................................................................................................................................................... 82
32 Capital commitments and contingencies ........................................................................................................................................... 130
34 Personnel ...................................................................................................................................................................... 82
33 Operating leases .......................................................................................................................................................................................... 130
35 Related party transactions ....................................................................................................................................... 83
34
Personnel
130.......................................................................................................................................................................................................
36 Events
after
the reporting period ........................................................................................................................... 84

1135 Related party transactions ........................................................................................................................................................................131
36 Events after the reporting period .......................................................................................................................................................... 132

49

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

Consolidated financial statements
Consolidated statement of financial position
AssetsNote

31.12.2018

31.12.2017

Intangible assets

6

253,297

236,419

Property, plant and equipment

7

132,317

133,445

Investment property

7

9,641

9,688

Investments in associated companies

963,42863,538Financial investments

102,328,948

2,287,830

Reinsurance contracts

18597,716

585,887

Deferred income tax assets

20

37,27130,087

Current income tax assets

20

48,93559,559Receivables

11

237,071

225,079

Accounts receivable on insurance and reinsurance business

180,503

164,983

Other accounts receivable

56,56860,096

Other assets

570,315

540,459

Deferred acquisition costs

12

71,74369,441

Miscellaneous assets and accruals

13

498,572

471,018

Cash and cash equivalents

14446,357

347,171

4,725,296

4,519,162

1,821,405

1,753,232

33

16

1,821,438

1,753,248

Total
EquityCapital and reserves attributable to the owners of the Company
Non-controlling interests
Total
Liabilities
Subordinated debt

16323,790323,614

Employee benefit liabilities

17

100,182

79,554

Insurance contracts

18

1,619,869

1,530,339

Provisions

19

2,679

3,034

Deferred income tax liabilities

20

101,155

124,951

Current income tax liabilities

20

47,992

37,636

Payables

21

227,008

200,947

Accounts payable on insurance and reinsurance business

152,802129,822

Trade and other accounts payable

74,206

71,125

Other liabilities

22

480,847

459,846

Borrowings

14

336

5,993

Total

2,903,858

2,765,914

Total equity and liabilities

4,725,296

4,519,162

50

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

Consolidated income statement
Note

2018

2017

Insurance premium revenue

23

1,648,527

1,588,095

Insurance premium ceded to reinsurers

23(671,988)(675,629)

976,539

912,466

Net premium earned
Service and other income

24249,517249,140

Share of income/ (losses) of associated companies

25

4,652

(7,396)

Net income from investments

25

17,493

20,585

1,248,201

1,174,795

Total income after reinsurance
Insurance claims and loss adjustment expenses

26(775,244)(714,482)

Insurance claims and loss adjustment expenses recovered from reinsurers

26

282,938

285,498(492,306)(428,984)

Net insurance claims
Net operating expenses(469,789)(473,929)

Total expenses after reinsurance

27(962,095)(902,913)

Operating result before finance costs

286,106

271,882

5,858

2,696

Finance income
Finance expenses

28(14,599)(19,271)

277,365

255,307(74,710)(69,073)

202,655

186,234

Owners of the Company

202,638

186,275

Non-controlling interests

17

(39)

Total result for the year

202,655

186,236

Result for the year before tax
Income tax expense

29

Result for the year
Attributable to:51

All amounts in thousands of Euro, unless otherwise stated

All amounts in thousands of Euro, unless otherwise stated

Consolidated statement of comprehensive income
2018

2017

202,655

186,236

Note
Result for the year
Other comprehensive income:Items that will not be reclassified to the income statement:
Effect of the asset ceiling on defined benefit pension plans

15.5

3,286

(3,286)

Actuarial gains/(losses) on defined benefit pension plans

15.5(15,269)

45,643

4,909(9,370)15.3(47,569)

12,854--15.4(7,201)(25,303)

Income tax relating to items that will not be reclassified
Items that may be subsequently reclassified to the income statement:
Net fair value gains/(losses) on available-for-sale financial investments
Share of other comprehensive income of associated companies
Exchange gains/(losses) on translating foreign operations and associated companies
Income tax relating to items that may be reclassified

11,248(2,303)

Other comprehensive income for the year, net of tax(50,596)

18,235

Total comprehensive income for the year

152,059

204,471

152,042

204,510Attributable to:
The owners of the Company
Non-controlling interests
Total comprehensive income for the year

17

(39)

152,059

204,471

Consolidated statement of changes in equity
Attributable to the owners of the Company

Note
Balance at 1 January
2017
Dividends
Total
comprehensive
income for the year

30

Result for the year
Other
comprehensive
incomeBalance at 31
December 2017
Balance at 1 January
2018
Dividends
Total
comprehensive
income for the year
Result for the year
Other
comprehensive
incomeBalance at 31
December 2018

30

Share
capitalShare Revaluation
Currency
premium
reserve translation
reserve
reserve

Pensionreserve

Retainedearnings

Total

Noncontrollinginterests

Total
equity79,122

639,22854,757---(32,558)(170,310)

1,055,231

1,625,470

55

1,625,525--(76,748)(76,748)-(76,748)

-

-

-

-

8,303

(23,055)

32,987

186,275

204,510(39)

204,471---

186,275

186,275(39)

186,236

79,122

639,228

8,303
63,060(23,055)(55,612)32,987(137,323)

1,164,758

18,235
1,753,232

16

18,235
1,753,248

79,122

639,228

63,060(55,612)(137,323)

1,164,758

1,753,232

16

1,753,248

-

-

-

-

-

(83,869)(83,869)-(83,869)--(37,552)(5,970)(7,074)

202,638

152,04217

152,059

-

-

-

-

-

202,638

202,63817

202,655

79,122

639,228(37,552)
25,508(5,970)(61,582)(7,074)(144,397)

1,283,527(50,596)
1,821,405

33(50,596)
1,821,438

52

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius Atradius| Consolidated| Consolidated
financialfinancial
statements
statements
2018 Atradius
2018 Atradius
N.V.
N.V.

Consolidated
Consolidated
statement
statementof cashof cashflowsflows
Note

I. Cash flows
I. Cashfrom
flows
operatingfrom operating
activities
activities

Note

Result for
Resultthe foryearthebeforeyear tax
before tax

2018 20182017 2017277,365277,365 255,309
255,309

Adjustments
Adjustments
for:
for:
RealisedRealised
capital (gains)/losses
capital (gains)/losses
on investments
on investments(157) (157)(5,379) (5,379)

Dividends
Dividends
receivedreceived
from financialfrom financial
investments
investments(9,383)(9,383)(9,463)(9,463)

Impairment
Impairment
loss loss
Share ofShareincomeof incomeof associatedof associatedcompanies
companies

9

9

28

28

Depreciation,
Depreciation,
impairment
impairment
and amortisation
and amortisation
InterestInterest
expenseexpense
on subordinatedon subordinateddebt debt

5,347 5,347-(4,652)(4,652)(3,678)(3,678)-

56,951 56,951

67,60867,608

17,074 17,074

17,065 17,065

Net interest
Net interest
incomeincome(38,975)(38,975) (37,582)(37,582)

Other non-cash
Other non-cash
items items

10,410 10,410

27,686 27,686

Changes
Changesin operational
in operational
assets andassetsliabilities:
and liabilities:
Insurance
Insurance
contracts
contracts

18

18

89,53089,530 (30,816)(30,816)

Reinsurance
Reinsurance
contracts
contracts

18

18(11,829)(11,829)

46,375 46,375

DeferredDeferredacquisitionacquisition
costs costs

12

12(7,184) (7,184)

3,683 3,683

7,460 7,460(65,163)(65,163)
48,98648,986

Accounts
Accounts
receivable
receivableand payable
and payable
on insurance
on insurance
and reinsurance
and reinsurance
businessbusiness
Changes
Changesin otherinassets
other and
assetsliabilities
and liabilities

44,427 44,427

Pensions
Pensions
and otherandlong-termother long-term
employeeemployeebenefit benefit
net contributions
net contributions(34,444)(34,444) (22,870)(22,870)

Cash generated
Cash generated
from operations
from operations

401,940
401,940 291,761291,761

IncomeIncome
tax paidtax paid

(66,514)(66,514) (58,070)(58,070)

InterestInterest
paid paid(18,780)(18,780)

Net cashNet(usedcashin)/generated(used in)/generated
by operatingby operating
activities
activities

316,646316,646 232,383232,383(1,308)(1,308)

II. CashII.
flows
Cashfrom
flows
investingfrom investing
activities
activities
Investments
Investments
and acquisitions
and acquisitions(cash outflows):(cash outflows):
Investments
Investments
in associatedin associatedcompanies
companies

99

Short-term
Short-term
investments
investments-- (34,742)(34,742)(235,035)(235,035) (159,856)(159,856)

Financial
Financialinvestments
investments
available-for-saleavailable-for-sale10

10

Property,
Property,plant andplant
equipment
and equipment
and intangible
and intangible
assets assets(484,342)(484,342) (586,891)(586,891)(55,830)(55,830) (50,393)(50,393)

Divestments,
Divestments,
redemptions
redemptions
and disposals
and disposals(cash inflows):(cash inflows):
Short-term
Short-term
investments
investments

186,880
186,880 157,368157,368

Financial
Financialinvestments
investments
available-for-saleavailable-for-sale10

10

Property,
Property,plant andplant
equipment
and equipment
and intangible
and intangible
assets assets
Dividends
Dividends
receivedreceived
from associatedfrom associatedcompanies
companies

99Dividends
Dividends
receivedreceived
from financialfrom financial
investments
investments
InterestInterest
receivedreceived
Net cashNet(usedcashin)/generated(used in)/generated
by investingby investing
activities
activities

426,369
426,369 543,470
543,470
-

-

-

-

2

2

462

462

9,383 9,383

9,001 9,001

41,489 41,489

42,237 42,237(111,086)(111,086) (79,342)(79,342)

III. CashIII.
flows
Cashfrom
flows
financingfrom financing
activities
activities
Dividend
Dividend
paid paid

30

30(83,869)(83,869) (76,748)(76,748)

InterestInterest
paid onpaid
subordinatedon subordinateddebt debt(16,888)(16,888) (16,875)(16,875)

Net cashNet(usedcashin)/generated(used in)/generated
by financing
by financing
activities
activities(100,757)(100,757) (93,623)(93,623)

Changes
Changesin cash in
and
cash
cash
and
equivalents
cash equivalents(I + II + III)(I + II + III)104,803104,803

Cash and
Cash
cash
and
equivalents
cash equivalents
at the beginningat the beginningof the yearof the year

14

Effect of
Effectexchangeof exchange
rate changes
rate changes
on cashon
and
cash
cash
and
equivalents
cash equivalents
Cash and
Cash
cash
and
equivalents
cash equivalents
at the end
at theof theendyearof the year14

59,418 59,418

341,178341,178 286,469
286,469
40

40(4,709)(4,709)

446,021446,021 341,178341,178

The cash
The
and
cash
cash
and
equivalents
cash equivalents
are presented
are presented
net of bank
net ofoverdrafts
bank overdrafts(see Note(see
14).
Note 14).

53

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise statedNotes to the consolidated financial statements
1

General information

Atradius N.V. (‘the Company’), with its office at David Ricardostraat 1, 1066 JS, Amsterdam, the Netherlands, and its
subsidiaries (together referred to as ‘Atradius’) is a global credit insurer and aims to support its customers’ growth bystrengthening their credit and cash management through a wide range of credit insurance management products andservices. These services include credit insurance, bonding, reinsurance, information services, collection services andinstalment credit protection. Atradius offers products and services from strategically located offices on six continents
and employed 3,707 people as at 31 December 2018 (2017: 3,756). The parent is Grupo Compañía Española de Crédito y
Caución, S.L., which owns 64.23% (2017: the same) of the shares in Atradius N.V. The ultimate parent and the ultimate
controlling party of Atradius is Grupo Catalana Occidente, S.A., which holds 73.84% of the shares in Grupo Compañía
Española de Crédito y Caución, S.L. and 35.77% (2017: the same) of the shares in Atradius N.V. The financial statementsof Atradius N.V. are consolidated within Grupo Catalana Occidente, S.A., which is a listed company in Spain.
The Atradius consolidated financial statements have been authorised for issue by the Management Board on 6 March
2019 and have been reviewed by the Supervisory Board. On 6 March 2019 the consolidated financial statements havebeen adopted at the Annual General Meeting of Atradius N.V.

2

Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all financial years presented, unless otherwise stated.

2.1

Basis of preparation

The Atradius consolidated financial statements are prepared in accordance with International Financial ReportingStandards (IFRS) as adopted by the European Union and also comply with Part 9 of Book 2 of the Dutch Civil Code.
These have been prepared under the historical cost convention as modified by the revaluation of available-for-salefinancial investments.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Atradius accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates
are significant to the consolidated financial statements, are disclosed in Note 3.
The income statement of Atradius N.V. for 2018 is incorporated in the consolidated financial statements, which allow
for a presentation of a condensed company income statement in the company financial statements in compliance withBook 2, Article 402 of the Dutch Civil Code.
All amounts in the notes are shown in thousands of Euro (EUR), rounded to the nearest thousand, unless otherwise
stated.
Due to rounding, numbers presented throughout this, and other documents, may not add up precisely to the totals
provided.

2.2

New and revised standards

All changes in the accounting policies have been made in accordance with the transitional provisions in the respective
standards. All standards and amendments adopted by Atradius require retrospective application.

2.2.1

Standards, amendments and interpretations effective in 2018

The following relevant standards, amendments and interpretations have been adopted in 2018, but have had nomaterial effect on the consolidated financial statements unless otherwise mentioned:-

IFRS 15 Revenue from Contracts with Customers (effective 1 January 2018) establishes a comprehensive
framework for determining whether, how much and when revenue should be recognised. Under IFRS 15

54

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

-

-

-

revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in
exchange for transferring goods or services to a customer. The new revenue standard supersedes IAS 18
revenue recognition standard and the related interpretations under IFRS. For implementation, Atradius haschosen to apply the modified retrospective method, by which the cumulative effect of applying the standard isrecognised as an adjustment to the opening balance of equity at 1 January 2018 and the comparative
information is not restated. Since insurance contracts are scoped out of IFRS 15, only service and other incomeof EUR 250 million (2017: EUR 249 million) is affected. Atradius has analysed the IFRS 15 requirements forthese revenue streams and concluded that Atradius accounting policies are in line with IFRS 15. As such, the
IFRS 15 implementation has had no impact on the 2017 net result and therefore did not affect equity as at 1
January 2018.
Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures (effective 1 January 2019). These
amendments clarify that entities apply IFRS 9 Financial Instruments to long-term interests in an associate or
joint venture to which the equity method is not applied. Atradius applies the equity method and therefore
these amendments will not have a material impact on the consolidated financial statements.
Amendments to IAS 40 Investment property: Transfer of investment property (effective 1 January 2018)clarifies that management’s intention is insufficient on its own to justify a previously recognised property
from being reclassified to or from the investment property category. This amendment will not have a material
impact on the consolidated financial statements.
IFRIC 22 Foreign Currency Transactions and Advance Consideration (effective 1 January 2018) clarifies theaccounting for transactions that include the receipt or payment of advance consideration in a foreign
currency. This interpretation will not have a material impact on the consolidated financial statements.
Annual improvements cycle 2014-2016 (effective 1 January 2018). The Cycle introduces limited amendments
to the following standards: IAS 28 Investments in Associates and Joint ventures and IFRS 1 First time adoptionof International Financial Reporting Standards. The amendments are not expected to have a material impact
on the consolidated financial statements.

2.2.2

Standards, amendments and interpretations not yet adopted

The following relevant standards and amendments are effective for annual periods beginning after 31 December 2018and have not been early adopted by Atradius:--

IFRS 9 Financial Instruments (effective 1 January 2018) replaces the existing guidance in IAS 39 Financial
Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification andmeasurement, impairment of financial instruments and the new general hedge accounting requirements. In
September 2016, the IASB issued amendments to IFRS 4 to address issues arising from the different effective
dates of IFRS 9 and the forthcoming new insurance contracts standard (IFRS 17). The amendments introduce
two alternative options for entities that issue insurance contracts within the scope of IFRS 4: a temporary
exemption from applying IFRS 9 and an overlay approach. The temporary exemption is available for entities
whose activities are predominantly connected with Insurance. Atradius performed an assessment of theamendments to IFRS 4 and concluded that its activities are predominantly connected with insurance as at 31
December 2015 based on the assessment that the predominance ratio i.e. ratio total carrying amount of its
liabilities connected with insurance compared with total carrying amount of liabilities criteria was greaterthan 90%. Atradius decided to apply the temporary exemption in its reporting period starting on 1 January
2018 and expects to adopt IFRS 9 in combination with the adoption of IFRS 17 Insurance contracts on 1
January 2022. In case of a significant change in operating activities, Atradius will reassess whether its
activities are predominantly connected with insurance. Please refer to the ‘Temporary exemption from IFRS 9’
section included in Risk and Capital management for the related disclosures.
IFRS 16 was issued in January 2016 (effective 1 January 2019) and replaces IAS 17 Leases. IFRS 16 sets out the
principles for the recognition, measurement, presentation and disclosure of leases and requires lessees toaccount for all leases under a single on-balance sheet model similar to the accounting for finance leases under
IAS 17. At the commencement date of a lease, a lessee will recognise a liability to make lease payments and an
asset representing the right of use (“ROU”) the underlying asset during the lease term. Lessees will be required
to separately recognise the interest expense on the lease liability and the depreciation expense on the right-ofuse asset. Lessor accounting under IFRS 16 is substantially unchanged from today’s accounting under IAS 17.
Atradius has made an assessment of the impact on its consolidated financial statements and completed thenecessary changes to its accounting systems in order to comply with the new lease accounting methodology.
Atradius has chosen to implement IFRS 16 applying the modified retrospective approach, and will recognise
the ROU as assets and lease liabilities for its operating leases at approximately EUR 99 million as at 1 January

55

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated--2019, of which 94% relates to buildings, with no impact on profit or loss. The comparative information of leaseliabilities from previous year will not be restated. In addition, the expenses related to those leases will now
change as IFRS 16 replaces the straight-line operating lease expense with a depreciation charge for the rightof-use assets and interest expense on lease liabilities, calculated against an incremental borrowing rate. The
group elected the practical expedient to apply the standard to contracts that were previously identified asleases under IAS 17, as well as the exemption options for short term- and low value leases.
Annual improvements cycle 2015-2017 (effective 1 January 2019). The cycle introduces limited amendments tothe following standards: IFRS 3 Business combinations, IFRS 11 Joint arrangements, IAS 12 Income taxes and
IAS 23 Borrowing costs. The amendments are not expected to have a material impact on the consolidated
financial statements.
IFRIC 23 Uncertainty over Income Tax Treatments (effective 1 January 2019). The interpretation is notexpected to have a material impact on the consolidated financial statements.
Amendments to IFRS 9: Prepayment features with negative compensation (effective 1 January 2019). The
amendments clarify that a financial asset passes the SPPI criterion regardless of the event or circumstancethat causes the early termination of the contract and irrespective of which party pays or received reasonable
compensation for the early termination of the contract. The amendments are not expected to have a material
impact on the financial statements.

The European Union have not yet endorsed the following relevant standards and amendments and as such have notbeen adopted by Atradius:- Amendments to IAS 1 and IAS 8; Definition of Material (effective 1 January 2020) clarifies the definition ofmaterial and what should be considered when the definition of materiality is applied. It is expected that theseamendments will not have a material impact on the consolidated financial statements.
- Amendments to IFRS 3 Business Combinations (effective 1 January 2020). The amendments clarify thedefinition of a business, with the objective of assisting entities to determine whether a transaction should be
accounted for as a business combination or as an asset acquisition. It is expected that this standard will nothave a material impact on the consolidated financial statements.
- Amendment to IAS 19 Employee benefits, on Plan amendment, curtailment or settlement (effective 1 January2019) specifies how companies determine pension expenses when changes to a defined benefit pension plan
occur. This amendment will not have a material impact on the consolidated financial statements.
- IFRS 17 Insurance contracts (effective 1 January 2022). In November 2018, the IASB agreed to start the process
to amend IFRS 17 to defer the mandatory effective date of IFRS 17 by one year (original effective date was
January 1, 2021). Subject to IASB due process, entities will be required to apply IFRS 17 for annual periods
beginning on or after January 1, 2022. The standard replaces the existing guidance in IFRS 4 Insurance
contracts. IFRS 17 aims to provide a more useful and consistent accounting model among entities issuinginsurance contracts. Under IFRS 17, the general model requires entities to measure an insurance contract at
initial recognition at the total of the fulfilment cash flows (comprising the estimated future cash flows, anadjustment to reflect the time value of money and an explicit risk adjustment for non-financial risk) and thecontractual service margin. The fulfilment cash flows are remeasured on a current basis each reporting period.
The unearned profit (contractual service margin) is recognised over the coverage period. Aside from thisgeneral model, the standard provides, as a simplification, the premium allocation approach. This simplified
approach is applicable for certain types of contract, including those with a coverage period of one year or less.
For insurance contracts with direct participation features, the variable fee approach applies, however this is
not applicable for Atradius as these types of contracts are not underwritten. Atradius is currently assessing theimpact of the standard on the consolidated financial statements, including which measurement model should
be applied to which products, credit insurance, bonding, instalment credit protection (ICP), assumed businessand reinsurance held and how the requirements with regards to the level of aggregation should be applied.
The impact assessment also includes the transition requirements. The standard can be applied retrospectively
in accordance with IAS 8, but it also contains a ‘modified retrospective approach’ and a ‘fair value approach’for transition depending on the availability of data. Atradius will very likely apply a blend of transition
approaches. Although the impact on the consolidated financial statements is expected to be material in termsof recognition, measurement and on the presentation and disclosures in the consolidated financial statements,
no further details can be provided yet.

2.3

Consolidation

The following principles of consolidation and measurement are applied to the financial statements:

56

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

2.3.1

Subsidiaries

Subsidiaries are all entities over which Atradius has control. Atradius controls an entity when it is exposed to, or has
rights to variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to Atradius.
They are de-consolidated from the date on which control ceases.
Intragroup transactions, balances and unrealised gains on intragroup transactions are eliminated. Unrealised losses
are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Subsidiaries’
accounting policies are changed where necessary to ensure consistency with the policies adopted by Atradius except
for the accounting for insurance contracts (see Note 2.17).
When the group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any
related Non-controlling Interest (Minority-interest) (further referred to as ‘non-controlling interest’) and othercomponents of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former
subsidiary is measured at fair value when control is lost.

2.3.2

Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a businesscombination is measured at fair value, which is calculated as the sum of fair values of the assets (at the acquisitiondate) transferred to Atradius, liabilities incurred by Atradius to the former owners of the acquiree and the equity
interests issued by Atradius in exchange for control of the acquiree. Acquisition-related costs are generally recognisedin the income statement as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value atthe acquisition date, except that the deferred tax assets or liabilities and assets or liabilities related to employee
benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits respectively.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controllinginterests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any)over the net amount of the identifiable assets acquired and the liabilities assumed. If the net amount of the identifiable
assets acquired and the liabilities assumed exceed the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree and the fair value of Atradius’ previously held equity interest in the acquiree (ifany), then the excess is recognised immediately in profit or loss as a bargain purchase.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of theentity’s net assets in the event of liquidation, may be initially measured either at fair value or at the non-controllinginterests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice ofmeasurement method is made on a transaction-by-transaction basis. Other types of non-controlling interests aremeasured at fair value or, when applicable, on the basis specified in another IFRS.
When the consideration transferred by Atradius in a business combination includes assets or liabilities resulting froma contingent consideration arrangement, the contingent consideration is measured at the fair value and included in
the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that
qualify as measurement period adjustments, are adjusted retrospectively, with a corresponding adjustment togoodwill. Measurement period adjustments are adjustments that arise from additional information obtained during
the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstancesthat existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as
measurement period adjustments depends on how the contingent consideration is classified. A contingent
consideration that is classified as equity is not re-measured at subsequent reporting dates and its subsequent
settlement is accounted for within equity. A contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39 Financial Instruments: Recognition andMeasurement or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with thecorresponding gain or loss being recognised in profit or loss.

57

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise statedWhen a business combination is achieved in stages, Atradius’ previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e., the date when Atradius obtains control) and the resulting gain or
loss, if any, is recognised in the income statement. Amounts arising from interests in the acquiree before theacquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss
where such treatment would be appropriate if that interest were disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, Atradius reports provisional amounts for the items for which the accounting is incomplete. Those
provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities arerecognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that,
if known, would have affected the amounts recognised at that date.

2.3.3

Associated companies

Associated companies are entities in which Atradius has significant influence, but not control or joint control, over thefinancial and operating policies, generally accompanying a shareholding of between 20% and 50% of the voting rights.
Associated companies are accounted for using the equity method and are initially recognised at cost. Atradius’
investment in associated companies includes goodwill (net of any accumulated impairment loss).
Atradius’ share in its associated companies’ post-acquisition profits or losses is recognised in profit or loss, and its
share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income.
Unrealised gains on transactions between Atradius and its associated companies are eliminated to the extent of
Atradius’ interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence ofan impairment of the asset transferred. Associate’s accounting policies are changed where necessary to ensure
consistency with the policies adopted by Atradius.
Interests in companies in which Atradius does not exercise significant influence are accounted for at fair value, in
accordance with the accounting principles for available-for-sale investments.

2.4

Segment reporting

IFRS 8 requires operating segments to be identified on the basis on which the Management Board regularly reviews
components of Atradius in order to allocate resources to the segments and to assess their performance. Operating
segments are reported in a manner consistent with the internal reporting provided to the Management Board.

58

Atradius | Consolidated financial
financial statements 2018 Atradius
Atradius N.V.
N.V.

2.5

Foreign currencies

2.5.1

Functional and presentation currency

Items included in the financial statements of each of Atradius’ entities/branches are measured using the currency ofthe primary economic environment in which the entities/branches operate (the ‘functional currency’).
All amounts in the notes are shown in thousands of Euro (EUR)

2.5.2

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at thedates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions andfrom the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in the income statement. A monetary item that forms part of a net investment in a foreign operation forwhich settlement is neither planned nor likely to occur in the foreseeable future is, in substance, part of the net
investment in that foreign operation. In the consolidated financial statements the related exchange gains and losseson these monetary items are recognised in other comprehensive income.
Translation differences on non-monetary items, such as equities classified as available-for-sale financial investments,
are included in the revaluation reserve through other comprehensive income.

2.5.3

Atradius companies

The results and financial position of all Atradius entities that have a functional currency different from thepresentation currency are translated into the presentation currency as follows:--

assets and liabilities for each statement of financial position presented are translated at the closing exchange
rate at the date of that statement of financial position;
income and expenses for each income statement presented are translated at monthly average exchange rates
unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on thetransaction dates, in which case income and expenses are translated at exchange rates at the dates of thetransactions; andall resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities and ofborrowings and other currency instruments designated as hedges of such investments, are taken to othercomprehensive income. When a foreign operation is sold, such exchange differences are recognised in the income
statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as the foreign entity’s
assets and liabilities and are translated at the closing rate.
The exchange rates of the most relevant functional currencies for Atradius are presented below:
Currency

End rate

Average rate

GBP

USD

AUD

GBP

USD

AUD

At 31 December 2018

1.118

0.873

0.617

1.123

0.880

0.642

At 31 December 2017

1.127

0.834

0.652

1.146

0.891

0.680

59

All amounts
amounts inin thousands
thousands ofof Euro,Euro,unlessunlessotherwise
otherwisestatedstated2.6

Goodwill and other intangible assets

2.6.1

Goodwill

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controllinginterests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any)over the net amount of the identifiable assets acquired and the liabilities assumed. If the net amount of the identifiable
assets acquired and the liabilities assumed exceed the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree and the fair value of Atradius’ previously held equity interest in the acquiree (ifany), then the excess is recognised immediately in profit or loss as a bargain purchase. Goodwill arising on an
acquisition of a business is carried at cost as established at the date of acquisition of the business (see Note 2.3.2) lessaccumulated impairment losses, if any.
For the purpose of impairment testing, goodwill is allocated to Atradius’ relevant cash-generating units. Cashgenerating units to which goodwill has been allocated are tested for impairment annually, or more frequently when
there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less thanthe carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset
in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on
disposal.
Goodwill on the acquisitions of associated companies is included as part of investments in associated companies.
The CGU’s where Goodwill is allocated are the lowest identifiable level possible.

2.6.2

SoftwareAcquired computer software licenses are capitalised on the basis of costs incurred to acquire and to bring to use thespecific software. These assets are amortised on the basis of the expected useful life: which is between three and five
years. Computer software is stated at cost less accumulated amortisation and any accumulated impairment losses.
Costs that are directly associated with the production of identifiable and unique software products controlled by
Atradius, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as
intangible assets. Direct costs include the software development team’s employee costs and an appropriate portion of
relevant overhead. All other costs associated with developing or maintaining computer software programmes arerecognised as an expense as incurred. Computer software development costs recognised as assets are amortised using
the straight-line amortisation method over its estimated economic useful lives: in general, not exceeding a period offive years.
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic
benefits embedded in the specific assets to which it relates. All other expenditure is expensed as incurred.

2.6.3

Other intangible assets

Other intangible assets are recognised at fair value at the acquisition date. Amortisation charges are included in net
operating expenses and are calculated using the straight-line method over the expected life of the asset which isestimated to be between 5 and 15 years.

2.7

Property, plant and equipment

Land and buildings comprise offices occupied by Atradius (‘property for own use’). Land and buildings are stated at
the cost of acquisition or construction, less any subsequent accumulated depreciation and subsequent accumulated
impairment losses. For analysis of the residual value, the fair value is assessed based on active market prices, adjusted
if necessary, for any difference in the nature, location or condition. All other property, plant and equipment are statedat historical cost less accumulated depreciation and subsequent impairment losses.

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Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to Atradius and the cost of theitem can be reliably measured. All other repairs and maintenance are recognised as an expense in the income
statement during the financial period in which they are incurred.
Some of Atradius’ properties comprise a part that is held as investment property to earn rentals or for capital
appreciation and another part that is held for own use. If these parts could be sold separately or leased out separately
under a financial lease, Atradius accounts for the parts separately as investment property and property for own use,
respectively.
The depreciation period is based on the estimated economic useful life of the asset. Leasehold improvements are
depreciated over the shorter of the estimated useful life of the improvements and the respective lease terms. Land is
not depreciated. All other assets are depreciated using the straight-line depreciation method over the estimatedeconomic useful lives: buildings over 50 years, fixtures and fittings over 3-10 years and information systems
hardware over 3-5 years.

2.8

Investment property

Property held for long-term rental yields that is not occupied by one of the companies of Atradius is classified as
investment property.
Investment property comprises freehold land and buildings. It is stated at the cost of acquisition or construction, lessany subsequent accumulated depreciation and subsequent impairment losses. Buildings are depreciated using thestraight-line depreciation method over the estimated economic useful life of the property: 50 years.

2.9

Fair value measurements

For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree towhich the inputs to the fair value measurements are observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
Level 1: Quoted prices in active markets. This category includes financial instruments for which the fair value isdetermined directly by reference to published quotes in an active market. A financial instrument is regarded as quoted
in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry
group, pricing service or regulatory agency and those prices represent actual and regularly occurring market
transactions on an arm’s length basis;
Level 2: Valuation techniques based on observable market data. This category includes financial instruments forwhich the fair value is determined using a valuation technique (a valuation model), where inputs in the valuation
model are taken from an active market or are market observable. If certain inputs in the model are not market
observable, but all significant inputs are, the instrument is still classified in this category, provided that the impact of
those elements on the overall valuation is insignificant. Included in this category are items whose value is derived
from quoted prices of similar instruments, but for which the prices are (more than insignificantly) modified based onother market observable external data;
Level 3: Valuation techniques incorporating information other than observable market data. This category includes
financial investments for which the fair value is determined using a valuation technique for which a significant levelof the input is not supported by a current observable market transaction. This category also includes the financial
investments for which the fair value is based on brokers quotes or pricing services. These valuations are for 100% of
the fair value verified with an external independent valuation company.
The fair values of financial instruments traded in active markets are based on quoted market prices at the end of thereporting period. The quoted market price used for financial investments held by Atradius is the current bid price.
Transaction costs on initial recognition of financial investments are expensed as incurred.
The fair values of financial instruments in markets that are not active are determined using valuation techniques.
Atradius uses a variety of methods and assumptions that are based on market conditions existing at the end of thereporting period.

61All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

The fair values of property for own use and investment property are determined by independent real estate valuators
registered in the relevant countries and who have appropriate qualifications and experience in the valuation ofproperties.
See Note 4.3.1.1 for further details regarding the determination of the fair value of financial investments.

2.10

Recognition and derecognition of financial investments

All purchases and sales of financial investments that require delivery within the time frame established by regulationor market convention (‘regular way’ purchases and sales) are recognised at trade date, i.e. the date that Atradius
commits to purchase or sell the asset. Loans and receivables are recognised and derecognised at settlement date, thedate Atradius receives or delivers the asset.
Financial investments are derecognised when the rights to receive cash flows from the financial investments have
expired or where Atradius has transferred substantially all the risks and rewards of ownership. If Atradius neithertransfers nor retains substantially all the risks and rewards of ownership of a financial investment and does not retain
control over the investment, it derecognises the financial investment. In transfers where control over the asset isretained, Atradius continues to recognise the asset to the extent of its continuing involvement. The extent ofcontinuing involvement is determined by the extent to which Atradius is exposed to changes in the value of the asset.

2.11

Classification of financial investments

Atradius classifies its financial investments into two categories: investments available-for-sale and loans andreceivables. The classification depends on the purpose for which the investments were acquired. Atradius determines
the classification of its investments at initial recognition and re-evaluates this at the end of each reporting period.

2.11.1 Available-for-sale financial investments
Available-for-sale financial investments are non-derivative financial assets that are either designated in this categoryor not classified in other categories.
Financial investments are initially recognised at fair value plus transaction costs that are directly attributable to theiracquisitions. Unrealised gains and losses arising from changes in the fair value of financial investments classified asavailable-for-sale are recognised in other comprehensive income net of tax. When financial investments classified asavailable-for-sale are sold or impaired, the accumulated fair value adjustments are included in the income statement
as net gains or losses on financial investments.

2.11.2 Loans and receivables
Loans and receivables (including deposits) are non-derivative financial investments with fixed or determinable
payments that are not quoted on an active market, other than those that Atradius intends to sell in the short term, orthat it has designated as available-for-sale. Deposits withheld by ceding companies and receivables arising frominsurance contracts are also classified in this category. Loans and receivables are initially recognised at fair value plustransaction costs and subsequently measured at amortised cost using the effective interest method, less provision for
impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables
where the recognition of interest would be immaterial.

2.12

Impairment of assets

2.12.1 Financial assets - general
At the end of each reporting period Atradius assesses, whether there is objective evidence that a financial asset orgroup of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses
are incurred only if there is objective evidence of impairment as a result of one or more events that have occurred
after the initial recognition of the asset (a ‘loss event’) and that loss event has a negative impact on the estimatedfuture cash flows of the financial asset or group of financial assets that can be reliably estimated.
Atradius first assesses whether objective evidence of impairment exists for financial assets that are individually62

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

significant. If Atradius determines that no objective evidence of impairment exists for an individually assessedfinancial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk
characteristics and assesses them collectively for impairment. Assets that are individually assessed for impairment
and for which an impairment loss is or continues to be recognised are not included in a collective assessment of
impairment.

2.12.2 Financial investments - carried at amortised cost
Atradius assesses, at the end of each reporting period, whether there is objective evidence that a financial asset carriedat amortised costs is impaired. Objective evidence that loans and receivables are impaired can include significant
financial difficulty of the counterparty, default or delinquency by a counterparty, restructuring of a loan or advance by
Atradius on terms that Atradius would not otherwise consider; indications that a counterparty will enter bankruptcy;
or economic conditions that correlate with defaults.
Where such evidence exists that an impairment loss has been incurred on loans and receivables, the amount of theloss is measured as the difference between the asset’s carrying amount and estimated future cash flows. The carrying
amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in theincome statement. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is thecurrent effective interest rate determined under contract. As a practical expedient, Atradius may measure impairment
on the basis of an instrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively toan event occurring after the impairment was recognised, the previously recognised impairment loss is reversed byadjusting the allowance account. The amount of the reversal is recognised in the income statement.

2.12.3 Financial investments - carried at fair value
Atradius assesses, at the end of each reporting period, whether there is objective evidence that an available-for-salefinancial investment is impaired. Objective evidence that available-for-sale financial investments (including debt andequity securities) are impaired can include default or delinquency by an issuer, indications that an issuer will enter
bankruptcy and/or the disappearance of an active market for a security. In addition, for an investment in an equity
security, management assesses whether there has been a significant or prolonged decline in its fair value below its
acquisition cost.
In this assessment, Atradius uses the following indications to decide whether a loss on an equity instrument position
qualifies for impairment:-

significant: The market value of the equity instrument dropped below 60% of its average historical cost price(i.e.the unrealised loss is larger than 40% of the average historical cost price); or
prolonged: The market value of the equity instrument has been below its average historical cost price forconsecutive period of 18 months.

Where such evidence exists for available-for-sale financial investments, the cumulative net loss that has beenpreviously recognised directly in other comprehensive income is recycled from other comprehensive income (therevaluation reserve) and recognised in the income statement.
If, in a subsequent period, the fair value of debt securities classified as available-for-sale increases and the increase
can be objectively related to an event occurring after the impairment loss was recognised in the income statement, theimpairment loss is reversed through the income statement, but only to the amortised cost price. Subsequent increases
above the amortised cost price are credited against the revaluation reserve as a component of other comprehensive
income.
Impairment losses recognised in the income statement on equity securities cannot be reversed in subsequent periods.

2.12.4 Impairment of other non-financial assets
Assets that have an indefinite useful life, for example land, are not subject to amortisation or depreciation and aretested annually for impairment. Assets that are subject to amortisation and depreciation are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An

63All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise statedimpairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes ofassessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows(cash-generating units). Investment properties are not allocated to cash-generating units, but are tested for
impairment on an individual basis.
If in a subsequent period the amount of the impairment loss decreases and the decrease can be related objectively toan event occurring after the impairment loss was recognised in the income statement, the carrying amount of theasset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, provided that theincreased carrying amount does not exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset (or cash-generating unit) in previous years. The amount of the reversal
is recognised in the income statement. However, impairment losses recognised for goodwill are not reversed insubsequent periods.

2.13

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the statement of financial position only
when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net
basis, or to realise the asset and settle the liability simultaneously.

2.14

Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held on call with banks and other short-term highly liquid
investments with original maturities of three months or less that are subject to an insignificant risk of changes in theirfair value, and are used by Atradius in the management of its short-term commitments. Bank overdrafts that are
repayable on demand form an integral part of Atradius’ cash management and are included as a component of cash
and cash equivalents for cash flow purposes. In the statement of financial position, bank overdrafts that do not meetthe criteria for offsetting, are presented separately as liabilities under borrowings.
Deposits pledged for regulatory and other purposes as well as cash held for investments are not available for use in
Atradius’ day-to-day operations and are therefore not included within cash and cash equivalents. These assets areincluded within financial investments.

2.15

Capital and reserves

2.15.1 Share capital
Share capital is the nominal value of issued shares. Incremental costs directly attributable to the issue of equity
instruments are shown in equity as a deduction from the proceeds, net of tax. Incremental costs directly attributable tothe issue of equity instruments as consideration for the acquisition of a business are included in the cost of acquisition.

2.15.2 Share premium reserve
Share premium reserve is the amount received by the Company in excess of the nominal value of the shares it has
issued.

2.15.3 Revaluation reserve
The revaluation reserve comprises the unrealised gains/losses of the securities available-for-sale after the deductionof income tax, except for impairments that are charged directly to the income statement.

2.15.4 Currency translation reserve
The net exchange difference, after the deduction of income tax that is recognised in the currency translation reserve ineach period represents the following:64

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

-

in respect of revenue, expenses and capital transactions, the difference between translating these items at
actual or average exchange rates and using the exchange rate at the end of the reporting period, which is thecase for recognised assets and liabilities;
in respect of the net assets at the beginning of the reporting period, the difference between translating these
items at the rate used at the end of the previous reporting period and using the rate at the end of the current
reporting period; andin respect of the net assets acquired during the reporting period, the difference between translating these
items at the rate at acquisition date and using the rate at the end of the current reporting period.

2.15.5 Pension reserve
The pension reserve relates to the various defined benefit schemes and consists of:-actuarial gains and losses, after the deduction of income tax, that arise in calculating Atradius’ pension
obligations and fair value of the plan assets in respect of a defined benefit plan in the period in which theyoccur; andthe non-recognition of assets (‘asset ceiling’) that can occur when the plan assets are higher than the projected
benefit obligation and where Atradius cannot recover any surplus through refunds from the pensions vehicle
due to solvency and/or control requirements.

2.15.6 Retained earnings
Retained earnings are the accumulated amount of profits or losses at the end of the reporting period, which have notbeen distributed to shareholders.

2.15.7 Non-controlling interests
Non-controlling interests represent the proportion of shareholders’ equity and of total comprehensive income
attributable to minority shareholders.
Non-controlling interest are initially measured on the net fair value of the acquirer’s identifiable assets, liabilities andcontingent liabilities at the date of the acquisition. The calculation of the percentage attributable to the non-controllinginterest includes any equity interest not held indirectly through subsidiaries.
Non-controlling interest is presented within equity separately from the equity attributable to the equity holders of theCompany. Similarly, the statement of recognised income and expenses presents total income and expenses for theperiod showing separately the amounts attributed to the equity holders of the Company and non-controlling interests.

2.16

Subordinated debt

A subordinated debt is recognised initially at fair value, net of transaction costs incurred. A subordinated debt issubsequently stated at amortised cost. The difference between the proceeds (net of transaction costs) and theredemption value is recognised in the income statement over the fixed period of the debt during which the interest isfixed using the effective interest method. Interest payable is reported under other liabilities.

2.17

Insurance contracts

An Insurance contract is a contract under which one party (the insurer) accepts significant insurance risk fromanother party (the policyholder) by agreeing to compensate the policyholder or its beneficiary if a specified uncertain
future event (the insured event) affects the policyholder.
The insurance contracts issued by Atradius can be classified into two main categories:-

Credit insurance contracts: contracts that provide for specific payments to be made to reimburse the holder forthe loss it incurs because a specified debtor fails to make a payment when due under the original or modified
terms of the contract between the debtor and Atradius’ insured customers; and65

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated-

Bonding contracts: contracts that provide compensation to the beneficiary of the contract if Atradius’ bonding
customer fails to perform a contractual obligation relative to the beneficiary.

The company applies IFRS 4.25, which allows existing insurance accounting practices to continue. The maindifference relates to the accounting of local business in Spain and Portugal that applies existing earnings and related
provisioning practices. The differences in application lead to different allocations of unearned premium and provision
for outstanding claims. Further reference is made to specific information included in Note 4.2.6 and Note 18.

2.17.1 Deferred acquisition costs
Commission costs that vary with and are related to securing new contracts and renewing existing contracts arecapitalised as deferred acquisition costs. All other costs are recognised as expenses when incurred. The deferredacquisition costs are subsequently amortised over the life of the policies as premium is earned.

2.17.2 Provision for unearned premium
The recognition of unearned premium per product is set out in Note 4.2.6.1.

2.17.3 Provision for outstanding claims
Claims and loss adjustment expenses are charged to the income statement as incurred based on the estimated liability
for compensation owed to contract holders. They include direct and indirect claims settlement costs and arise from therisks Atradius has assumed up to the end of the reporting period. Atradius does not discount its liabilities (other than
the recoveries on the Instalment Credit Protection (ICP) product) given the short-term nature of its liabilities.
Liabilities for unpaid claims are estimated using the input of assessments for individual cases reported to Atradius andstatistical analyses for the claims incurred but not reported. When appropriate, deductions are made for salvage,
subrogation and other expected recoveries from third parties. For reinsurance business the provisions are determinedtreaty-by-treaty, based on premium and loss information supplied by the ceding companies. Estimates of expected
losses are developed using historical claims experience, actual versus estimated claims experience and other known
trends and developments.
Additional information on the measurement of the provision for outstanding claims is provided in Note 4.2.6.

2.17.4 Liability adequacy test
At the end of each reporting period, a liability adequacy test is performed to ensure the overall adequacy of the total
insurance contract liabilities, net of related deferred acquisition costs. In performing this test, current best estimates of
future contractual cash flows and claims handling expenses are used. Any deficiency on consolidated level isimmediately charged to the income statement by first writing down the related deferred acquisition costs and then by
establishing a provision for losses arising from the liability adequacy test.

2.17.5 Reinsurance contracts
Contracts entered into by Atradius with reinsurers, under which Atradius is compensated for losses on one or more
contracts it has issued and that meet the classification requirements for insurance contracts, are classified asreinsurance contracts held. Contracts that do not meet the classification requirements are classified as financial assets.
Insurance contracts entered into by Atradius under which the contract holder is another insurer (reinsurance
business) are included in insurance contracts.
The benefits to which Atradius is entitled under its reinsurance contracts held are recognised as reinsurance assets.
These assets consist of short-term balances due from reinsurers (classified within loans and receivables), as well as
longer term receivables (classified as reinsurance contracts) that are dependent on the expected claims and benefits
arising under the related reinsurance contracts. Amounts recoverable from or due to reinsurers are measured
consistently with the amounts associated with the reinsured insurance contracts and in accordance with the terms ofeach reinsurance contract. Reinsurance liabilities are primarily premium payable for reinsurance contracts and arerecognised as an expense when due.
Atradius assesses its reinsurance assets for impairment on a quarterly basis. If there is objective evidence that the66

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

reinsurance asset is impaired, Atradius reduces the carrying amount of the reinsurance asset to its recoverable
amount and recognises that impairment loss in the income statement. Atradius gathers the objective evidence that areinsurance asset is impaired by applying procedures similar to those adopted for financial assets held at amortised
cost. The impairment loss is calculated under similar method used for these financial assets.
Atradius has profit commission arrangements with its reinsurance companies that are based on the loss ratio perunderwriting year. Atradius accounts for these commissions based on detailed assessments of the expected ultimate
loss ratios.
Atradius recognises the gains and losses from reinsurance contracts directly in the income statement.

2.17.6 Receivables and payables related to insurance contracts
Receivables and payables are recognised when due. These include amounts due to and from agents, brokers andinsurance contract holders.
If there is objective evidence that the insurance receivable is impaired, Atradius reduces the carrying amount of theinsurance receivable accordingly and recognises that impairment loss in the income statement. Atradius gathers theobjective evidence that an insurance receivable is impaired by applying procedures similar to those adopted for loans
and receivables. The impairment loss is also calculated under similar method used for these financial assets.

2.17.7 Salvage and subrogation reimbursements
Some insurance contracts permit Atradius to sell goods acquired in settling a claim (i.e., salvage). Atradius may also
have the right to pursue third parties for payment of some or all costs (i.e., subrogation).
Estimates of salvage recoveries and subrogation reimbursements are included as an allowance in the measurement of
the provision for claims. The allowance is the amount that can reasonably be expected to be recovered.

2.17.8 Insurance portfolios
Acquired insurance portfolios are initially recognised at fair value by estimating the net present value of future cash
flows related to the liability arising from insurance contracts, being the provision for unearned premium and theprovision for outstanding claims at the date of acquisition. The difference between the carrying value and the fairvalue of the insurance contracts is recognised as an intangible asset.
The Group subsequently amortises this asset based upon the duration of the underlying cash flows. The carrying
amount after initial recognition is adjusted for accumulated amortisation and any accumulated impairment losses.

2.18

Provisions

Provisions for restructuring, onerous contracts and litigation are recognised when Atradius has a present legal orconstructive obligation as a result of past events and it is more likely than not that an outflow of resources will be
required to settle the obligation and the amount has been reliably estimated.
Restructuring provisions include employees’ termination payments that are directly related to restructuring plans.
Provisions are not recognised for future operating losses. Where there are a number of similar obligations, thelikelihood that an outflow will be required in settlement is determined by considering the class of obligations as awhole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the sameclass of obligations may be small. Where the effect of the time value of money is material, the provision is measured as
the present value of the expenditure expected to be required to settle the obligation discounted using a pre-tax rate.

2.19

Deposits received from reinsurers

Deposits received from reinsurers represent amounts received from reinsurance companies in respect of ceded claims
and premium provisions and are stated at amortised cost using the effective interest method. Interest expense isrecognised on an effective yield basis, except for short-term deposits where the impact of interest would be
immaterial.

67All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

2.20

Employee benefits

2.20.1 Post-employment benefits
Atradius has a number of post-employment benefit plans. The obligations of these schemes are determined byperiodic actuarial calculations and are generally funded through payments to state plans, insurance companies ortrustee-administered funds. Atradius has both defined benefit plans and defined contribution plans.
Defined benefit plans
A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on
retirement, dependent on one or more factors such as age, years of service and compensation. In a defined benefit plan
Atradius may pay contributions into a separate entity or fund. Atradius, and in some cases the employees who areparticipating, fund a defined benefit plan and Atradius has a legal or constructive obligation to pay further
contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service
in the current and previous periods.
The amount recognised as a defined benefit liability is the net total of the present value of the defined benefit
obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (ifany) out of which the obligations are to be settled directly. The recognition of assets that arise by over-funding of thedefined benefit plan is limited to the ability to use the surplus to generate future benefits (the asset ceiling). The
defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The
present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using
interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid
and that have terms of maturity that approximate to the terms of the related pension liability.
Remeasurement of the net defined benefit liability, which comprises actuarial gains and losses, the return on plan
assets (excluding net interest that is calculated by applying the discount rate) and the effect of the asset ceiling (if any,excluding interest), is recognised immediately in other comprehensive income. Atradius determines the net interest
expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used tomeasure the defined benefit obligation at the beginning of the annual period to the then net defined benefit liability(asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result ofcontributions and benefit payments. Net interest expense and other expenses related to defined benefit plans arerecognised in the income statement.
The non-recognition of assets (‘asset ceiling’) can occur when the plan assets are higher than the projected benefit
obligation and Atradius cannot recover any surplus through refunds from the pension vehicle due to solvency and/or
control requirements.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past
service or the gain or loss on curtailment is recognised immediately in the income statement. Atradius recognises
gains and losses on the settlement of a defined benefit plan when the settlement occurs.
Defined benefit costs are categorised as follows:-

service cost (including current service cost, past service cost, as well as gains and losses on curtailments andsettlements);
administration expenses;
net interest expense or income; andremeasurement.

The first two components of defined benefit costs are presented in the income statement under net operating
expenses. The net interest is presented under finance expenses. Curtailment gains and losses are accounted for as past
service costs. Remeasurements are recognised in other comprehensive income.
Defined contribution plans
Defined contribution plans are post-employment benefit plans under which Atradius pays fixed contributions into aseparate entity (a fund) and will have no legal or constructive obligation to pay further contributions if the fund does

68

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.
For defined contribution plans, Atradius pays contributions to publicly or privately administered pension insurance
plans on a mandatory, contractual or voluntary basis. Atradius has no further payment obligations once thecontributions have been paid. The contributions are recognised as employee benefit expenses when they are due.
Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments
is available. The contributions to these plans are recognised as expenses in the income statement.

2.20.2 Other long-term employee benefits
Atradius has a number of other post-employment plans. The main plans are lump sum payment plans and prepension plans. A lump sum payment plan is a plan where the employees are entitled to a lump sum payment at thedate their employment is terminated. A pre-pension plan is a plan where the employees are entitled to receive
payments if they stop working before their actual retirement date.
Atradius’ obligation in respect of long-term service benefits, other than pension plans, is the amount of future benefit
that employees have earned in return for their service in the current and prior periods. The obligation is calculated
annually by independent actuaries using actuarial techniques.

2.20.3 Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an
employee accepts voluntary redundancy in exchange for these benefits. Atradius recognises termination benefits
when it is committed to either terminating the employment of current employees according to a detailed formal plan
without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage
voluntary redundancy. When termination benefits are related to an overall restructuring plan, the Atradius liability is
included as part of the provisions.

2.20.4 Profit sharing and bonus plans
Atradius recognises a liability and an expense for bonuses and profit sharing based on a formula that takes into
consideration, amongst other things, individual targets and the profit attributable to the owners of the Company.
Atradius recognises a liability where contractually obliged or where there is a past practice that has created aconstructive obligation.

2.21

Taxation

Income tax in the consolidated income statement for the year comprises current and deferred tax. Income tax isrecognised in the consolidated income statement except to the extent that it relates to items recognised in othercomprehensive income, in which case it is recognised in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income for the year, using tax rates enacted or
substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous
years.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income
tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of thereporting period and are expected to apply when the related deferred income tax asset is realised or the deferredincome tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be used. Deferred tax assets and liabilities are offset when there is alegally enforceable right to set-off current tax assets against current tax liabilities and when they relate to income
taxes levied by the same tax authority and Atradius intends to settle its current tax assets and liabilities on a net basis.
If the deferred income tax arises from initial recognition of an asset or liability in a transaction other than a businesscombination that at the time of the transaction affects neither the accounting nor the taxable profit or loss, it is notaccounted for.

69All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

2.22

Consolidated income statement

2.22.1 Income
Revenue comprises the fair value for services, net of value added tax, after eliminating revenue within Atradius.
Revenue is recognised as follows:
Premium earned
Written premium includes both direct business and reinsurance business and is defined as all premium and policyrelated fees invoiced to third parties and reinsurance premium, excluding tax.
Written premium includes an estimate of premium not yet invoiced for which Atradius has already accepted thecontractual risk. Accruals for premium refunds and cancellations are charged against premium written. Premium
earned includes an adjustment for the unearned share of premium.
Premium ceded under reinsurance contracts is reported as a reduction of premium earned. Amounts for ceded
unearned premium under cession agreements are reported as assets in the consolidated statement of financial
position.
Service and other income
Service income includes the income from:- Credit information services, consisting of providing up-to-date credit information on buyers for which acustomer requires a credit limit application under the insurance policy. This performance obligation issatisfied over time during the policy period. Revenue is recognised based on the credit limit applications
requested by and invoiced to the customer, against fixed prices stated in the contract. If a contract includes a
separate charge for monitoring, this element is recognised evenly over time;- Debt collection services for debts owed to customers. The performance obligation is defined at the level of theindividual debts, placed under the contract. Revenue is recognised in line with the actual collected amounts,
based on fees specified in the debt collection agreements.
- Business information and other service income.
Business information is provided online to customers on a subscription basis. Revenue is recognised
evenly over time based on the consideration in the contract, reflecting the constant effort required toacquire and prepare business information.
Atradius Dutch State Business (ADSB) is the official Export Credit Agency for The Netherlands andissues export credit insurance policies and guarantees to Dutch businesses, on behalf of and for therisk of the Dutch State. ADSB receives a service fee for managing the credit insurance facility,
specified in the service contract. This income is recognised evenly over time.

Share of income of associated companies
Associates are accounted for in the consolidated financial statements using the equity method. Under the equity
method the investor’s share of after-tax profits or losses of the associates is presented as a single line item in theincome statement.
Net income from investments
Investment income comprises interest income on funds invested (including available-for-sale financial investments),
dividend income, gains on the disposal of available-for-sale financial investments and rental income from investment
property that are recognised in the income statement. Interest income is recognised as it accrues in the income
statement, using the effective interest method. Dividend income is recognised in the income statement on the date that
Atradius’ right to receive payment is established, which in the case of quoted securities is the ex-dividend date.
Investment expenses comprise impairment losses recognised on financial investments and investment property.
Realised gains or losses on investment property recognised in the income statement represent the difference between
the net disposal proceeds and the carrying amount of the property.

70Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

2.22.2 Expenses
Net insurance claims
Claims charges include claims paid, the change in provision for outstanding claims, and the claims handling expenses.
Claims ceded under cession contracts are recorded as reductions of gross claims.
Net operating expenses
Net operating expenses comprise administrative expenses and commissions. Total administrative expenses are
expenses associated with selling and administrative activities after reallocation of claims handling expenses toinsurance claims.
Finance income and expenses
Finance income consists of interest received on loans, receivables and cash and cash equivalents.
Finance expenses includes interest, amortisation of discount on the subordinated debt, foreign exchange results andthe net interest on the net defined benefit liability (asset) related to defined benefit plans (see also Note 2,20). Foreign
currency gains and losses are reported on a net basis and consist of transaction and translation results.
Interest income and expenses are calculated using the effective interest rate method based on market rather than
nominal rates, at the date that the instrument is recognised initially or modified.

2.23

LeasesLeases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as
operating leases.

2.23.1 Atradius as lessor
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial
direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased
asset and recognised on a straight-line basis over the lease term.

2.23.2 Atradius as lessee
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except whereanother systematic basis is more representative of the time pattern in which economic benefits from the leased asset
are realised. Contingent rentals arising under operating leases are recognised as an expense in the period in which
they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as aliability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis,
except where another systematic basis is more representative of the time pattern in which economic benefits from theleased asset are realised.

2.24

Consolidated statement of cash flows

The statement of cash flows is presented using the indirect method, whereby the result for the year before tax isadjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash
receipts or payments, and items of income or expense associated with investing or financing cash flows.
Some of the terminology used in the statement of cash flows is explained as follows:-

cash flows are inflows and outflows of cash and cash equivalents;
operating activities are the principal revenue-producing activities of Atradius and other activities that are notinvesting or financing activities;

71All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated-investing activities are the acquisition and disposal of long-term assets and other investments not included in
cash equivalents; andfinancing activities are activities that result in changes in the size and composition of the contributed equity
and borrowings of Atradius.

72

Atradius | Consolidated financial statements 2018 Atradius N.V.
AtradiusAtradius| Consolidated| Consolidated
financialfinancialstatements
statements
2018 Atradius
2018 Atradius
N.V.
N.V.

3 Critical
3 Criticalaccounting
accounting
estimates
estimates
andandjudgements
judgements
in applying
in applying
accounting
accounting
policies
policiesthat affectthat affectthe reported
the reported
assetsassets
and liabilities
and liabilities
and contingent
and contingent
assetsassets
and andAtradius
Atradius
makesmakes
estimates
estimates
and assumptions
and assumptions
liabilities.
liabilities.
Estimates
Estimatesand judgements
and judgements
are continually
are continually
evaluated.
evaluated.
TheseThese
are based
are basedon historicalon historicalexperience
experienceand otherand otherfactors,
factors,
includingincluding
expectations
expectationsof futureof future
eventsevents
that arethat
believed
are believed
to be reasonable
to be reasonable
underunder
the circumstances.
the circumstances.
The most
The most
significant
significant
areas for
areas
which
for whichmanagement
management
is required
is required
to maketo makejudgements
judgements
and estimatesand estimatesthat affectthat affectreportedreported
amounts
amounts
and disclosuresand disclosures
are detailed
are detailed
below.below.

3.1

3.1
Measurement
Measurementof fairofvalue
fair value

some ofsome
its financial
of its financial
instruments
instruments
at fairat
value
fair value
for financial
for financial
reportingreportingpurposes.
purposes.
The fairThe
value
fair valueofof
Atradius
Atradius
measuresmeasuresfinancialfinancial
instruments
instrumentsthat are
that
not
are
tradednot tradedin an active
in an active
marketmarketis determinedis determinedby using
by using
valuation
valuationtechniques.
techniques.
Atradius
Atradius
uses its
uses
judgementits judgement
to select
to select
a varietya varietyof methodsof methods
and makeand makeassumptions
assumptions
that arethat
mainlyare mainly
based basedon market
on market
conditions
conditions
existing
existing
at the at
end
the
ofend
each
ofreporting
each reporting
period.period.
WhereWhere
Level Level
1 inputs
1 inputs
are notare
available,
not available,
Atradius
Atradius
engages
engages
an externalan external
independent
independentvaluation
valuationcompany
company
to perform
to performthe valuation.
the valuation.
Atradius
Atradius
worksworks
together
togetherwith thewithexternal
the external
independent
independentvaluation
valuationcompany
company
to establish
to establish
the appropriate
the appropriate
valuation
valuationtechniques
techniques
and inputs
and inputs
to the tomodel.
the model.
Information
Information
about about
the valuation
the valuation
techniques
techniques
and inputs
and inputs
used inused
determining
in determining
the fairthevaluefair valueof variousof various
instruments
instruments
are aredisclosed
disclosed
in Notein4.3.1.1
Note 4.3.1.1
and Notes
and Notes
7 and 7
16.and 16.

3.2

3.2
(Re-)insurance(Re-)insurance
relatedrelatedestimates
estimates

arisingarisingfrom claims
from claims
made madeunderunderinsurance
insurance
contracts
contracts
The ultimate
The ultimate
liability
liability
The estimate
The estimateof the ofultimate
the ultimate
liability
liability
arisingarisingfrom claims
from claims
includingincludingrecoveries
recoveries
made,made,or to beormade,to be made,underunderinsurance
insurance
contracts
contracts
is Atradius’is Atradius’
most criticalmost criticalaccounting
accounting
estimate.
estimate.
Although
Althoughmanagement
management
has endeavoured
has endeavoured
to adequately
to adequately
take alltake allfacts into
factsaccount,
into account,by theirbyverytheirnaturevery nature
estimates
estimates
remainremainuncertain
uncertain
and theandeventual
the eventual
outcomeoutcomemay differ
may differ
significantly
significantly
from thefromprojected
the projectedamount.
amount.
Pipeline
Pipelinepremium
premium
Pipeline
Pipelinepremium
premium
is estimatedis estimatedas theas
part
theofpartinsuranceof insurance
premium
premium
earnedearned
but notbut
yetnotinvoiced
yet invoicedat the at
end
the
ofend
the of thereportingreportingperiod.period.
Although
Althoughthe calculation
the calculationof the ofpipeline
the pipeline
premium
premium
is derived
is derived
from thefromcore
thebusinesscore businesssystems
systems
and andcalculated
calculated
at policy
at policy
level, consideringlevel, considering
all policy
all policy
specific
specificfeaturesfeaturesthat mightthat might
impactimpact
the assessment,
the assessment,
the calculation
the calculation
does involve
does involvethe usetheofuse
managementof management
estimates.
estimates.
The main
The reason
main reason
is thatispremiums
that premiums
for risks
fortakenrisks taken
on dependon dependon theon theamountamountof businessof businessinsuredinsuredduringduring
the reporting
the reporting
period,period,
whereaswhereasat the at
end
the
ofend
the ofreportingthe reporting
periodperiod
not allnot
business
all businesshas been
hasdeclared
been declaredyet. A yet.
secondaryA secondary
reasonreason
is thatisfor
that
part
forofpartthe ofpolicies
the policies
the final
thepremium
final premium
depends
depends
on claims
on claims
relatedrelated
to the topolicy.
the policy.
As theAs
final
theperformance
final performanceof the ofpolicythe policy
is not is
known
not knownat reportingat reporting
date, this
date,
also
thismeansalso meansthat part
thatofpartthe of thepipeline
pipelinepremiums
premiums
result result
from estimates.
from estimates.
The assumptions
The assumptions
are based
are basedon recenton recenttrendstrends
in insured
in insured
business,business,client client
specific
specific
information,
information,knowledgeknowledgeof pendingof pending
claims,claims,and when
and whenrelevant,
relevant,
macro-economic
macro-economic
information.
information.
Sliding
Slidingscale reinsurance
scale reinsurance
commissioncommission
Reinsurance
Reinsurance
commissioncommission
relatedrelatedto Atradius’
to Atradius’
quota quota
share sharetreaties
treaties
is calculated
is calculated
and accounted
and accounted
for at aforprovisional
at a provisional
rate rate
but reviewed
but reviewed
againstagainstthe development
the developmentof the ofultimate
the ultimate
loss ratio
lossas
ratio
soon
asas
soon
an underwriting
as an underwriting
year matures.
year matures.
The sliding
The sliding
scale commission
scale commission(an additional(an additional
incomeincomeor expense
or expense
on toponof topthe ofprovisional
the provisional
commission)commission)is basedis basedon an onestimate
an estimate
bybymanagement
managementof the ofultimate
the ultimate
loss ratio
lossforratio
anforunderwriting
an underwriting
year. year.

3.3

3.3
Impairment
Impairmentof available-for-saleof available-for-sale
equityequityfinancialfinancialinvestments
investments

determines
determinesthat anthatavailable-for-salean available-for-sale
equityequity
financialfinancialinvestment
investment
is impaired
is impaired
when when
there has
there
been
hasabeen a
Atradius
Atradius
significant
significant
or prolonged
or prolonged
declinedeclinein the in
fair
the
value
fair value
belowbelow
its cost.
itsThiscost.determination
This determinationof whatof is
whatsignificant
is significant
or prolonged
or prolonged
requiresrequiresjudgement.
judgement.

73All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

Had all the declines in fair values below cost been considered significant or prolonged Atradius would have anadditional EUR 10.4 million loss before tax (2017: EUR 3.5 million loss), being the transfer of the total revaluation
reserve for unrealised losses on equity financial investments to the income statement.

3.4

Estimated impairment of goodwill

In accordance with its accounting policy, Atradius annually tests whether goodwill of subsidiaries and associatedcompanies has suffered any impairment. The recoverable amounts of cash-generating units have been determinedbased on value in use calculations. These calculations require the use of estimates (see Note 6).
In order to test the value in use against the recognised goodwill, Atradius has stress-tested the main assumptions(discount rate, combined ratio of terminal value and Capital Requirement ratio) which have been applied when
determining the value in use for the related cash-generating units.
The discount rate used varies depending on the location and industry of the company to analyse, using customised
Risk-Free Rates, Market Betas and Country Risk Premiums. The terminal value is calculated based on the dividend
flow/free cash flow of the normalised period through a perpetuity, which applies a long-term growth rate of 1% - 3.5%
and the specific discount rate.
The projection period is 10 years, where the first 1-3 year projections are based on financial budgets and/or forecasts.
The remaining years are estimated using ratios and growth rates that converge towards their normalised term value.

3.5

Pension and post-retirement benefits

The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis
using a number of assumptions. The main assumptions used in determining the net cost (income) for pensions
includes the discount rate and the inflation rate. Any change in these assumptions will impact the carrying amount ofpension obligations.
Atradius determines the appropriate discount rate at the end of each year. This is the interest rate that should be used
to determine the present value of estimated future cash outflows expected to be required to settle the pension
obligations. In determining the appropriate discount rate, Atradius considers the interest rates of high-quality
corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms tomaturity approximating the terms of the related pension obligation. Other key assumptions for pension obligations
are based in part on current market conditions.
Additional information, including a sensitivity analysis for the main (actuarial) assumptions, is disclosed in Note 17.

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Atradius | Consolidated financial statements 2018 Atradius N.V.

4

Risk and capital management

4.1

Risk management

As a global insurance provider, Atradius recognises the importance of risk management. Atradius maintains a strong
governance and associated internal control system within the organisation. As a self-learning organisation and basedon additional regulatory requirements, Atradius continues to strengthen its risk management capabilities bybroadening risk management scope and enhancing existing risk management tools.
The relationship between risk and capital is fundamental for Atradius. Understanding how risk-taking consumes
capital allows management to steer Atradius and take strategic decisions with the interdependence of risk and capitalin mind. These decisions are substantially informed by the outcomes of Atradius’ economic capital model. This
internally developed model, which has received supervisory approval for use in calculating regulatory capitalrequirements, contributes to a multitude of risk assessment activities, as well as risk profile measurement, andenhances Atradius’ ability to monitor and manage risk levels within the organisation through the allocation of riskbased capital and the definition of a respective appetite. Moreover, risk management, risk profile measurement andimplicitly the relationship between risk and capital play a central role in the European regulatory regime, Solvency II.

4.1.1 The risk landscapeThe state of the global economy greatly influences the risks that Atradius faces. Economic deterioration may result inhigher insolvencies causing more frequent and severe claims expenses. In addition, a deterioration may lower ourrevenues as they are strongly correlated to global trade. The return on our investment may also deteriorate anddefaults on our holdings of debt instruments may occur. A severe deterioration of all the above-mentioned may affectthe credit rating of Atradius. A downgrade of our credit rating could have a potential negative impact on the number ofcustomer policies held by Atradius. This might further lower revenues. Understanding of that landscape, anticipating
developments and preparation for mitigating actions is a key expertise of Atradius.
The uncertainty triggered by Brexit continues to present challenges. Our global footprint of offices enables Atradius toconnect to customers in territories throughout Europe and across the globe. Through our network of establishedoffices, which all operate under one single legal framework, Atradius is able to deliver international insurance
solutions in every EU27 country as well as the United Kingdom and will be able to continue doing that after Brexit. Ourstrong network of offices, combined with our flexibility and customer centred approach, will enable Atradius tocontinue to deliver customer specific solutions in the future.
Atradius’ current activities will continue without interruption, whether there is a Hard Brexit, or whether the UK
leaves the European Union with an “agreed deal”. The departure of the UK from the EU and the subsequent loss of
Freedom of Services will mean that Atradius may no longer be able to provide policies across border as we currently
do. However, as an EEA registered insurer, Atradius is able to issue policies from any of its EU branches. Accordingly,
for customers with insured subsidiaries operating cross border in EU territories, the subsidiary’s policy may be issued
from an Atradius office within the EU.
In the UK, the financial regulatory authority (PRA) has prepared for a no-deal Brexit with the Temporary Permissions
Regime. This Regime will enable Atradius to continue all its activities in the UK, through its existing Atradius UK
branch, which going forward, will be operating as a Third Country Branch. Atradius has already secured the necessary
regulatory permissions. This required regulatory change will have no material impact on the cover available or claims
payment under current or future policies, nor to our customers’ rights under their policy.

4.1.2 The risk management and internal control framework
The boards of the group companies have ultimate responsibility and accountability for risk management and internal
control within their respective companies. Atradius N.V.’s Management Board owns, implements and oversees
Atradius group-wide risk governance through the Risk Strategy Management Board (RSMB). The RSMB consists of all
members of the Management Board, as well as the Directors of Group Risk Management, Strategy and Corporate
Development and Finance. The RSMB’s responsibilities include the development of the framework to manage risk andthe on-going overview of the largest risks. The RSMB establishes the internal risk control system by determining risk
control policies, risk boundaries, and by prescribing risk mitigation activities. In addition, the RSMB ensures that there
are processes and systems to review the effectiveness of risk management and the internal control system.

75

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

The Supervisory Board is responsible for overseeing that the Management Board implements, amongst other things, a
suitable risk management and internal control system. In this respect, the Management Board, alongside its risk
management functions, periodically presents results, developments and plans to the Supervisory Board and relevant
committees thereof. One of these committees, the Audit Committee, supervises, monitors and advises the Management
Board on the effectiveness of internal risk management and control systems. The Audit Committee is assisted in thisrole by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls andprocedures, the results of which are reported to the Audit Committee.
Atradius’ risk management policies are established to identify and analyse the risks faced by Atradius, to set
appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies andsystems are reviewed regularly to reflect changes in market conditions and Atradius’ activities. Through its training
and management standards and procedures, Atradius has implemented and maintains a disciplined and constructive
control environment in which all employees understand their roles and responsibilities.
Central to Atradius’ system of governance is the Atradius risk governance structure. The risk governance structure
comprises a framework of committees (which support RSMB in specific risk areas), approval authorities, roles andresponsibilities and risk boundaries which combine to define the process by which Atradius decides what risks ittakes on and how it manages those risks.
By applying the Atradius risk governance structure, Atradius is able to:- Communicate risk-related norms and values across the organisation;- Provide clarity over the various responsibilities and accountabilities in the management of risk;- Manage the Group’s risk profile and development of the business over time;- Ensure that Atradius adheres to an approved risk appetite;- Ensure appropriate ownership of decisions; and- Provide the Management Board with clear lines of sight into decision-making and risk-management
processes.

4.1.3 Risk classification
Atradius classifies its main risk types as insurance, financial and operational. Insurance risks are the risks of financial
loss as a direct result of providing insurance; these arise predominantly from the risk of non-payment by a buyer
covered by a policy (credit insurance) or the risk of non-performance by a customer (bonding). Financial risks include
market risk, credit risk and liquidity risk. Operational risks arise from inadequate or failed internal processes, people,
systems, or applicable loss from external events.

4.2

Insurance risk

4.2.1 Insurance products, their characteristics, sensitivity to insurance risk, risk mitigation and controls
Atradius operates with two main direct insurance product lines: credit insurance and bonding. In addition, Atradius
writes both credit and bonding business as a reinsurer. Credit insurance can be divided into three subcategories:
traditional credit insurance, instalment credit protection and special products. Each of these sub-categories has
particular risk characteristics.
The starting point for the management of insurance risk is that all staff have well-defined authorities specifying thelevel of risk they can accept and that all risk acceptance must take place within the framework of the risk governancestructure described in Note 4.1.2. The main elements of the risk governance structure currently in place are described
below. Furthermore, Atradius’ reinsurance DAC structure imposes checks on the largest exposures. Exposures beyonda certain threshold are subject to special acceptance by our leading reinsurers.
Traditional credit insurance and special products
In traditional credit insurance, Atradius insures its customers against the risk of non-payment of trade receivables.
The causes of loss covered differ by policy and usually include all forms of legal insolvency. Policies can also cover socalled ‘political’ causes of loss, which include but are not limited to, the risk of non-payment due to payment transfer
problems, cancellation of export/import licenses and contract frustration. Traditional credit insurance does not covernon-payment of trade receivables due to commercial disputes. Each policy stipulates a maximum credit period thatthe policyholder can offer to its buyers without prior approval from Atradius. ‘Buyers’ are the customers of Atradius’76

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

insured customers, i.e., the parties that Atradius insures credit risk on. In order to mitigate the risk of adverse
selection, the traditional credit insurance products of Atradius usually cover the entire portfolio of buyers of apolicyholder.
For traditional credit insurance, there are two underwriting processes: policy underwriting and buyer underwriting.
Policy underwriting is the process by which Atradius decides which companies to accept as policyholders and theterms and conditions of cover that are offered to those policyholders. Buyer underwriting is the process by which
Atradius sets a risk capacity for each buyer and issues credit limits for buyers under existing policies. Policy
underwriting and buyer underwriting are carried out by Commercial and Risk Services units respectively.
Policies are issued for a fixed period: usually no longer than two years and with a break clause after one year. Within
traditional credit insurance, customers retain some of the risk for their own account to protect Atradius from the riskof moral hazard. That self-retention can take the form, for example, of an uninsured percentage, a deductible on eachclaim, an aggregate first loss amount or a combination of these. Almost all policies stipulate Atradius’ maximum
liability. A customer is covered for the credit risk on a buyer after a credit limit on the buyer has been established.
Most policies allow customers to establish credit limits themselves for smaller amounts, under strict conditions
specified in the policy. Larger credit limits must be issued by Atradius. Credit limits are an important risk
management instrument for Atradius as they cap the amount that Atradius would have to pay to a customer in theevent of a claim. Moreover, Atradius can, in principle, withdraw the credit limit on a buyer at any time if
circumstances demand. Credit limits may be subject to specific conditions and Atradius can also set conditions forcover on a country or withdraw cover on a country altogether. These are important tools in managing insurance risk
exposure.
Staff in Commercial units have well-defined authorities specifying who can underwrite which policies. Authorities
typically require the approval of two people and conditions become stricter as the maximum liability under a policy
becomes larger, with the largest policies needing sign-off by both the Director of a Commercial unit and the
responsible Management Board member. The pricing of credit insurance policies (new, amended and renewed), is also
subject to governance and the methodologies used to establish a technical price require the approval of the
Quantitative Model Committee, a committee responsible for approving quantitative models used within the group.
Staff in Risk Services have well-defined authorities specifying who can set what capacity on a buyer and who canapprove what credit limits. As credit limit amounts grow, decisions require the approval of one or more cosignatories
of increasing seniority. The largest credit limit amounts require the approval of the Atradius credit committee with theappropriate authority level.
The special products business offers a range of bespoke policies to insure against various credit and political risks; thisproduct line includes policies that cover single transactions, single trade relationships and e.g. asset confiscation. A
distinguishing feature of special products policies is that, unlike traditional credit insurance, credit limits typicallycannot be readily withdrawn. The conditions of special products policies tend to place a greater onus on risk
monitoring and due diligence on the insured.
All policies are bound within clearly defined authorities issued to the policy underwriters who report ultimately to theChief Market Officer. All buyer risk is signed off by dedicated Risk Services teams, which report ultimately to the Chief
Risk Officer. In addition, a dedicated risk management team with a functional reporting line to the Director of Group
Risk Management ensures adherence to the risk governance model, monitors the portfolio risk and ensurescompliance with the terms of the reinsurance treaty.
Bonding
Atradius issues surety bonds for customers in a number of European countries including Italy, France, Spain, Portugal,
Germany and the Nordic and Benelux countries. Surety bonds insure beneficiaries against the risk of our customer not
meeting contractual, legal, or tax obligations. Beneficiaries include national, regional, local governments and tax
authorities as well as companies.
While a customer may fail to meet its obligations either because it is unable to perform to an agreed or required levelor because it is insolvent, there is also the risk that the customer may intentionally fail to meet its obligations.
Therefore, our assessment of both the customer’s financial strength and its ability to perform play an important part in
the underwriting process. Unlike traditional credit insurance, exposure related to issued bonds cannot be unilaterally
cancelled by Atradius.

77

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise statedWhen a bond is called by the beneficiary, Atradius mediates to resolve conflicts by working with both customer andbeneficiary. If, as a result of non-performance, a payment is made by Atradius to the beneficiary, a recovery action istaken against the customer who remains ultimately liable. If Atradius does incur an irrecoverable loss it is almost
always because of the customer’s financial distress, making the triggers for loss similar to those of traditional credit
insurance.
The spread of customers over industry sectors varies by country as a result of differing legal and market
environments. The type of bonds issued include bid bonds, performance bonds, maintenance bonds, advance payment
bonds and various types of administrative bonds. These are issued with tenors ranging from a few weeks to years, but
only rarely in excess of five years.
All bonding facilities and individual bonds are underwritten by technical underwriters who are part of theCommercial units. Technical underwriters assess the risk of non-performance as well bonding wordings and othertechnical aspects. Financial underwriters, who are not part of the Commercial units, focus on the credit risk-related
aspects of customers; they must approve the acceptance of facilities and individual bonds over certain thresholds.
There is an authority structure in which decisions are escalated depending on the amounts involved. The largest
amounts require the approval of Atradius credit committees (Local or Group) with the appropriate authority level.
Other products
Reinsurance
Atradius underwrites reinsurance programmes for credit insurance and bonding business written by primary
insurers. This business is conducted by Atradius Reinsurance DAC, which is domiciled and regulated in Ireland.
Atradius Reinsurance DAC provides reinsurance capacity for primary insurance companies from both the developed
and developing credit insurance and bonding markets. It currently assumes business from over 50 countries
worldwide, maintaining a balanced diversity within the portfolio from each continent. The underlying businessconsists of approximately 58% credit insurance and 42% bonding, based on premium volume.
Reinsurance underwriting guidelines and risk boundaries define the kind of business Atradius Reinsurance DAC isauthorised to write, with specific guidelines to type of product, capacity limit, exposure, term and diversity of theunderlying insurance ceded. Particular attention is given to ensuring the diversity of business from third party clientsand the level of exposure to any one country, company, or market is managed within agreed underwriting limits andcapacity.
All reinsurance business is regularly reviewed with respect to past underwriting years’ performance, triangulation
development, individual buyer exposure development, aggregate total potential exposure management and market
and country exposure. Risk and policy limit setting is monitored to ensure credit quality and compliance of theunderlying insurance products to the terms of the reinsurance programme.
Instalment Credit Protection (ICP)The ICP product line covers the medium- and long-term risks that financial and corporate policyholders face in theirmultiple instalment agreements with private individuals and businesses, and is available in Belgium andLuxembourg.
Policy underwriting is performed within the Commercial units. Policies are generally issued for a fixed period with
automatic renewal. The indemnification rate can rise to 100% and recoveries are for the benefit of Atradius.
Risk underwriting is performed by the risk underwriting teams. Credit decisions are made for each individual
operation based on an automated decision model. The model, without human intervention, can refer the case to anunderwriter for manual assessment. Authorities are granted to underwriters according to their seniority andexpertise. Cases are escalated according to pre-determined thresholds to the local ICP credit committees, then to the
ICP credit committee and finally to the Management Board member responsible for instalment credit protection.

4.2.2 Insurance risk management tools
Atradius monitors its exposure across various dimensions such as counterparty, industry sector and geographic
location. We maintain records of all credit insurance policies, credit limits and buyers in various connected systems.

78

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

These systems enable Atradius to set specific limits by buyer or buyer group. Management information derived fromthese systems enables Atradius to monitor aggregate exposure by country, customer, industry sector and otherdimensions.
All buyers with significant exposure are reviewed at least annually. Atradius continually receives information onbuyers through on-line connections with business information providers and from customers reporting negative
payment experiences. Buyers are reviewed whenever pertinent new information is received. Atradius assigns aninternal rating to buyers and the review process takes into account exposure on a buyer through direct business,
including exposure for special products and bonding. The authority structure for approval of new exposure referred toin this note also applies to buyer reviews.
The main system includes an integrated risk and (capital) cost-based pricing system. Most new policies and non-tacit
renewals are priced starting from a technical price suggested by the Group Pricing Model.
For reinsurance, Atradius Reinsurance DAC uses a number of risk management tools to monitor the reinsurance
portfolio for exposures and performance developments. The reinsurance system is used to record the risk profile,ultimate estimate and related accounting information for each reinsurance treaty. This allows the reporting of
performance, total aggregate exposure and accounting reinsurance result. Performance development and exposuresrelated to each reinsurance treaty are reviewed quarterly within certain limits and through exception reporting.
For ICP, consumer credit risk underwriting relies on the databases of the relevant national authorities. In Belgium, theNational Bank of Belgium maintains two databases: a negative database, listing every credit non-payment incident,
and a positive database, listing every credit granted to any individual. In addition, ICP maintains and uses its own
internal consumer credit database.
Both Bonding and ICP have their own pricing systems and guidelines, which reflect the specifics of their businesses.

4.2.3 Reinsurance programme
Atradius transfers a significant portion of its insurance risk to external reinsurers, through a number of reinsurance
arrangements that include quota share and excess of loss treaties covering either the entire portfolio of Atradius or
specific risks. The reinsurance treaties are renewed annually, usually in December of the preceding year. However,during January 2017, Atradius decided to renew its reinsurance arrangements for 2018.This trend continued with therenewal of the reinsurance arrangements for 2019 in early 2018. On renewal, Atradius assesses the optimal structureof the treaties for the forthcoming period, including the excess of loss treaties (the attachment points, spread of thelayer and the number of reinstatements). A number of items are taken into consideration during this review, including
the forecast growth in the underlying business, economic developments etc. In addition, the proposed structure isconsidered in the context of the Solvency II requirements and Atradius’ SCR appetite.
For the underwriting year 2018 one quota share reinsurance treaty is in place covering the majority of Atradius’
business. The retention under this treaty is 60% (2017; 57.5%).
In addition, there are two separate quota share treaties, which cover a limited number of policies, where the retention
percentage is 25%. In addition, there is a single excess of loss programme, covering the own retention under these
quota share treaties, consisting of a series of excess of loss treaties (per buyer group). These excess of loss treaties also
provide protection for the assumed business of Atradius Reinsurance DAC. The combined excess of loss programme
for Atradius has mitigated the likelihood of it retaining two separate retentions if a common buyer were to fail,impacting both the assumed and direct business of Atradius. The top of the excess of loss layers is chosen so that, inthe judgement of management, there remains only a very remote possibility that failure of any single buyer group will
exceed the top end of the excess of loss coverage purchased.
The attachment point of the excess of loss treaties has been set such that the net retention for business ceded underthe quota share treaties and excess of loss structure for any buyer group does not exceed EUR 25 million for Atradius.
Atradius Reinsurance DAC has also purchased additional lower level protection.
With regard to the reinsurance panel, it is Atradius’ policy to select only reinsurers that have a high quality standard ofsolvency/rating. The normal minimum requirement is an ‘A-’ level rating. The treaties also include a provision that if areinsurer is downgraded during the period of the reinsurance below an A- rating then security can be requested and if
not provided the reinsurance agreement with that reinsurer can be terminated.

79All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

4.2.4 Concentration risk
Atradius is exposed to concentration risk in a number of ways: primarily by buyer, buyer’s country or buyer’s
industry. The following tables illustrate the exposure at the end of 2018 and 2017 in terms of the sum of credit limits
registered by Atradius on individual buyers. This is referred to as total potential exposure or TPE.
TPE is an approximate upper boundary to real exposure, in the sense that a limit that Atradius has issued does notnecessarily give rise to credit risk at a specific point in time. Atradius normally does not know the real outstanding
exposure under its limits on any specific buyer. The ‘usage’ of limits is, on average, much smaller than the amount of
the limit. At the portfolio level, real outstanding exposure tends to be in the range of 10% to 30% of TPE, on top of whichcustomers still have their own retention. In addition to the TPE, customers are often allowed to bring exposure under
the policy through discretionary limits and potential exposure resulting from a discretionary limit on any buyer is notheld on Atradius’ system. Each policy specifies the maximum discretionary limit allowed under the policy and, formost policies this is no more than EUR 20 thousand per buyer. This illustrates that TPE is a crude measure of exposureand that, in aggregate, real exposure will be far lower.
The TPE details below show TPE gross of reinsurance; due to the non-linear nature of the excess of loss cover in
Atradius’ reinsurance DAC programme, which has a finite number of reinstatements for each layer, there is no natural
way to show TPE net of reinsurance.
In the following tables, the TPE has been aggregated and shows the exposure for credit insurance (including special
products and reinsurance). Germany, Spain and Portugal constitute more than 29% of the overall exposure.
Buyer country

TPE 2018(EUR million)%

TPE 2017(EUR million)%

Spain, Portugal

99,453Germany

90,59915.2%

98,714

15.8%

13.9%

86,430

14.1%

Central and Eastern Europe

63,935

9.8%

59,253

9.4%

USA50,556

7.7%

49,228

8.3%

France47,1197.2%

44,854

7.4%

United Kingdom

44,9896.9%43,537

6.8%

Italy

44,263

6.8%

42,242

6.3%

The Netherlands

29,650

4.5%

27,636

4.3%

Nordic28,072

4.3%

26,390

4.2%

Other

154,768

23.7%

144,545

23.2%

Total

653,404100%

622,829

100%

80

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

The following table shows the distribution of TPE over buyer industry sector.
Industry sector

TPE 2018(EUR million)%

TPE 2017(EUR million)%

Chemicals

86,47913.2%

82,783

13.3%

Electronics

77,43311.9%

74,476

12%

Consumer durables

69,881

10.7%

68,442

11%

Metals68,424

10.5%

63,419

10.2%

Food

63,001

9.6%

58,6089.4%

Transport

60,461

9.3%

56,9309.1%

Construction

49,773

7.6%

46,896

7.5%

Machines

39,972

6.1%

37,137

6%

Agriculture

33,876

5.2%

33,3185.3%

Construction materials

28,3604.3%

27,0584.3%

Services

27,837

4.3%

26,994

4.3%

Other

47,907

7.3%

46,768

7.5%

Total

653,404100%

622,829

100%

The following table shows TPE aggregated by group of buyers. This is the method of aggregation that is relevant for
Atradius’ excess of loss treaties. For instance, assuming real outstanding exposure of 20% of TPE, then only buyers
with TPE in excess of around EUR 125 million could give rise to claim under an excess of loss treaty (2017: the same).
Value band

TPE 2018(EUR million)%(EUR million)

0 - 20349,91020 - 100
100 - 250

TPE 2017%(EUR million)
53.6%

339,174

113,52817.4%

107,227

17.2%

70,575

10.8%

66,824

10.7%

250 - 500

48,405

7.4%

46,0807.4%

500 - 1000

37,175

5.7%

33,8585.4%1000 - and more

33,811

5.2%

29,6664.8%

653,404100%

622,829

100%

Total

54.5%

Exposure for bonding and for instalment credit protection has different characteristics and therefore has not been
included in these tables. The bonding exposure is EUR 24 billion (2017: EUR 23.4 billion). Exposure for instalment
credit protection amounts to EUR 2.6 billion (2017: EUR 2.5 billion).

4.2.5 Factors affecting the frequency and severity of claims
The frequency and severity of claims are affected by several factors. These include all factors that affect credit risk ingeneral. Thus the status of the economy is a major driver of the frequency and severity of claims. Its effect may varyby country and sector. For trade credit risk, the behaviour of customers may also affect the frequency and severity ofclaims, for instance through risks inherent to their business activities and their risk management practices. Specific
events (e.g. natural disasters) or structural changes in the economy (e.g. easier access to developed markets for
producers in low cost countries), may impact the frequency and severity of claims. What specific events or structuralchanges are relevant in this respect will vary over time. In addition, the political risk cover that Atradius provides has
its own dynamics of frequency and severity of claims.
The bonding business usually only incurs irrecoverable losses when, after a bond call, any payments to beneficiaries
cannot be reclaimed from the bonding customer, or its guarantors. This is almost always due to either the insolvency
or bankruptcy of the bonding customer. Thus, in the end, the frequency and severity of claims is affected by similar
factors as those affecting credit insurance.

81All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

All forms of credit insurance and bonding bear the risk that changes in legislation, in particular of insolvency law,
may affect the amount and timing of claims payments or recoveries.
Atradius’ business processes are designed to effectively manage the impact of the many risk factors that affect thefrequency and severity of claims. The business processes continually evolve in response to how Atradius views theserisk factors in the context of its overall business strategy.

4.2.6 Sources and assumptions
4.2.6.1

Sources of uncertainty in the estimation of future claims payments

The sources of uncertainty in the estimation of future claims payments include, but are not limited to, all the factorsthat affect the frequency and severity of claims in general, as described in Note 4.2.5.
The insurance liabilities that cover claims experience after the reporting period for risks that have been accepted
before the end of the reporting period consist of two elements: the provision for unearned premium (UPR) and theprovisions for claims ‘incurred but not reported’, the IBNR. The accounting policies and estimation methods for setting
UPR and IBNR vary by product and in part also by entity within Atradius:

-

-

-

for traditional credit insurance, premium is earned in full when the underlying shipment takes place. UPR
exclusively relates to the unearned part of premium invoiced in advance and to risks that have not started.
IBNR is Atradius’ estimate for future claims payments that will result from risks taken on, but for which noclaims notification has been received;for the local credit insurance business in Spain and Portugal, premium is earned pro rata over the period
between invoice date and due date of invoices for the insured shipments. Thus part of UPR relates to risks thathave started, in the sense that the underlying insured shipment has taken place. IBNR is the local business in
Spain and Portugal’s estimate for future claims payments that will result from risks taken on, for which noclaims notification has been received and for which the underlying invoices are overdue at the end of thereporting period;for bonding, instalment credit protection and reinsurance, the UPR relates to risk taken on; andfor special products, UPR is set on the same basis as for traditional credit insurance. With the exception of
single transactions, where the UPR relates to risk taken on.

As a consequence, the release of the provision for unearned premium should be taken into account for the local credit
insurance business in Spain and Portugal, bonding, instalment credit protection and reinsurance when interpretingthe claims development tables in Note 18 to evaluate the accuracy with which Atradius has historically estimatedfuture claims payments.
Estimates for future claims payments are made through a combination of case-by-case estimates and statisticalestimates. Provisions for reported claims are set on a case-by-case basis, taking into account statistical estimates for
expected recoveries and statistical estimates of claims incurred to payment ratios. The estimates for future claims
payments are produced per period during which policyholders brought risk under the cover of the policy (i.e., theperiod in which the insured shipment has taken place). Large cases are provisioned separately, at expected loss.
In the case of traditional credit insurance, the main sources of uncertainty for estimates of future claims payments
include:-the amounts that will be paid out as a percentage of the claim amount;the speed with which customers submit claims, as measured from the moment that the insured shipment took
place, the expected average claims payment and the expected percentage of cases that do not lead to apayment;
the expected number of claims for risks taken on during the most recent months since very few claims will
have been reported for the most recent four to six months (depending on the country of the customer);the inflow by number and size of large case; andthe estimation of the expected recovery percentages.

Estimates for future claims payments for bonding have a greater uncertainty than estimates for future claims
payments for credit insurance. Bonding is a ‘longer tail’ business; i.e., the time between issuance of the bond andreceipt of the bond call tends to be much longer than that of traditional short-term credit insurance. For example, mostcredit insurance covers credit periods up to 180 days, while around half the number of bonds written has tenors of82

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

over two years. After receipt of a bond call, it usually takes longer to settle the claim and litigation is not uncommon,
either following the bond call or when trying to realise recoveries. Especially in Italy, litigation tends to be a lengthy
process. Outcomes of litigation cannot be predicted with certainty. For bonding, the provisions set on a case-by-casebasis are based on the amount called minus an amount to account for expected recoveries based on historicexperience or case specific information. For imminent large bond calls as well as for large customers in financial
difficulties, the Company may set an IBNR provision. Booked recovery provisions for bonding are periodicallyreviewed and adjusted to experience.

4.2.6.2

Assumptions, change in assumptions and sensitivity

The risks associated with credit insurance and bonding are complex and are subject to a number of influences that are
not particularly open to quantitative sensitivity analysis. However, this section describes the quantitative sensitivity
analysis that is feasible.
The most important assumption used in the main method for reserving for traditional credit insurance to set theestimate for the ultimate number of claims for the most recent months of shipment is that the claims inflow in early2019 will be around 20% above the level of end 2018. An indication of the sensitivity to projected ultimate number ofclaims would be the following: if the estimated ultimate number of claims for the most recent six months of risk wereto change by 10%, the claims provisions would change by EUR 25 million, gross of reinsurance (2017: EUR 23 million).
As in essence provisions for most recent months are set as estimated number times estimated claims size, this also
describes the sensitivity to assumed claims size.
By its nature, an estimate of the expected inflow of large cases is not easy to quantify. The order of magnitude of thissensitivity would, in the judgement of management, be similar to the sensitivity in the estimated number of claims forthe most recent months, although, as is inevitable with severity risk, it has a longer tail.
Claims provisions are presented net of recoveries from salvage and subrogation. Realised recoveries can deviate fromexpected recoveries. Expected recoveries amount to EUR 409.2 million (2017: EUR 441.2 million). The largest twocomponents of the expected recoveries are the recoveries for standard credit insurance of EUR 185.7 million (2017:
EUR 194.2 million), and for instalment credit protection of EUR 141.7 million (2017: EUR 134.7 million).

4.3

Financial risk

Atradius is exposed to financial risk mainly through its financial assets, financial liabilities, reinsurance contracts andinsurance contracts. The core components of financial risk are market risk, credit risk and liquidity risk.
These risks arise mainly from interest rate sensitive positions, equity instruments, credit exposures, non-Eurocurrency exposures and cash flow patterns.

4.3.1 Market risk
Market risk is the risk that the fair value of assets and liabilities that are sensitive to movements in market prices,
decrease or increase due to adverse movements in equity prices, interest rates or currency rates. Atradius exposes
itself to these risks by holding assets and liabilities which fair value are sensitive to movements in those prices. To
measure these risks, Atradius uses several risk metrics. The most important ones being the mismatch between assets
and liabilities which fair value is denominated in foreign currency, value-at-risk, capital models from the credit
assessment institutions and interest rate duration.
Atradius uses a Solvency II available capital approach to define the Strategic Asset Allocation and to assess the impact
of investment decisions to ensure that sufficient Solvency II capital remains.

4.3.1.1

Fair value of financial assets and liabilities

The estimated fair values of Atradius’ financial assets and liabilities, other than the subordinated debt, equal theircarrying value. The fair values of subordinated debts are disclosed in Note 16.
The fair values correspond with the price, at our best estimate, that would be received to sell an asset or paid totransfer a liability in an orderly transaction between market participants at the measurement date. Wheneverpossible, the fair values are based on quoted market prices. If there is no quoted market price available, we use

83All amounts in thou

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise statedvaluation technvaluation techniques which are based on market prices of comparable instruments or parameters from comparable active markets
active markets (market observable data). If no observable market inputs are available, valuation models are used(non-market ob(non-market observable data). These valuation techniques are subjective in nature and involve various assumptions about the releva
about the relevant pricing factors. Changes in these assumptions could significantly affect the estimated fair values. Consequently, tConsequently, the fair values presented may not be indicative of the net realisable value. In addition, the calculation of
the estimated fa
the estimated fair value is based on market conditions at a specific point in time and may not be indicative of future fair values.
fair values.
The fair values
The fair values are subject to a control framework designed to ensure that they are either determined or validated by afunction indepe
function independent of the risk taker. To this end, Atradius establishes the accounting policies and processes
governing valua
governing valuation and is responsible for ensuring that these comply with all relevant accounting pronouncements. Within this gov
Within this governance structure, non-quoted investments or illiquid investments in which Atradius invests arevalued by an exvalued by an external independent valuation company. That company uses its own proprietary valuation systems to value the securi
value the securities supported by economic and market assumptions from financial information providers. The
valuations are p
valuations are provided on a monthly basis and are reviewed and approved by Atradius.
Debt and equity
Debt and equity securities available-for-sale
The fair value o
The fair value of debt and equity securities available-for-sale is based on quoted market prices, where available. For those securities
those securities not actively traded, fair values are provided by an external independent valuation company.
Loans and shor
Loans and short-term investments
For loans and o
For loans and other short-term investments, carrying amounts represent a reasonable estimate of their fair values.
Other financial
Other financial assets
The carrying am
The carrying amount of other financial assets, including cash and cash equivalents, is not materially different to theirfair value, given
fair value, given their short-term nature.
Subordinated dSubordinated debt
The fair values
The fair values of subordinated debts are based on binding quotes from independent brokers (see Note 16 for further details).
details).
Other financial
Other financial liabilities and deposits received from reinsurers
The carrying am
The carrying amount of other financial liabilities and deposits received from reinsurers is not materially different to their fair value,
their fair value, given their short-term nature.
The following ta
The following tables present the fair values of the financial instruments carried at fair value:

Quoted prices in active markets
Level 1

Financial instruments measured at fair value
Assets2018

Financial instru
Assets2017

Available-for-sa
Available-for-sale:

Equity securiti

Equity securities

241,720

293,976

Government bonds

563,834

555,976

Corporate bonds

1,267,474

Debt securities:

Debt securities

Government

Corporate bo
1,232,631 Total
Total
2,073,028
2,082,583
The Company h
The Company has at 31 December 2018 respectively 31 December 2017 only securities traded in active markets (level 1).
1).

84Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

4.3.1.2

Equity price risk

Equity price risk is the risk that the fair value of the assets that are sensitive to movements in equity prices decreases
due to adverse movements in equity prices. Atradius exposes itself to equity price risk by investing in equity
instruments issued by corporations and equity instruments issued by investment funds. These risks are measured andanalysed by using value at risk techniques and capital models from the external credit assessment institutions. The
value-at-risk measures the potential maximum loss on Atradius’ equity instruments due to adverse movements inequity prices in the short-term while the capital models measures the potential maximum loss in the long-term, (seeNote 4.3.1.4 for more information). Atradius invests in a portfolio of diversified equity instruments to manage theserisks.
Individual equity instruments
Atradius invests in individual equities via a segregated mandate in which the asset manager has discretion to selectthe equity portfolio in accordance with investment restrictions set in an investment management agreement. This
diversified portfolio consists out of EUR denominated large capitalisation equities. Per the end of December 2018, themarket value of this equities portfolio is EUR 78.5 million (2017: EUR 95.2 million).
Investment funds
The investment funds in which Atradius invests are exposed to market risk, counterparty risk, liquidity risk andcurrency risk (i.e., general investment fund risks). The risk of an investment fund is mainly driven by the nature of theassets in which it invests. As investment funds are offered to multiple investors, the investment restrictions of a fundare stated in the fund’s prospectus. Atradius only selects investment funds that have similar investment restrictions
stated in their prospectus as stated in the Atradius Investment Policy.
Equity instruments issued by investment funds
The portfolio of equity instruments issued by investment funds are shown in the following table:
Weight in %2018
Passive equities exchange traded funds
Active money market funds
Total

Weight in %2017

161,184

98.8%

197,334

99.3%

2,008

1.2%

1,448

0.7%

163,192

100.0%

198,782

100.0%

Passive equities exchange traded funds
The portfolio of passive equities exchange traded funds mainly consists of exchange traded fund which passively
tracks the Dow Jones EuroStoxx 50 Index.
Active money market funds
The portfolio of active money market funds consists out of one money market fund denominated in Brazilian real.

4.3.1.3

Interest rate risk

Interest rate risk is the risk that the fair value of assets and liabilities, that are sensitive to movements in interest rates,
decreases or increases due to adverse movements in interest rates. Atradius exposes itself to this risk by investing in
debt instruments and equity instruments issued by investment funds that invest in debt instruments, issuing
subordinated debt and by insurance contracts.
Profile85

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

At the end of the reporting period the interest rate profile of Atradius’ interest-bearing financial instruments was:Fixed rate instruments -Variable rate instruments -carrying amountcarrying amount

2018

2017

2018

2017

Financial assets 1) 3)

1,831,308

1,788,607

702,277

552,419

Financial liabilities(323,790)(323,614)(42,347)(50,875)

1,507,518

1,464,993

659,930

501,544

2) 4)

Total

1) Fixed rate financial assets include debt securities;2) Fixed rate financial liabilities include the subordinated debt;
3) Variable rate financial assets include cash and cash equivalents, loans, short-term investments and cash held for investments;
4) Variable rate financial liabilities include borrowings and deposits received from reinsurers.

Duration
Duration demonstrates the dependability of a bond’s market value to a change in the underlying discount rate of thatbond. The duration figure depicts the percentage change of the market value of a bond investment if the underlying
discount rate is parallel shifted by 1%. The higher the duration figure, the more a bond is sensitive to movements in theunderlying discount rate.
Atradius uses the duration to assess its interest rate risk exposure and monitors whether the duration remains
between the minimum and maximum duration limit (between one to five years for government bonds and one tothree years for corporate bonds) as set in the Atradius Investment Policy. The duration can be described as thepercentage change of a bond’s value when the underlying discount rate is parallel shifted by 1% and is calculated as theweighted average of the discounted future cash flows to be received measured in years. The duration for 2018 is 2.0
years (2017: 2.5 years) and the average maturity for 2018 is 2.2 years (2017: 2.8 years).

4.3.1.4

Value-at-Risk

Atradius measures equity price and interest rates risk by analysing the value-at-risk (VaR) of its financial
instruments. This risk metric measures the potential maximum loss on those financial instruments due to adverse
movements in equity prices and interest rates within a specified time frame and probability (confidence level). The
VaR is based on variance-covariance methodology that uses the historical volatility of the fair values of the financial
instruments and the correlation between them as main inputs. These volatilities and correlations are provided byfinancial information providers or financial institutions.
The risk of using the variance-covariance methodology or any other historical methodology is that it may
underestimate the riskiness of the financial instruments. This is because these methodologies assume that thehistorical volatility of and correlation between the financial instruments will be repeated in the future. Therefore, it is
not intended to represent or to guarantee any future price movements but rather to be used as guidance for
information purposes and comparison of historical developments only.
The VaR provides insight into the maximum expected loss per asset category and on portfolio level. The fair values
and percentages presented are calculated with a given confidence level of 99% for a period of 12 months. This implies
that there is 1% probability of underestimating the potential maximum loss for the coming 12 months.
The following table shows the VaR of Atradius’ equity securities and debt securities on portfolio level.

86Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

Value-at-Risk

EUR million% of themarket value

EUR million

2018% of themarket value

2017

Equity securities:
Shares (including equity funds)

84.6

35.3%

77.8

26.6%

Government bonds (including government bond funds)

17.0

3.0%

7.1

1.3%

Corporate bonds (including corporate bond funds)

17.7

1.4%

17.9

1.4%

Total portfolio

95.9

4.1%

85.9

3.8%

Debt securities:

The classification of financial investments in the VaR table stated above are based on the actual financial risks that theindividual securities present in the investment portfolio carry. For instance, within debt securities a separation
between government bonds, and corporate bonds is maintained to capture the actual exposure to corporate bonds thatcarry additional credit risk above the risks that government bonds bring along. When individual securities areclassified to the asset class that fits their actual risk profile, the volatility of that asset class is calculated using thevolatility to the financial markets of the underlying securities in that asset class. The volatility of each asset class as awhole serves as input for the VaR calculation of that asset class. In case of an investment fund, the volatility of thefund (driven by the characteristics of its underlying securities) serves as input for the calculation of the VaR on thatspecific investment fund and is subsequently included in the VaR calculation of the asset class. Total portfolio VaR
may not be equal to the sum of the VaR of the individual portfolio components because the correlation between thesecomponents may be less than one. The VaR percentage increased from 3.8% at the end of 2017 to 4.1% at the end of
2018 and the VaR value increased from EUR 85.9 million at the end of 2017 to EUR 95.9 million at the end of 2018.

4.3.1.5

Currency risk

Movements in exchange rates may affect the value of consolidated shareholders’ equity, which is expressed in Euro.
Foreign exchange rate differences taken to other comprehensive income arise on the translation of the net investment
in foreign subsidiaries and associated companies. During 2018, the Euro strengthened against most of the non-Eurofunctional currencies (see Note 2.5.3) resulting in a foreign currency loss in other comprehensive income of EUR 6
million, net of tax (2017: a loss of EUR 23.1 million, net of tax).
However, the impact of these fluctuations is limited as revenue, expenses, assets and liabilities within our non-Euro
operations are generally denominated in the same currencies.
Atradius’ exposure to foreign currency exchange rate risk, arising from monetary financial assets and liabilities
denominated in non-functional currencies as at 31 December 2018 and 31 December 2017, is presented in the following
table:
FinancialassetsFinancialliabilities

Net position

Financialassets2018

Financialliabilities

Net position

2017

EUR

165,638

153,919

11,719202,045

145,944

56,101

GBP

24,21725,559(1,342)

31,872

23,883

7,989

USD

307,310

260,599

46,711

291,314

271,401

19,913

AUD

8,644

8,610

34

7,520

7,913

(393)

Other

143,022

236,587(93,565)

153,813239,240(85,427)

Total

648,831685,274(36,443)686,564

688,381(1,817)

Sensitivity analysis
As an indication of the currency exposure, a 10% strengthening of these foreign currencies against the Euro as at theend of the reporting period would have increased/(decreased) the result for the year by an amount equal to the net
position as presented above, calculated against that 10%. This analysis assumes that all other variables, and inparticular interest rates, remain constant and is performed on the same basis as for 2017. A 10% weakening of the87All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

aforementioned foreign currencies against the Euro as at the end of the reporting period would have had an equal but
opposite effect.
The following table specifies Atradius’ gross and net positions in major currencies (both monetary and non-monetary
items):
AssetsLiabilities

Net position

Assets2018

Liabilities

Net position

2017

EUR

3,487,135

2,000,708

1,486,427

3,382,508

1,902,228

1,480,280

GBP

163,861

112,692

51,169135,653

96,47339,180USD

432,628

296,766

135,862394,331

299,070

95,261

AUD

85,82342,73043,09377,03440,82336,211

Other

555,849

450,962

104,887

529,636

427,320

102,316

Total

4,725,296

2,903,858

1,821,438

4,519,162

2,765,914

1,753,248

4.3.2 Credit risk
Credit risk is the risk that customers or counterparties are unable to repay their debt towards Atradius in full whendue. Atradius exposes itself to credit risk mainly by reinsurance contracts and holding financial assets.
Reinsurance is used to manage insurance risk. This does not, however, discharge the liability as primary insurer. If a
reinsurer fails to pay a claim for any reason, Atradius remains liable for the payment to the policyholder. The Atradiuspolicy is to select only reinsurers that have a well-established investment grade credit rating. The normal minimum
requirement is an ‘A’ level rating, although there are some minor exceptions. In the event that the reinsurer’s rating isfound to be below this threshold, Atradius has the right to either terminate the reinsurance relationship during thecourse of the reinsurance year or else seek collateral if the relationship is to continue. Deposits received fromreinsurers mitigate the credit risk and are therefore included in the table below.
Individual operating units maintain records of the payment history for significant contract holders with whom they
conduct regular business. The exposure to individual counterparties is also managed by other mechanisms, such as
the right of offset where counterparties are both debtors and creditors. Management information reported to Atradius
includes details of provisions for impairment on loans and receivables and subsequent write-offs.
Credit exposure to business partners, such as insured customers and brokers, is closely monitored. Potential
impairments on receivables are reviewed monthly and updated.
With regard to managing the credit risks of the financial investments, the investment policy of Atradius is to hold a,
principally Euro-centric, internationally diversified portfolio and to avoid large risk concentrations. From a Standard& Poor’s rating scale or comparable perspective, the overall fixed income portfolio is almost completely invested ininvestment grade debt securities which are rated ‘A-‘ or higher. If a debt security in which Atradius has invested falls
below the minimum credit rating or is not rated, it should be reviewed by the Group Investment Committee to decide
whether the debt security is still a suitable investment. The maximum concentration limit per issuer (per legal entityand at Atradius level) is 5% of the market value of the financial investments of the legal entity or Atradius. The
concentration per issuer is evaluated by aggregating the exposure to a single issuer through both debt investments
and equity securities. The Group Investment Committee monitors this limit and action is taken if a concentration limit
is breached.
The counterparty ratings of receivables, short-term investments, claims, commissions and deposits arising fromreinsurance, cash and cash equivalents and the rating of debt securities as at 31 December 2018 and as at 31 December
2017, are presented in the following tables:88Atradius
Atradius| Consolidated
Consolidated
financialfinancialstatements
statements
2018
2018
Atradius
Atradius
N.V.
N.V.
Atradius|| Consolidated
financialstatements
2018
Atradius
N.V.

AtAt
3131
December
December
2018
2018

AAA
AAA

AA
AA

AA

--

209
209

245
245

11

2323

478
478

(2)
(2)

(42)
(42)

(EUR
(EUR
million)million)BBBBBB Other
Other
and
and
Non-rated
Non-rated

Total
Total

Receivables,
Receivables,claims,
claims,commissionscommissionsand
anddeposits
deposits
arisingarisingfrom
fromreinsurance:
reinsurance:
Receivables,
Receivables,claims
claimsandandcommissionscommissionsarisingarising
fromfromreinsurance
reinsurance

--

(22)
(22)

(18)
(18)

-0

Government
Governmentbonds
bonds

255
255

227
227

5757

88

1717

564
564

Corporate
Corporatebonds
bonds

1414

171
171

1,002
1,002

7979

11

1,267
1,267

Structured
Structureddebt
debt

--

--

--

--

--

--

--

77

88

44

77

2626

2828

77

135
135

6161

--

230
230

Deposits
Depositsreceived
receivedfrom
fromreinsurers
reinsurers
Debt
Debtsecurities:
securities:

Short-term
Short-terminvestments:
investments:
Deposits
Depositswithheld
withheldbybycedingcedingcompanies
companies
Bank
Bankdeposits
depositsunder
undershort-term
short-terminvestments
investments
Cash
Cashandandcashcashequivalents
equivalents

--

3434

343
343

5151

1919

446
446

Total
Total

297
297

633
633

1,772
1,772

203
203

6565

2,969
2,969

AtAt
3131
December
December
2017
2017

AAA
AAA

AA
AA

AA

BBB
BBB Other
Other
and
and
Non-rated
Non-rated

Total
Total

Receivables,
Receivables,claims
claimsandandcommissionscommissionsarisingarising
fromreinsurance
reinsurance
from

--

209
209

232
232

11

2424

466
466

Deposits
Depositsreceived
receivedfrom
fromreinsurers
reinsurers

--

(22)
(22)

(21)
(21)

--

(2)
(2)

(45)
(45)

Government
Governmentbonds
bonds

187
187

280
280

6161

88

2020

556
556

Corporate
Corporatebonds
bonds

99

9696

1,011
1,011

116
116

11

1,233
1,233

Deposits
Depositswithheld
withheldbybycedingcedingcompanies
companies

--

77

66

44

99

2626

Bank
Bankdeposits
depositsunder
undershort-term
short-terminvestments
investments

2020

1919

106
106

3333

--

178
178

--

3131

272
272

40
40

44

347
347

216
216

620
620

1,667
1,667

202
202

5656

2,761
2,761

(EUR
(EUR
million)million)Receivables,
Receivables,claims,
claims,commissionscommissionsand
anddeposits
deposits
arisingfrom
fromreinsurance:
reinsurance:
arising

Debt
Debtsecurities:
securities:

Short-term
Short-terminvestments:
investments:

Cash
Cashandandcashcashequivalents
equivalents

1) 1)

Total
Total

1) 1)
For
For
comparative
comparative
purposes
purposes2017
2017
ratings
ratings
have
have
been
been
amended.
amended.
InIn
Cash
Cash
and
and
cash
cash
equivalents
equivalents
line,
line,
reclassifications
reclassifications
have
have
been
been
performed
performed
without
withoutany
anyfinancialfinancial
impactimpact
atat
total
total
level.
level.

creditratings
ratingsand
andthethecredit
creditrating
ratingofofthe
thedebt
debtinstruments
instrumentsare
arepredominantly
predominantlybased
basedononStandard
Standard&&
The
Thecounterparty
counterpartycredit
Poor’sPoor’srating.
rating.InInthetheabsence
absenceofofa aStandard
Standard&&Poor’s
Poor’scredit
creditrating,rating,Atradius
Atradiususes
usesMoody’s
Moody’sororBloomberg
BloombergComposite
Composite
Ratings.
Ratings.

4.3.2.1
4.3.2.1Disclosures
Disclosuresabout
aboutthethetemporary
temporaryexemption
exemptionfrom
fromIFRSIFRS9 9Atradius
Atradiushas
hasdecided
decidedtotoapply
applythethetemporary
temporaryexemption
exemptionfor
forthetheapplication
applicationofofIFRS
IFRS9 9totoitsitsfinancial
financialassets
assets(see(seenotenote
2.2.2
2.2.2‘Standards,‘Standards,amendment
amendmentand
andinterpretationinterpretationnot
notyetyetadopted’).
adopted’).The
Thefinancial
financialassets
assetsfor
forfinancial
financialyear
yearending
ending3131
December
December2018
2018arearestill
stillclassifiedclassifiedandandmeasured
measuredbased
basedononIAS
IAS3939(see(seenote
note1010‘Financial‘Financialinvestments’investments’andandnotenote2.2.2
2.2.2‘Standards,‘Standards,amendment
amendmentand
andinterpretationinterpretationnot
notyetyetadopted’).
adopted’).The
Thedisclosure
disclosurebelow
belowprovides
providesinformation
informationrequired
requiredfor
forthetheapplication
applicationofofthe
thetemporary
temporaryexemption.
exemption.
IFRS
IFRS9 9classification
classificationofoffinancial
financialassets
assetsisisbased
basedononassessment
assessmentofofthe
thebusinessbusinessmodel
modelandandthethecontractual
contractualcash
cashflows
flowsofof
thetheinstruments.
instruments.Contractual
Contractualcash
cashflows
flowsareareassessed
assessedtotocheck
checkif ifthetheasset
assetgives
givesrise
risetotopayments
paymentsononspecified
specifieddates
datesthat
thatarearesolelysolelypayments
paymentsofofprincipal
principalandandinterest
interest(“SPPI”)(“SPPI”)ononthe
theprincipal
principalamountamountoutstanding.
outstanding.

89All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise statedContractual cash flows that are SPPI on the principal amount outstanding are consistent with basic lending
arrangements. Interest is the consideration for the time value of money and the credit risk associated with theprincipal amount outstanding during a particular period of time. It can also include consideration for other basic risks(e.g. liquidity risk) and costs (e.g., administrative costs) associated with holding the financial assets for a particularperiod of time, and a profit margin that is consistent with a basic lending agreement.
The table below presents an overview of the fair values of financial assets based on SPPI criteria as at 31 December
2018, as well as the changes in the fair values during the year. The asset classes are divided into two categories:- SPPI: Assets of which cash flows represent solely payment of principal and interest on an outstanding
principal amount, excluding any financial assets that meet the definition of held for trading in IFRS 9, or thatare managed and whose performance is evaluated on a fair value basis; and- other: all financial assets other than those specified in SPPI financial assets:
I.

With contractual terms that do not give rise on specified dates to cash flows that are solely paymentof principal and interest on the principal amount outstanding;II.

That meet the definition of held for trading in IFRS9 or that are managed and whose performanceare evaluated on a fair value basis.

Fair Value at

Change in fair
value

(EUR million)
31-Dec01-JanDebt securities:(Government bonds + Corporate bonds+ Structured debt)

1,831

1,789

42

SPPI

1,826

1,783

43

Other

5

6

(1)

Equity securities:

242

294

(52)

SPPI

-

-

-

Other

242

294

-

Short-term investments:

230

179

52

SPPI

230

179

-

Other

-

-

-

Cash and cash equivalents

446

347

99

SPPI

446

347

-

Other

-

-

-

Total

2,749

2,609

142

The credit ratings of the financial assets passing the SPPI test (Debt securities, Bank deposits under short-term
investments and cash and cash equivalents) which are above investment grade (rated BB or above) are included in the
counter party rating table in section 4.3.2.
No impairment allowance was recorded for those financial assets as at 31 December 2018.
For information on credit exposure for ‘Other accounts receivables’, please refer to note 11.

4.3.3 Liquidity risk
Atradius is exposed to liquidity risk if there is insufficient cash available to meet its financial obligations, when due, ata reasonable cost. For Atradius, liquidity risks may arise if large scale short-term fluctuations occur to cash flows, suchas a decline in incoming cash or a rise in outgoing cash, or a combination of both.
Liquidity risk is managed at Atradius level, in close coordination with local operations. Atradius’ policy is to monitor
and measure ongoing cash flow patterns and control liquidity by maintaining sufficient cash and highly marketablesecurities to reduce liquidity risk to acceptably low levels. The investment policy states that Atradius should only
invest in financial instruments that can be liquidated in less than three business days. Atradius is able to access credit

90Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

facilities to prevent certain liquidity shortages which may arise due to short-term cash flow variances. Atradius
maintain one uncommitted credit line in excess of EUR 1 million, in the form of an overdraft facility for a total amountof EUR 50 million (2017: EUR 50 million). The credit line provides liquidity to cover infrequent peaks in short-term
liquidity requirements while also permitting Atradius to reduce its cash balances and to benefit from a more
substantial and stable investment portfolio. Finally, Atradius has in place a simultaneous claims payment clause in themain reinsurance treaties. This clause allows Atradius to ask the reinsurers to anticipate the payment of a large claim
upon Atradius’ request instead of the usual payment terms agreed in the reinsurance treaties.
Liquidity and interest risk tables
The following tables indicate the estimated amount and timing of the main cash flows at the end of the reporting
period of interest and non-interest bearing liabilities and assets. The tables include both interest and principal cash
flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves
at the end of the reporting period. Atradius has considered the impact of the cross-border cash pooling arrangement inthis overview.
The tables have been drawn up based on the undiscounted contractual cash flows of financial liabilities based on theearliest contractual repayment date. When Atradius has a choice of when an amount is paid, the financial liability isallocated to the latest period in which Atradius can be required to pay. When the lender has a choice of when an
amount is paid, the financial liability is allocated to the earliest period in which Atradius can be required to pay.

91

All
All amounts
amounts inin thousands
thousands ofof Euro,Euro, unlessunless otherwise
otherwise statedstatedAt 31 December 2018

Contractual cash flows (undiscounted)
Weighted
averageeffective
interest
rate %

On demand

Less than 1
year

1 to 5 years> 5 years

Carrying
amountSubordinated note

5.35%

-

13,12552,500259,529

248,790

Subordinated loan

5.00%

-

3,750

79,870-75,000Bankoverdraft

0.00%

336

--

--

--

336

Deposits received fromreinsurers

0.30%Interest bearing liabilities-

42,011--42,011336

58,886132,370259,529

366,137

Insurance contracts--

1,096,725

498,825(114)

1,619,869

Payables-

227,008--

227,008

Total-

1,323,733

498,825(114)

1,846,877

At 31 December 2017

Contractual cash flows (undiscounted)

Total
Non-interest bearing liabilities

Weighted
averageeffective
interest
rate %

On demand

Less than 1
year

1 to 5 years> 5 years

Carrying
amount 1)

Subordinated note

5.35%

-

13,12552,500272,654248,614

Subordinated loan

5.00%

-

3,750

83,620--75,000Bankoverdraft

0.00%

5,993

--

--

--

5,993

Deposits received fromreinsurers

0.16%

-

44,882--44,882

5,993

61,757

136,120272,654374,489-

1,038,894

469,319(1,031)

1,530,339

Interest bearing liabilities

Total
Non-interest bearing liabilities
Insurance contracts
Payables-

200,947--

200,947

Total-

1,239,841

469,319(1,031)

1,731,286

1) In 2017 Annual Report, the undiscounted subordinated notes cash flows were calculated until their maturity date. In 2018 Annual Report, such cash flows have been recalculated
until these subordinated notes first call date. Due to this change of criteria, 2017 figures show an impact of EUR 235 million under the [>5 years] bracket.

92

Atradius
Atradius || Consolidated
Consolidated financial
financial statements
statements 20182018 Atradius
Atradius N.V.
N.V.

At 31 December 2018

Contractual cash flows (undiscounted)
Weighted
averageeffective
interest
rate %

On demand

Less than 1
year

1 to 5 years> 5 years

Carrying
amountDebt securities
Investments: deposits and cash
held for investments

0.46%

--

387,9431,436,020

37,2591,831,308

0.12%

75,808-180,252----

255,894

Cash: Cash and bank deposits(0.14%)

441,353

5,005

-

-

446,358

517,161

573,200

1,436,020

37,2592,533,560-

241,746--

241,746

410,878

186,880(42)

597,716

Interest bearing assets

Total
Non-interest bearing assets
Other financial assets
Reinsurance contracts
Receivables-

237,071--

237,071

Total-

889,695

186,880(42)

1,076,533

At 31 December 2017

Contractual cash flows (undiscounted)
Weighted
averageeffective
interest
rate %

On demand

Less than 1
year

1 to 5 years> 5 years

Carrying
amountDebt securities
Investments: deposits and cash
held for investments

0.22%

-

196,223

1,545,996

51,401

1,788,607

0.00%

65,786

99,40240,000--205,222

Cash: Cash and bank deposits

0.00%

Interest bearing assets

340,195

6,976

-

-

347,171405,981

302,601

1,585,996

51,401

2,341,000

Other financial assets-

294,002--

294,002

Reinsurance contracts--

403,849

182,439(401)

585,887

Receivables-

225,079--

225,079

Total-

922,930

182,439(401)

1,104,968

Total
Non-interest bearing assets

4.4

Operational risk

4.4.1 Operational risk management
Operational risk means the risk of loss arising from inadequate or failed internal processes, personnel or systems, orfrom external events. This definition is in line with industry practice as well as with the European Solvency II
Directive. It is therefore present within all activities undertaken by Atradius, at all levels and across all locations.
The Operational Risk Management (ORM) unit is part of the Atradius Group Risk Management department and is
responsible for developing methods for the identification, assessment and response to risks, and for monitoring andfurther enhancing the overall risk management and control framework. The ORM unit works closely with bothInternal Audit and the Legal and Compliance unit. At the highest level, operational risk is overseen by the Operational
Risk Committee, which has a reporting line through to the Chief Risk Officer.

93All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

The ORM unit uses a framework for management of operational risk, which is based on the Committee of Sponsoring
Organisations’ Enterprise Risk Management (COSO ERM) Integrated Framework. Identification and monitoring
activities continue to be developed and enhanced, including the maintenance of risk registers, risks and control selfassessment procedures and business continuity plans. Additionally, risks and the related controls are discussed at alllevels, locations and units across the business, including the Management Board and Supervisory Board. High-level
information on crystallised risks has been captured for several years, with separate records of information technology
risk events stretching back even further. To provide oversight and assurance in an auditable and efficient manner, theORM unit employs a dedicated governance, risk and compliance software platform (the ’GRC portal‘) that integrates
existing risk management activities across the business.
In respect of external fraud, the Fraud Control Group, composed of employees across various locations, monitors theactivity of customers and buyers to detect indications of fraud. Atradius also provides fraud awareness training toemployees to help identify fraudulent buyers. Internal fraud is addressed through manual and automated operational
controls such as the segregation of duties, application of signing authorities and role-based system privileges andauthorities.
More details on certain operational risk management activities are provided below.

4.4.1.1

Risk registers and risk / control self-assessments

While the ORM unit is responsible for facilitating operational risk management within Atradius, the lines of businessand functional areas are responsible for managing their operational risks. Atradius Leadership Team members,
assisted by ‘risk champions’, maintain risk registers for their respective units. The content of the registers provides
input to local management meetings and is also reviewed by an Operational Risk Committee and during meetings ofthe Management Board. This ensures that operational risks are evaluated from all management perspectives.
While risk registers use a top-down approach to capturing risks, Atradius also uses a bottom-up approach of control
self-assessments to identify and assess risks and any control weaknesses inherent in business processes.
On a quarterly basis, Atradius conducts specific assessments of processes and controls covering financial reporting
risks; the resulting ‘in control’ sign-off process is overseen by a committee with representatives from Group Risk
Management, Finance and Internal Audit.

4.4.1.2

Business continuity management

Atradius recognises the importance of being able to recover its critical business processes in the event of any major
operational disruption. The business continuity management programme at Atradius is aligned with the International
Standard ISO22301. The ORM unit co-ordinates the documentation, maintenance and continual testing of practicalplans for recovering key business activities within acceptable timeframes.

4.4.1.3

Compliance

Compliance practices support our business, our reputation and our integrity. These elements are of importance to ourcustomers, suppliers, staff and other stakeholders. Complying with relevant laws, rules and regulations andmaintaining a high standard in terms of ethics and integrity, leads to lower operational risk and more stable businessprocesses. The Atradius Code of Conduct outlines the basic corporate, legal and ethical compliance principles andguidelines that apply to all employees of Atradius and that govern Atradius’ operations and its employees’ businessconduct and actions. Individual Compliance Policies address specific compliance areas in more detail and set out
detailed compliance requirements that must be complied with across Atradius and which must be included in existing
business procedures. For the monitoring and testing of effectiveness of these requirements, close alignment is soughtwith the activities of the ORM and Internal Audit units.

94

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

4.5

Capital management

4.5.1 Guiding principles
Capital management is guided by the following principles:-to ensure that Atradius is sufficiently capitalised to have the ability to survive by maintaining sufficientavailable capital after meeting its financial obligations;
to meet the local regulatory capital requirements of all Atradius entities, including branches and subsidiaries
of Atradius worldwide;
to manage the capital adequacy of Atradius and its entities, taking into account the economic and accounting
views along with the external rating agencies and regulatory capital requirements;
to optimise capital structure by allocating funds across Atradius’ entities; andminimising the overall cost of funding while preserving financial flexibility.

4.5.2 Atradius' objectives, policies and processes with regard to capital
Atradius manages capital worth more than two billion euro. Per year-end 2018, the capital includes shareholders’funds of EUR 1.8 billion and subordinated debt of EUR 325 million (nominal value). The subordinated debt includes
subordinated notes of EUR 250 million (nominal value) and a subordinated loan of EUR 75 million. The subordinatednotes and the subordinated loan are classified as Level 2 and as Tier 2 basic own funds for Solvency II.
Available capital is measured and managed both from an accounting and economic perspective. Atradius considers
the solvency calculation models of the relevant regulatory authorities and credit rating agencies to actively manage
capital to ensure capital adequacy. Atradius’ policy is to maintain a sufficient excess above the minimum solvency
capital required by the relevant regulatory authorities.
Atradius has embedded processes and procedures to ensure compliance with externally imposed regulations andinternally imposed requirements for capital adequacy. Such compliance is ensured by:-a process of regular assessment of solvency needs, taking into account the business strategy, resulting risk
profile and applied risk limits;
incorporating a view on expected future investments in new businesses, revenues, claims, reinsurance
expectations and dividends as these impact both available and required capital;
monitoring duration of assets; andtaking into consideration capital market expectations such as expected returns, volatilities and correlations asthese may impact earnings and the shareholder equity reserves.

In order to ensure capital adequacy, a capital buffer above the regulatory solvency capital required is maintained, suchthat large loss events would not impair the ability of Atradius to carry on its normal course of business.

4.5.3 Regulatory capital requirements
In each country in which Atradius operates with insurance or reinsurance companies established according to local
laws, and where prescribed for branches as well, the local insurance regulator specifies the minimum amount andtype of capital that must be held by each of the subsidiaries or branches. The minimum required capital must be
maintained at all times throughout the year. In addition, the local insurance regulators have the discretionary right toimpose additional capital requirements in excess of the required minimum.
In 2018, the capital of Atradius has been managed according to the Atradius guidelines and in close cooperation withthe units involved in managing the different factors related to capital. The Atradius entities were able to meet theirfinancial obligations and to comply with local legal and regulatory requirements.

4.5.4 Solvency II
Solvency II is the regulatory framework for (re-)insurance undertakings and groups domiciled in the EU; it became
effective on 1 January 2016. It replaced the former regulatory regime of 14 directives which were commonly known as“Solvency I”.

95All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

Atradius Crédito y Caución, S.A. de Seguros y Reaseguros in Spain and Atradius Reinsurance DAC in Ireland are theregulated entities that are subject to Solvency II. Under Solvency II guidelines Group supervision takes place at theultimate parent Grupo Catalana Occidente S.A.
After approval by the College of Supervisors during 2017, the regulated entities within Atradius apply a Partial
Internal Model for calculating their regulatory capital requirements. An internal model, which reflects our businessbetter than the regulatory “standard formula”, is used to calculate capital requirements for Underwriting Risk.
Atradius uses the standard formula for Market, Counterparty Default and Operational Risk as the characteristics ofthese risk types do not warrant an internal model approach.
As per year end 2018 the eligible own funds under SII for the Company amounts to EUR 2,059 million (2017: EUR
2,040 million).

5

Segment information

Operating segments are identified on the basis of internal reports about components of Atradius that are regularly
reviewed by the Management Board in order to allocate resources to the segment and to assess its performance. The
insurance business is split into the segments Credit insurance which includes Instalment credit protection (ICP),
Bonding and Reinsurance due to the different nature of the related products and the associated insurance liabilities.
The segment Services includes Collection activities, Atradius Dutch State Business and other service related business.
Group costs relate to corporate operations, after cost allocations to the other business segments.
Collection activities include recovery activities on behalf of insurance companies. Transactions between segments areon an arm’s length basis in a manner similar to transactions with third parties. The accounting policies of thereportable segments are the same as described in Note 2.
Information regarding these segments is presented in the following tables:96Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

Business segment

2018
Insurance premium
revenue
Service and other income

Creditinsurance

Bonding

Reinsurance

Total
insurancebusiness

Services

Intersegment
eliminati
on

Group
costs

Total

1,397,309

119,854

131,364

1,648,527---

1,648,527

132,511--

132,511

117,006--

249,517

Inter-segment revenue

-

-

-

-

3,742

(3,742)--

Total revenue

1,529,820

119,854

131,364

1,781,038

120,748(3,742)-

1,898,044

Insurance premium ceded
to reinsurers(594,218)(52,400)(25,370)(671,988)---(671,988)

Total segment income
after reinsurance

935,60267,454

105,994

1,109,050

120,748(3,742)-

1,226,056(680,354)(25,607)(72,376)(778,337)

-

3,093

-

(775,244)

Insurance claims and loss
adjustment expenses
Insurance claims and loss
adjustment expenses
recovered from reinsurers

254,318

11,70816,912282,938---

282,938

Net insurance claims(426,036)(13,899)(55,464)(495,399)

-

3,093

-

(492,306)

Gross operating expenses
Commission received forbusiness ceded toreinsurers(530,082)(42,679)(51,526)(624,287)

649(8,123)(753,207)

259,791

19,475

4,152

283,418---

283,418

Net operating expenses(270,291)(23,204)(47,374)(340,869)(121,446)

649(8,123)(469,789)

Operating segment result

239,275

30,351

3,156

272,782(698)-(8,123)263,961(121,446) *Share of income/ (losses)of associated companies
Net income frominvestments

17,493Finance income

5,858

Finance expenses(14,599)

Result for the year before
tax

277,365

Income tax expense(74,710)

Result for the year

202,655

4,652*Gross Operating Expenses Service Segment: includes EUR 4.3 million from Trade name amortisation (not considered for management reporting purposes).

Business segment

Creditinsurance

Bonding

Reinsurance

Total
insurancebusiness

Services

Intersegment
elimination

Total

Reinsurance contracts

397,473

151,591

48,652597,716--

597,716

Receivables

205,215

23,314

4,978

233,507

6,745(3,181)

237,071

-

-

-

-

-

-

3,890,509

602,688

174,905

53,630831,223

6,745(3,181)

4,725,296

Insurance contracts

944,516

292,785

382,568

1,619,869--

1,619,869

Payables

188,204

38,889334

227,427

18,943(19,362)

227,008

-

-

-

-

-

-

1,056,981

1,132,720

331,674

382,902

1,847,296

18,943(19,362)

2,903,858

2,703

150

28

2,881

664

-

3,545

2018

Unallocated assets
Total assets

Unallocated liabilities
Total liabilities
Total year end number of employees(full-time equivalent)97All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

Business segment

Creditinsurance

Bonding

Reinsurance

Total
insurancebusiness

Services

Intersegment
elimination

Group
costs

Total

2017
Insurance premium
revenue

1,341,173

113,225

133,697

1,588,095---

1,588,095

Service and other income

130,830--

130,830

118,310--249,140

-

-

-

-

3,402

(3,402)--

Total revenue

1,472,003

113,225

133,697

1,718,925

121,712(3,402)-

1,837,235

Insurance premium ceded
to reinsurers(599,825)(50,394)(25,410)(675,629)---(675,629)

Total segment income
after reinsurance

872,178

62,831

108,287

1,043,296

121,712(3,402)-

1,161,606

Insurance claims and loss
adjustment expenses(618,736)(21,040)(77,452)(717,228)

-

2,746

-

(714,482)

Inter-segment revenue

Insurance claims and loss
adjustment expenses
recovered from reinsurers

257,764

7,468

20,266285,498---

285,498

Net insurance claims(360,972)(13,572)(57,186)(431,730)

-

2,746

-

(428,984)

Gross operating expenses
Commission received forbusiness ceded toreinsurers(509,929)(41,396)(54,840)(606,165)(118,122)656(6,745)(730,376)

233,162

18,733

4,552

256,447---

256,447

Net operating expenses(276,767)(22,663)(50,288)(349,718)(118,122)656(6,745)(473,929)

Operating segment result

234,439

26,596813

261,848

3,590-(6,745)

258,693

Share of income/ (losses)of associated companies
Net income frominvestments

20,586

Finance income

2,696

Finance expenses(19,271)

Result for the year before
tax

255,309

Income tax expense(69,073)

Result for the year

186,236(7,396)*Gross Operating Expenses Service Segment: includes EUR 1.5 million from Trade name amortisation (not considered for management reporting purposes).

Business segment

Creditinsurance

Bonding

Reinsurance

Total
insurancebusiness

Services

Intersegment
elimination

Total

Reinsurance contracts

390,885

148,045

46,957585,887--

585,887

Receivables

198,207

20,377

3,559

222,143

5,675(2,739)225,079

-

-

-

-

-

-

3,708,196

Total assets

589,092

168,422

50,516808,030

5,675(2,739)4,519,162

Insurance contracts

879,679

278,074

372,586

1,530,339--

1,530,339

Payables161,940

37,960564

200,464

15,051(14,568)

200,947

-

-

-

-

-

-

1,034,628

1,041,619

316,034

373,150

1,730,803

15,051(14,568)

2,765,914

2,723

139

21

2,883

713

-

3,596

2017

Unallocated assets

Unallocated liabilities
Total liabilities
Total year end number of
employees (full-time equivalent)98Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

The segmental reporting follows the management point of view. In all the other insurance related notes the figures arereported based on the products of credit insurance and bonding which differs from the segmental view presented
here. The underlying contracts of the Reinsurance segment are approximately 58% credit insurance contracts andapproximately 42% bonding (2017: 58% and 42% respectively), based on premium volume.
Revenue from external customers allocated to the region in which the insurance contract is issued or services are
rendered is presented in the following table:
2018

2017

Spain and Portugal

380,418

372,348

France, Belgium, Italy and Luxembourg

356,213340,480

Germany, Central and Eastern Europe

352,639

328,485

United Kingdom and Ireland

277,087

277,770

The Netherlands

169,979

168,758

Oceania and Asia

138,622130,259

Americas118,637

121,604

Nordic countries

104,449

97,531

1,898,044

1,837,235

Total

Total assets and capital expenditure allocated based on where the assets are located are presented in the following
table:
AssetsNon-current assets 1)

Additions to non-current
assets 1)

2018

2017

2018

2017

2018

2017

Spain and Portugal

1,342,231

1,420,458

121,798

123,738

6,018

12,712

France, Belgium, Italy and Luxembourg

362,474

321,651

23,56525,025

1,519

5,076

Germany, Central and Eastern Europe

345,625

342,190

7,673

7,215

2,288

3,004

United Kingdom and Ireland

1,523,439

1,462,223

36,30034,017

14,99017,078The Netherlands

572,918

433,406

50,32233,44930,238

11,900

Nordic countries

156,614147,083

891

1,180

124

315

Americas228,829

208,994

2,914

2,859

372

1,049

Oceania and Asia

193,166

183,157

1,244

1,512

281

360

4,725,296

4,519,162

244,708

228,995

55,83051,494Total

1) Non-current assets included in the above table comprise intangible assets (other than goodwill), property, plant and equipment and investment property.

99All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated6

Intangible assets

2018

Goodwill

Software

Other 1)Total

At cost at 1 January

151,292

218,831

30,342400,465

Additions-45,63750

45,687

Disposals-(4,667)-(4,667)

Effect of movements in foreign exchange rates

(8)

(817)

48

(777)

151,284

258,984

30,440440,708(736)(142,984)(20,326)(164,046)

Amortisation charge for the year-

(17,200)(5,484)(22,684)

Disposals

-

4,181

-

4,181

Impairment-(5,347)-(5,347)(736)

533(160,817)(48)(25,858)

485(187,411)

Balance at 1 January

150,556

75,847

10,016

236,419

Balance at 31 December

150,548

98,167

4,582

253,2972017

Goodwill

Software

Other 1)Total

At cost at 1 January

151,312

193,424

32,238376,974

Additions-

31,316-31,316

Disposals-(3,286)(1,739)(5,025)

At cost at 31 December
Accumulated amortisation and impairments at 1 January

Effect of movements in foreign exchange rates
Accumulated amortisation and impairments at 31 December

Reclassification
Effect of movements in foreign exchange rates
At cost at 31 December
Accumulated amortisation and impairments at 1 January

-

(9)

-

(9)

(20)

(2,614)(157)(2,791)

151,292

218,831

30,342400,465(736)(130,802)(19,431)(150,969)

Amortisation charge for the year-

(16,074)(2,584)(18,658)

Disposals

-

1,881

1,532

3,413

Reclassification

-

163

-

163

(736)

1,848
(142,984)

157(20,326)

2,005(164,046)

150,576
150,556

62,62275,847

12,805
10,014226,005
236,419

Effect of movements in foreign exchange rates
Accumulated amortisation and impairments at 31 December
Balance at 1 January
Balance at 31 December

1) Other intangible assets relate to agent networks, non-patented technology, trade names and insurance portfolios

Goodwill
If applicable, impairment of goodwill is recognised as a separate item in the income statement. During 2018 there was
no impairment charge (2017: no impairment charge).
The goodwill allocated to the main cash-generating units or groups of units (CGU’s) is presented in the following table:

100Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

Cash-Generating Units

2018

2017

ACyC 1)

98,797

98,797

Graydon Holding N.V.

30,93130,931

Atradius Trade Credit Insurance Inc.

4,750

4,750

Atradius Collections B.V.

6,426

6,426

ACyC. (France)

2,767

2,767

ACyC (Nordic bonding)

2,563

2,571

Other

4,314

4,314

Total

150,548

150,5562)1) The CGU ACyC includes the local business in Spain and Portugal,.
2) The Nordic Bonding unit includes Atradius’ bonding business in Denmark, Norway, Sweden and Finland.

The value in use of an individual CGU is determined using a dividend discount model (DDM), except for Graydon
which is determined using discount cash flow model (DCF). The dividend flows are estimated using a projection period
and a normalised period. The projection period is 10 years towards covering a through-the-cycle performance, where
the first 1-3 year projections are based on financial budgets and/or forecasts. The remaining years are estimated using
ratios and growth rates that converge towards their normalised term value. The discount rate, gross of tax, varies
depending on the Risk-Free Rate and the Country Risk Premium of the country where the CGU is located. For those
CGUs with Goodwill higher than EUR 10 million, the discount rate stays between 6.2% and 7.8% and the growth rate
between 1% and 1.4% . The terminal value is calculated based on the dividend flows of the normalised period through aperpetuity which applies a long-term growth rate of 1% (2017: 0.5%) and the specific discount rate. Any profits, after
fulfilling minimum capital requirements, are assumed to be distributable dividends. Minimum capital requirements
are calculated based on the Solvency II Partial Internal Model and minimum shareholders equity required (nondistributable).
CGU are defined by line of business according to the way we manage and steer the operational business.
An approximation of the sensitivity of the following assumptions would impact the CGU goodwills by the percentages
shown below (Other CGU are not included due to immaterial impacts):

Cash-Generating Units

Discount rate

Growth rate

Combined ratio 1)

-50bp

-50bp

-50bp

ACyC

7.4%

-1.4%

1.8%

Graydon Holding

15.3%-11.1%-3.5%

Atradius Trade Credit Insurance Inc.

6.3%

-4.8%

2.9%

Atradius Collections B.V.

23.2%

-18.5%

0.0%

ACyC (France)

11.5%

-9.0%

4.8%

ACyC (Nordic bonding)

7.5%

-5.5%

3.3%

1) For Graydon, as a non-insurance CGU, the profitability variable used has been the EBITDA and the sensitivities are shown in this column.

SoftwareAtradius assessed all capitalised software to determine if the criteria for capitalisation are being met. During 2018
Atradius has capitalised EUR 38.1 million mainly due to Atradius Business Transformation project (ABT) (2017: EUR
25.2 million).
Atradius performed an impairment test on an annually basis. In 2018 there is an impairment recognition of 5.3
million. (There was no impairment recognition in 2017.)

101

All amounts in thousands of Euro, unless otherwise stated
All amounts
amounts inin thousands
thousandsof
ofEuro,Euro,unlessunlessotherwise
otherwisestatedstated7

Property,
Property, plant
plant andandequipment
equipment&&investment
investmentproperty
property2018

At cost at
at 11 January
JanuaryLand
Land&&
buildings
buildings

Fixtures
Fixtures&&fittings
fittings

ITIT
hardwarehardware

Total
Total
property,
property,
plant
plant
&&
equipment
equipment

Investment
Investment
property
property

112,112112,11260,93060,93051,481
51,481

224,523
224,523

14,581
14,581

Additions
Additions

--

4,118
4,118

6,024
6,024

10,143
10,143- -Disposals
Disposals

(566)
(566)

(1,261)(1,261)(4,439)(4,439)(6,265)(6,265)

- -

--

(9)
(9)

22

(8)(8)

- -

62
62

(122)
(122)

(242)
(242)

(303)
(303)

2828

At cost at
at 31
31 December
December

111,608
111,608

63,65663,65652,82652,826228,090
228,090

14,60914,609

Accumulated
Accumulated depreciation
depreciationand
andimpairments
impairments
at 1 January
January(11,540)(11,540)(40,308)(40,308)(39,230)(39,230)(91,078)(91,078)(4,893)(4,893)

Depreciation
Depreciation charge
charge forforthetheyearyear(1,102)(1,102)(4,054)(4,054)(5,554)(5,554)(10,710)(10,710)

(118)
(118)

Disposals
Disposals

49
49

1,261
1,261

4,358
4,358

5,668
5,668

- -

Impairment
Impairment loss
loss

95
95

--

- -

9595

4545

Reclassification
Reclassification

--

99

- -

99

- -

Effect of movements
movementsin
inforeignforeignexchange
exchange
rates

Reclassification
Reclassification
Effect of movements
movementsin
inforeignforeignexchange
exchange
rates

(8)
(8)

103
103

148
148

243
243

(2)(2)

Accumulated
Accumulated depreciation
depreciationand
andimpairments
impairments
at 31 December
December(12,506)(12,506)(42,989)(42,989)(40,278)(40,278)(95,773)(95,773)(4,968)(4,968)

Balance at
at 11 January
January

100,572
100,572

20,622
20,622

12,251
12,251

133,445
133,445

9,688
9,688

Balance at
at 31
31 December
December

99,102
99,102

20,667
20,667

12,54812,548132,317
132,317

9,641
9,641

102

Atradius || Consolidated
Atradius
Consolidated financial
financial statements
statements2018
2018Atradius
AtradiusN.V.
N.V.

2017

Land &
buildings

Fixtures &fittings

IT hardware

Total
property,plant &
equipment

Investment
property

At cost at 1 January

108,388

57,22949,177214,794

14,518

-

7,902

7,204

15,106

3,971

Additions
Disposals-(3,325)(3,886)(7,211)

-

3,860

4

(12)

3,852

(3,860)

(136)

(880)

(1,002)(2,018)(48)

At cost at 31 December

112,11260,93051,481

224,523

14,581

Accumulated depreciation and impairments
at 1 January(10,427)(40,026)(38,373)(88,826)(4,610)Depreciation charge for the year

(1,022)(4,031)(5,393)(10,446)(134)

Disposals

-

3,279

3,852

7,131

-

Impairment loss

-

-

-

-

(269)

Reclassification

(114)

(118)

(38)

(270)

115

Reclassification
Effect of movements in foreign exchange
rates

Effect of movements in foreign exchange
rates
Accumulated depreciation and impairments
at 31 December

23

588

722

1,333

5

(11,540)(40,308)(39,230)(91,078)(4,893)

Balance at 1 January

97,961

17,203

10,804125,968

9,908

Balance at 31 December

100,572

20,622

12,251

133,445

9,688

The depreciation charge on property for own use is reported as part of net operating expenses. The depreciation
charge on investment property is reported as part of net income from investments.
The fair value of land and buildings for own use and of investment property is presented in the following table:
Property own use
2018

Investment property
2017

2018

2017

Spain and Portugal

92,63486,395

9,104

8,830

Italy

20,62020,620675

675

Mexico

3,927

3,567

1,309

1,189

--

-

475

460

The Netherlands
Other

998

904

-

-

Total

118,179

111,486

11,563

11,154

Fair value measurement
Land and buildings are independently appraised by real estate valuators, which are registered in the relevant
countries and have appropriate qualifications and experience in the valuation of properties. Atradius usually revalues
land and buildings every two years.
All property is valued using valuation techniques. All significant inputs used in the measurement are market
observable and the fair value is therefore classified in Level 2 in the fair value hierarchy (as in 2017). Valuation
techniques used are: Market (comparison) approach, Income approach (discounted cash flow method) and Cost
approach. Significant valuation inputs used to determine the fair value measurements based on techniques used are
construction features, location (and/or conditions) and transport utilities.

103

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

The estimated fair value of the properties is directly dependant on the changes of the inputs used. There has been nochange in the valuation techniques used compared to prior year.
The investment property can be classified as follows: 89% office (2017: 89%) and 11% retail (2017: 11%).
Direct operating expenses incurred (including repairs and maintenance) arising from investment property are EUR
400 thousand (2017: EUR 97 thousand). During the year an amount of EUR 735 thousand (2017: EUR 551 thousand) has
been recognised as rental income from investment property for lease contracts. These contracts have remaining termsof between 1 and 10 years. Expected rental income arising from these contracts for next year is EUR 593 thousand ofwhich EUR 536 thousand are for non-cancellable contracts.

8

Subsidiaries

The following table sets forth, as at 31 December 2018 and 2017, the name and country of incorporation of the main
subsidiaries of Atradius N.V.
All companies are, directly or indirectly, wholly owned unless otherwise indicated. The companies are listed inalphabetical order.
Country ofincorporation% interest
heldType of business

The Netherlands

100.00%

Collections

Spain

100.00%Credit insurance

Atradius Finance B.V.

The Netherlands

100.00%Finance

Atradius Information Services B.V.

The Netherlands

100.00%Information services

Atradius Insurance Holding N.V.

The Netherlands

100.00%Holding

Atradius Participations Holding B.V.

The Netherlands

100.00%Holding

Atradius Reinsurance DAC

Ireland100.00%

Reinsurance

Atradius Rus Credit Insurance LLC

Russia100.00%Credit insurance

Atradius Seguros de Crédito, S.A.

Mexico100.00%Credit insurance

Atradius Trade Credit Insurance, Inc.

USA

100.00%Credit insurance

Atradius Crédito y Caución Seguradora SA

Brazil100.00%Credit insurance

The Netherlands

100.00%Information services

Atradius Collections B.V.
Atradius Crédito y Caución S.A. de Seguros y Reaseguros

Graydon Holding N.V.

104

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

9

Investments in associated companies

The following table shows the changes in investments valued by using the equity method:
2018

2017

63,53839,586-34,742

Share of income of associated companies

4,652.0

3,678

Dividends received
Disposals
Impairments of associated companies
Revaluations
Effect of movements in foreign exchange rates(968.0)(213.0)(3,581.4)(11,701)54(2,821)

Balance at 31 December

63,42863,538

Balance at 1 January
AdditionsNone of the associated companies is listed. All information from the associated companies, unless otherwise stated, isbased on balance sheet dates between 30 September 2018 and 31 December 2018.

Credit Guarantee Insurance Corporation of Africa Limited
CLAL Credit Insurance Ltd., Tel Aviv
Compañía de Seguros de Crédito Continental S.A., Santiago de
Chile
The Lebanese Credit Insurer s.a.l., Beirut

Country ofincorporation% interest
heldType of business

South Africa

25.00%

Credit insurance

Israel20.00%

Credit insurance

Chile

50.00% 1)

Credit insurance

48.90%

Credit insurance

Lebanon1) Minus one share

The following tables show summarised financial information of Atradius’ interest in associated companies and thefinancial information of the associated companies:

105

All
All amounts
amounts inin thousands
thousands ofof Euro,Euro, unlessunlessotherwise
otherwisestatedstated2018

Credit
CLAL Credit
Guarantee Insurance Ltd.
Insurance
Corporation of
Africa Limited

Compañía de The Lebanese
Seguros de Credit Insurer
Créditos.a.l.
Continental
S.A. 1)

Other

Total

Atradius 's interest
Goodwill

6,927

380

1,611

-

-

8,918

Net assets

14,991

11,34026,9971,182-

54,510Carrying amount
Share of income of associatedcompanies

21,918

11,72028,6081,182-

63,428

1,454

1,390

2,154

(346)

-

4,652

Result sale

-

-

-

-

-

-

Other income/(expense)

-

-

-

-

-

-

253

-

715

-

-

968

Dividends received
Associated companies
Assets120,944

85,363

121,2139,445-

336,965

Liabilities

60,97728,66362,1397,027-

158,806

Revenue

53,781

13,070

9,793

2,742

-

79,386

Net assets

59,96756,70059,074

2,418-

178,159

Result for the year

5,814

6,951

4,309

(708)

-

16,366

Goodwill

6,927

380

1,611

-

-

8,918

Net assets

15,31810,361

27,4801,461-

54,620Carrying amount
Share of income of associatedcompanies

22,245

10,741

29,091

1,461-

63,538

964

958

1,919

(163)

-

3,678

-

-

-

-

627

627

2017
Atradius 's interest

Dividends received
Associated companies
Assets127,879

81,144

120,160

10,674-

339,857

Liabilities

66,60829,33465,1997,686-

168,827

Revenue

46,842

13,574

10,745

2,662-

73,823

Net assets

61,271

51,81054,961

2,988-

171,030

Result for the year

3,856

4,795

3,838

(334)

-

12,155

1) Figures for Compañía de Seguros de Crédito Continental S.A. are related to non-consolidated statements.

106

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

10 Financial investments
Financial investments classified
by measurement category andnatureAvailable-for-sale
2018

2017

2018

2017

2018

2017

Equity securities

241,720

293,976--

241,720

293,976

Debt securities

1,831,308

1,788,607--

1,831,308

1,788,607

Loans

-

-

26

26

26

26

Short-term investments--

205,514

166,338

205,514

166,338

Cash held for investments--

50,38038,88350,38038,883

2,073,028

2,082,583

255,920

205,247

2,328,948

2,287,830

Total

Loans and receivables 1)

Total1) There are not bank deposits tacitly renewable in 2018 ( EUR 30 million with a maturity of 90 days tacitly renewable in 2017)

Movements in available-for-salefinancial investments

Equity securities

Debt securities

Total

2018

2017

2018

2017

2018

2017

293,976

290,904

1,788,607

1,781,141

2,082,583

2,072,045

Additions

7,930

26,870476,412560,021484,342586,891

Disposals(20,375)(42,649)(405,994)(500,821)(426,369)(543,470)--(23,304)(25,061)(23,304)(25,061)(39,954)

19,586(7,756)(2,860)(47,710)

16,726

143

(735)

3,343

(23,813)

3,486(24,548)

241,720

293,976

1,831,308

1,788,607

2,073,028

2,082,583

2018

2017

Accounts receivable on insurance and reinsurance business

180,503

164,983

Amounts owed by policyholders and direct insurance operations

130,031

116,941

Balance at 1 January

Amortisation charge for the year
Revaluations through othercomprehensive income andincome statement
Effect of movements in foreignexchange rates
Balance at 31 December

For disclosures about the temporary exemption from IFRS 9, please refer to Note 4.3.2

11

Receivables

Receivables arising out of reinsurance

50,47248,042Other account receivable

56,56860,096

Total

237,071

225,079

The outstanding receivables are substantially all current and consequently their fair values do not materially differ
from their carrying amounts.
There is no concentration of credit risk in respect of receivables as Atradius has a large number of internationallydispersed debtors (see Note 4.3.2).
An amount of EUR 77.7 million (2017: EUR 75.7 million) relates to past due receivables on insurance and reinsurance
business for which no impairment loss has been recognised, 91.9% (2017: 91.6%) relates to receivables ageing less than
three months.
All receivables are considered for impairment testing. As of 31 December 2018, receivables of EUR 24.9 million (2017:
EUR 22.1 million) were considered to be partially impaired. The amount of the impairment taken related to these107All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise statedreceivables was EUR 12.8 million (2017: EUR 14.7 million). This balance takes into account that a portion of theimpaired receivables will be recovered. Atradius does not hold any collateral over these balances.
The ‘Other accounts receivable’ related to service income, are short term balances which consist of individually smallbalances. The provision for impaired ‘Other accounts receivable’ for 2018 is EUR 3.3 million (2017: EUR 3.3 million)
Movements on the provision for impaired receivables are presented in the following table:
2018

2017

Balance at 1 January

14,693

17,576

Impairment of receivables

3,057

4,678

Receivables written off during the year as uncollectable(4,710)(7,128)

(297)

(433)

12,743

14,693

Unused amounts reversed
Balance at 31 December

The movement in the provision for impaired receivables on insurance business is included in the premium line.
Amounts charged to the allowance account are generally written off when there is no expectation of recovery.
For disclosures about the temporary exemption from IFRS 9, please refer to Note 4.3.2

12 Deferred acquisition costs

Balance at 1 January
Change in deferred acquisition costs
Effect of movements in foreign exchange rates

2018

2017

69,44173,919

1,128

233

1,174

(4,711)

Balance at 31 December

71,74369,441

Current
Non-current

42,03829,70547,865
21,5762018

2017

Pipeline and ceded return premium

389,275

375,086

Prepayments and accrued interest

36,00941,519Net pension plan asset

38,44020,814

Reimbursement rights

13,525

12,89413 Miscellaneous assets and accruals

Other

21,32320,705

Total

498,572

471,018

Pipeline premium relates to shipments made by Atradius’ policyholders for which Atradius is at risk but has not
invoiced the premium.
The miscellaneous assets and accruals are substantially all current and consequently the fair values of these assets do
not materially differ from their carrying amounts.
The reimbursement rights relate to the Spanish pension plans. Since the related policies do not qualify as an insurance
policy under IAS 19, the fair value cannot be netted with the related pension liability (see Note 17).
The net pension plan asset concerns the surplus of the pension plan in the UK; as per 31 December 2018 is EUR 38.4
million ( 2017: EUR 20.8 million) (see Note 17).

108

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

14 Cash and cash equivalents
2018

2017

Cash at bank and on hand

441,353

340,195

Short-term bank deposits

5,005

6,976

Cash and cash equivalents

446,358

347,171

Cash and cash equivalents

446,357

347,171(336)(5,993)446,021341,178

Borrowings
Cash and cash equivalents in the statement of cash flows

Atradius manages the cash by using a cross-border cash pooling agreement. This provides for a notional pool structurewith interest compensation per currency. The cash pool arrangement allows for offsetting of cash balances ofbranches within a legal entity. However, it does not allow offsetting between different legal entities. Therefore, in thestatement of financial position, the related bank overdrafts that do not qualify for offsetting are presented separately
as liabilities under borrowings.
For disclosures about the temporary exemption from IFRS 9, please refer to Note 4.3.2

15 Capital and reserves
15.1

Share capital

The authorised share capital of Atradius N.V. amounts to EUR 250,000,000 and is divided into 250,000,000 ordinary
shares with a nominal value of EUR 1 each (2017: the same) of which 79,122,142 ordinary shares were issued and fully
paid (2017: the same). The fully paid ordinary shares carry one vote per share and carry the right to dividends.
Earnings per share are calculated by dividing the Group share of the net income by the number of ordinary shares inissue during the year. The earnings in 2018 were of EUR 2.5 per share.

15.2

Share premium reserve
2018

2017

Balance at 1 January639,228

639,228

Balance at 31 December

639,228

639,228

15.3

Revaluation reserve
2018

2017

Balance at 1 January

63,06054,757

Change in revaluation reserve - gross(47,367)

18,069Change in revaluation reserve - tax

10,039(5,235)

Net (gains)/losses transferred to net profit on disposal - gross(202)(5,215)

Net (gains)/losses transferred to net profit on disposal - tax

(22)

684

25,50863,060

Balance at 31 December

109All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

15.4

Currency translation reserve
2018

2017

Balance at 1 January(55,612)(32,558)

Change in currency translation reserve - gross(7,201)(25,303)

Change in currency translation reserve - tax

1,231

2,248

(61,582)(55,612)

Balance at 31 December

Atradius’ significant foreign currencies and sensitivity to fluctuations are set out in Note 4.3.

15.5

Pension reserve
2018

2017

(137,323)(170,310)

Recognised actuarial gains/(losses)(9,539)35,452

Change in pension reserve - gross(15,269)

45,643

Change in pension reserve - tax

5,731(10,192)

Effect of the asset ceiling

2,465(2,465)

Change in pension reserve - gross

3,286(3,286)

Change in pension reserve - tax

(822)

822

(144,397)(137,323)

2018

2017

1,164,758

1,055,231

Dividends(83,869)(76,748)

Result for the year

202,638

186,275

Balance at 31 December

1,283,527

1,164,758

Balance at 1 January

Balance at 31 December

15.6

Retained earnings

Balance at 1 January

15.7

Dividend distribution

Atradius’ dividend distribution is based on the Company financial statements. The Company and its subsidiaries are
subject to legal restrictions regarding the amount of dividends they can pay to their shareholders. Dividends can only be
paid up to an amount equal to the excess of the Company’s shareholders' equity and reserves required by law The Dutch
Civil Code contains the restriction that dividends can only be paid up to an amount equal to the excess of theCompany’s shareholders’ equity and reserves required by law. Additionally, certain subsidiaries are subject torestrictions on the amount of funds they may distribute in the form of dividends or otherwise and also in respect ofminimum capital requirements that are imposed by industry regulators in the countries in which the subsidiaries
operate.
The Company distributes dividends out of the retained earnings balance. If this balance is insufficient, the Company
will distribute dividends out of the share premium reserve (see Note 4.2 in the Company financial statements).

110

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

16 Subordinated debt
2018

2017

Balance at 1 January323,614

323,437

Accretion of interest

176

177

Redemption--

Addition--

323,790323,614

Balance at 31 December

On 23 September 2014, Atradius Finance B.V. issued guaranteed subordinated notes with a nominal value of EUR
100,000 each for an aggregate amount of EUR 250 million (the ‘notes’). Atradius Finance B.V. may redeem the notes,
in whole but not in part, on 23 September 2024 and thereafter on each interest payment date. Unless previously
redeemed, the notes will be redeemed at maturity on 23 September 2044. The notes bear interest at a fixed rate of
5.250% per annum payable annually in the first 10 years, which will thereafter be reset to a floating 3 month-EURIBOR
plus a margin of 5.031% per annum payable quarterly for the remaining 20 years. The notes do qualify as regulatory
capital under the Solvency II grandfathering rules. The notes are listed on the Luxembourg Stock Exchange.
On 20 April 2016 the shareholders of Atradius N.V. provided a subordinated loan to Atradius Reinsurance DAC with aprincipal amount of EUR 75 million. The subordinated loan bears interest at a fixed rate of 5.0% per annum, payableannually in arrears on 20 April each year until and including the maturity date: 20 April 2026. Atradius Reinsurance
DAC may redeem the loan on the first call date, 20 April 2021, or thereafter on each interest payment date. The
subordinated loan qualifies as Tier 2 basic own funds item as set out in article 73 of the European Commission's
Solvency II Delegated Regulation (2015/35).
The fair value estimate of the notes issued by Atradius Finance BV is EUR 260 million (2017: EUR 295 million). The fairvalue estimate of the subordinated loan issued by Atradius Reinsurance DAC is EUR 82 million (2017: EUR 80 million).
Both the subordinated notes and the subordinated loan are classified as Level 2 under the fair value hierarchy and as
Tier 2 basic own funds for Solvency II.
The fair value estimates of the subordinated bond and the subordinated loan are provided by an external independentvaluation company, which uses its own proprietary valuation systems to value securities supported by economic andmarket assumptions from financial information providers. The model calculates, accordingly to IFRS methodology,
the present value of the subordinated bond/loan’s cash flows discounted using the Euro government bond yield curve
as a benchmark and applying an appropriate risk spread. The risk spread applied is estimated using the credit spreadsof market quoted subordinated bond issues from similar issuers and with similar rating and maturity profiles.

17 Employee benefit assets and liabilities
2018

2017

Retirement benefits

95,79273,880

Other long-term employee benefits

4,390

5,673

100,182

79,553

Total

17.1

Retirement benefits

The employee benefit assets and liabilities relate mainly to pension assets and liabilities for defined benefit plans. The
main defined benefit plans are in the United Kingdom, Germany and the Netherlands and these represent 89% (2017:89%) of the defined benefit obligation. The other plans relate to Spain and Portugal, Italy, Switzerland, Sweden,
Belgium, Norway, France and Mexico. The recognition of assets and liabilities is determined separately for each plan.
Within Atradius there are also defined contribution plans. The contributions to these plans are recognised as expenses
in the income statement. The total contributions amounted to EUR 11.4 million in 2018 (2017: EUR 10.5 million).

111

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise statedPension assets and liabilities
The following table presents the change in the value of the net defined benefit liability:

Defined benefit
obligation

Fair value of plan
assetsAsset ceiling

Net defined benefit(asset) liability

2018

2017

2018

2017

2018

2017

2018

2017

845,838

828,531775,244724,178(3,286)-73,880104,353-

37,325-37,529

-

-

-

(204)

-

-

-

-

-

-

-

-

Current service cost

13,154

14,724----

13,154

14,724

Past service cost

(3,877)(2,462)

-

-

-

-

(3,877)(2,462)

Interest cost / income

17,342

17,003

16,963

15,627

(66)

-

445

1,376

Balance at 1 January
Additions
Included in the income
statement:

Administration costs

528

532

-

-

-

-

528

532

4,402

2,797

-

-

-

-

4,402

2,797

459

1,122

75

1,249

-

384

(127)

32,00833,716

17,03816,876(66)-

15,036

16,840- demographic assumptions(12,275)

(100)

-

-

-

-

(12,275)(100)- financial assumptions

8,459(6,605)

-

-

-

-

8,459

(6,605)- experience adjustments(2,228)(6,506)

-

-

-

-

(2,228)(6,506)Return on plan assets
excluding interest income--(21,471)

32,861--

21,471(32,861)

Change in Irrecoverable
Surplus other than Interest

-

-

-

-

3,352

(3,286)(3,352)

3,286

Effect of movements inforeign exchange rates(2,554)(12,947)(2,588)(12,988)

-

-

34

41

Total included in OCI(8,598)(26,158)(24,059)

19,873

3,352(3,286)

12,109(42,745)

Other:
Contributions paid by theemployerPlan participants
contributions(3,450)(3,416)

19,40919,178--(22,859)(22,594)

2,160

2,121

2,160

2,121

-

-

-

-

Benefits paid

(29,425)(26,251)(29,425)(26,251)

-

-

-

-

-

(30)

-

(30)

-

-

-

-

-

-

(17,626)(18,230)--

17,626

18,230Total other(30,715)(27,576)(25,482)(23,212)--(5,233)(4,364)

Balance at 31 December

838,533

845,838

742,741775,244-(3,286)

95,79273,880

Cost of Termination Benefits
Effect of movements inforeign exchange rates
Total included in the income
statement-

Included in OCI:
Remeasurement loss (gain):
Actuarial loss (gain) arisingfrom:

Additional benefits
Reclassification of surplus
plan assets

112

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

Plan assets
Atradius has pension related assets which under IAS 19 do not meet the criteria to qualify as plan assets. In Germany,for one of the plans, assets of EUR 16.3 million (2017: EUR 16.7 million) are classified as financial investments since inthe event of bankruptcy, these assets are not fully secured for the members of the pension plan. In the UK, EUR 28.7
million of financial investments (2017: EUR 29.9 million) is on an escrow account to support the UK pension fund. In
the event of insolvency, the Trustee of the pension fund has the right to those investments, provided certain conditions
are met.
The surplus of the UK pension plans as per 31 December 2018 is EUR 38.4 million (2017: EUR 20.8 million) is disclosed
as net plan pension assets as part of Note 13.
In Spain and Portugal, the defined benefit plans are partially insured with Seguros Catalana Occidente S.A.. These
insurance policies do not qualify as insurance policies under IAS 19, therefore the fair value is treated asreimbursement rights, which are recorded as part of other assets for an amount of EUR 12.8 million (2017: EUR 12.3
million). At the end of 2018, the defined benefit obligation related to the reimbursement rights amounts to EUR 21.9
million (2017: EUR 24.6 million). This same defined benefit obligation has in addition plan assets of EUR 15.5 million(2017: EUR 15.1 million).

113

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

Characteristics of the main defined benefit plans
Characteristic
Entitlement

United Kingdom
Pension entitlements are basedon a percentage of final salary(closed to new employees).

Germany
Pension entitlements are basedon a percentage of the averagesalary of the last 10 years.

Number ofparticipants

135 active members (2017: 152
active members).
525 inactive members (2017:
523 inactive members).
EUR 257 million (2017: EUR 282
million).
EUR 296 million (2017: EUR 303
million).

485 active members (2017: 504
active members).
452 inactive members (2017:
433 inactive members).
EUR 129 million (2017: EUR 121
million).
EUR 74 million (2017: EUR 76
million). Assets of EUR 16.3
million (2017: EUR 16.7 million)
are recognised as part of thefinancial investments.
EUR 11.1 million – loss (2017:
EUR 1 million - loss).

Defined benefit
obligation
Plan assets

Remeasurement
gain (loss)
through OCI
Fundingarrangement

EUR 13.5 million - gain (2017:
EUR 14.2 million - gain).

Employeecontributions

In 2018 contributions amounted
to 7.1% (2017: 7.1%) of the eligible
salary.
Every three years an ALM-study
is performed to review theinvestment policy.

ALM-strategy

The basis of the funding
agreement lies in the Trust Deed
and Rules. The pension fundperforms triennial actuarial
valuations to determine
employer contributions.

The investment policy is to holdgovernment and corporate
bonds in respect of pensioners
to broadly match their liabilities
and to hold assets expecting todeliver a return in respect of the
non-pensioners.

A Contractual Trust Agreement
is established as a financing
vehicle to cover part of thepension liabilities. There is no
specific funding arrangement
although the assets must exceed
the initially funded amount of
EUR 39.2 million.
None; all contributions are madeby the employer.
The investment objectives andpolicies are developed based on
an ALM-study.
The investment policy limits theinterest rate risk by restricting
the investment in bonds to fixed
rate bonds. Equity price risk iscontrolled by investingaccording to the Dow JonesEuro Stoxx 50 Index.

The Netherlands
Pension entitlements are
based on a percentage of theaverage salary (maximum of
EUR 0.1 million - closed to
new employees).
307 active members (2017: 317
active members).
1,363 inactive members (2017:
1,367 inactive members).
EUR 343 million (2017: EUR
331 million).
EUR 326 million (2017: EUR
334 million).

EUR 17.9 million - loss (2017:
EUR 27.2 million - gain).
The employer pays a yearlybase premium as a percentageof the total sum of eligible
salaries of all active
participants which cannot be
below the cost-effective
premium for that year.
Employees contribute in 2018
7.50% (2017: 7.0%) of theireligible salary.
At least once every three
years an ALM-study is
performed in which theimpact of the strategic
investment policies areanalysed.
The interest rate risk ispartially hedged within theinvestment portfolio by theuse of debt instruments incombination with liability
driven investment funds.

In general, the defined benefit plans are administered by pension vehicles. Although liaised with the Group, these are
separate legal entities (a Trustee in the United Kingdom, a Pension Trust eV in Germany and a Pension Fund in the
Netherlands). The boards of these entities compromises both employer and employee representatives. The boards are
responsible for setting their own policies (e.g. investment and governance) within the applicable legal framework.
These defined benefit plans may expose the Group to actuarial risks (such as longevity risk) and financial risks likeinterest rate risks and investment risk.

114

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

Fair value of plan assets
The fair value of plan assets at the end of the reporting period is analysed in the following table:
Plan assets 2018
Belgium
FranceGermany
Italy
MexicoNorwaySpain
SwedenSwitzerland
The Netherlands
United Kingdom
Total

Plan assets 2017
Belgium
FranceGermany
Italy
MexicoNorwaySpain
SwedenSwitzerland
The Netherlands
United Kingdom
Total

Cash and cash
equivalents

Equityinstruments

Debt
instruments

Investment
funds

1,711
19,738
1,032

23,22723
257
123,929-

49,424
1,031
1,944
244,977314
182,433
14,90522,481

147,437

297,376

197,653

Equityinstruments

Debt
instruments

Investment
funds

938
-

26,04920

49,323874-

20,901
1,562
23,401

251
136,118
116,657
279,095

2,546
35
156,322
209,100

177,685
10,535
188,220

Cash and cash
equivalents

Insurance Real
contracts
estateTotal 201840,261
40,261
74,363
1,054
3,372
3,372
15,45915,459
343
2,858
4,976
4,976
326,101
13,383
274,297
64,06813,726

Insurance Real
contracts
estate38,2883,243
15,076
4,465
61,072-742,741

Total 2017
38,28876,310894

346
14,011
14,357

3,243
15,076
3,143
4,465
334,739
299,086
775,244

All equity and debt securities have quoted prices in active markets. The plan assets do not include any of Atradius’
own financial instruments, nor any property occupied or other assets used by Atradius.
The return on plan assets is determined by multiplying the fair value of the plan assets by the discount rate as
determined at the start of the annual reporting period, taking account of any changes in the plan assets held during theperiod as a result of contributions and benefit payments. The actual return on plan assets (including reimbursement
rights) was EUR 4.2 million – loss (2017: EUR 48.5 million - gain).

115

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

Actuarial assumptions
The principal assumptions used for the purpose of the actuarial valuations of the three main defined benefit plans arepresented in the following table:
Principal actuarial assumptions

United Kingdom

Germany

The Netherlands

2018

2017

2018

2017

2018

2017

Discount rate

2.75%

2.50%

1.75%

1.75%

1.75%

2.00%

Price inflation rate

3.50%

3.50%

1.75%

1.50%

1.75%

1.75%

Expected increase of futuresalaries

2.65%

2.40%

2.30%

2.05%

1.75%

1.75%

3.19%

3.00%

1.50%

1.25%

0.88%

0.88%

CMI 2017(1.5% LTR)

CMI 2015(1.5% LTR)

Heubeck
Richttafeln
2018 G

Heubeck
Richttafeln
2005 G

Prognosetafel
AG2018+ adjusted
experience

Prognosetafel
AG2016+ adjusted
experience

19

21

16

16

20

21

Expected increase of future benefit
levelsMortality table

Duration in years

An approximation of the sensitivity of the relevant actuarial assumptions, holding other assumptions constant, would
impact the total defined benefit obligation of the main pension plans by the amounts shown below:
Defined benefit obligation

2018

2017

Increase

Decrease

Increase

Decrease(124,531)

163,185(128,986)

170,004

Price inflation rate (1% movement)

87,371(80,472)

105,044(89,593)

Future salary growth (1% movement)

17,253(16,404)

18,034(15,718)

Future pension growth (1% movement)

130,557(103,926)

134,719(102,249)

Future mortality (+1 year)

25,555n/a

27,738n/aDiscount rate (1% movement)

17.2

Defined benefit costs

A total defined benefit cost of EUR 14.3 million (2017: EUR 16 million) is recognised in the income statement under net
operating expenses (see Note 27). EUR 14.2 million (2017: EUR 15.7 million) relates to pension plans and EUR 0.1
million (2017: EUR 0.3 million) to other long-term employee benefits.

116

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius
Atradius || Consolidated
Consolidatedfinancial
financialstatements
statements2018
2018Atradius
AtradiusN.V.
N.V.

18 Insurance
Insurance contracts
contracts
Credit insurance
insurance

Gross
Gross Reinsurance
Reinsurance
asset
asset
2018
2018

Net
Net

Gross
Gross Reinsurance
Reinsurance
asset
asset
2017
2017

NetNetClaims reported
reported andandloss
lossadjustment
adjustment
expenses
expenses229,635
229,635(119,443)(119,443)

110,192
110,192

222,699
222,699(119,645)(119,645)

103,054
103,054

Claims incurred
incurred but
butnotnotreported
reported

592,305
592,305(230,085)(230,085)

362,220362,220554,708554,708(223,259)(223,259)

331,449
331,449

Claims provisions
provisions

821,940
821,940(349,528)(349,528)

472,412472,412

777,407
777,407(342,904)(342,904)

434,503434,503

Provision
Provision forfor unearned
unearnedpremium
premium

308,226
308,226(96,596)(96,596)

211,630
211,630

287,072
287,072(94,938)(94,938)

192,134
192,134

Total

1,130,166
1,130,166(446,124)(446,124)

684,042684,042

1,064,479
1,064,479(437,842)(437,842)

626,637
626,637

reported andandloss
lossadjustment
adjustment
Claims reported
expenses
expenses

198,143
198,143(69,416)(69,416)

128,727
128,727

186,784
186,784(67,005)(67,005)

119,779
119,779

incurred but
butnotnotreported
reported
Claims incurred

71,216
71,216(7,104)(7,104)

64,11264,112

63,96863,968(7,090)(7,090)56,87856,878provisions
Claims provisions

269,359
269,359(76,520)(76,520)

192,839
192,839

250,752
250,752(74,095)(74,095)

176,657
176,657

Provision forfor unearned
unearnedpremium
premium
Provision

220,344
220,344(75,072)(75,072)

145,272
145,272

215,108
215,108(73,950)(73,950)

141,158
141,158

Total

489,703489,703(151,592)(151,592)

338,111
338,111465,860
465,860(148,045)(148,045)

317,815
317,815

insurancecontracts
contracts
Total insurance

1,619,869
1,619,869(597,716)(597,716)

1,022,153
1,022,153

1,530,339
1,530,339(585,887)(585,887)

944,452
944,452

Current

1,113,521
1,113,521(410,878)(410,878)

702,642702,642

1,038,894
1,038,894(403,849)(403,849)

635,045
635,045

Non-current
Non-current

506,348506,348(186,838)(186,838)

319,511
319,511

491,445
491,445(182,038)(182,038)

309,407309,407

Bonding
Bonding

liabilities forfor grossgrossclaims
claimsreported,
reported,loss
lossadjustment
adjustmentexpenses
expensesandandclaimsincurredbut
reported
The liabilities
claimsincurredbut
notnotreported
arearenetnetof of
expected recoveries
recoveriesfrom
fromsalvage
salvageandandsubrogation.
subrogation.
expected

18.1

Claims development
developmenttables
tablesClaimsclaims development
developmenttables
tablesprovide
providean
anoverview
overviewofofhow
howAtradius’
Atradius’
recognised
claimscosts
underwritingyears
The claims
recognised
claimscosts
forforunderwritingyears
2009-2018 have
havechanged
changedat
atsuccessive
successivefinancial
financialyear-ends.
year-ends.This
Thisoverview
overview
also
providesa breakdownof theclaims
2009-2018
also
providesa breakdownof theclaimsprovisions (claims(claimsreported
reportedand
andloss
lossadjustment
adjustmentexpenses
expensesand
andclaims
claimsincurredbutnotreported)that
heldagainstprovisions
incurredbutnotreported)
thatareareheld
againsteach underwriting
underwritingyear
yearasasat
at31
31December
December2018.
2018.Underwriting
Underwritingyear
year
here
means
the
year
which
risks
were
each
here
means
the
year
in in
which
thetherisks
were
accepted; forfor reinsurance
reinsurancebusinessbusinessititisisthe
thetreaty
treatyyear.
year.
accepted;

117

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

Credit Insurance – Gross
Claims development per underwriting year – (EUR million)

Year when risk was
taken

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Estimate of grossclaims incurred:at the end of the year
when risk was taken

749.0

515.2

739.7

809.6

682.1

753.0

829.6

755.7

770.4

833.8

one year later

644.8

500.3

694.4

764.0

586.0

734.6

780.7

669.6

735.3

-

two years later

620.6

451.2

670.4

704.9

554.6

734.9

744.5

638.5

-

-

three years later

592.0

437.4

663.5

696.3

543.8

732.4

715.0

-

-

-

four years later

578.7

438.9

649.7

684.3

540.9

724.5

-

-

-

-

five years later

577.0

432.1

642.9

685.4

533.2

-

-

-

-

-

six years later

569.5

425.7

636.7

678.1

-

-

-

-

-

-

seven years later

561.0

419.1

630.5

-

-

-

-

-

-

-

eight years later

557.3

414.8

-

-

-

-

-

-

-

-

nine years later
Current estimate of
cumulative claims
Cumulative payments
to date

553.1

-

-

-

-

-

-

-

-

-

553.1

414.8

630.5

678.1

533.2

724.5

715.0

638.5

735.3

833.8

6,456.8

555.0

417.9

630.5

667.0

535.6

695.1

711.6

644.6

610.6

179.3

5,647.2

(1.9)

(3.1)

-

11.1

(2.4)

29.4

3.4

(6.1)

124.8

654.5

809.6

Claims provision at 31
December 2018 inrespect of 2009 - 2018
In respect of prioryears (before 2009)

Total

12.3

Total

821.9

The table contains recognised claims costs only. It excludes the impact of losses from risks that have been accepted forwhich the premium has yet to be earned. The consequence of this is that the claims expense for a particularunderwriting year can increase in future financial years as both the premium and losses are recognised in the income
statement. This is relevant for the credit insurance business written by the local business in Spain and Portugal, thereinsurance business and instalment credit protection. The premium earned for underwriting years 2015-2017 in thecurrent financial year for these blocks of business was EUR 128.6 million.
The claims development tables are presented on a gross basis. The effect of risk mitigation is in line with our quota
share treaties as included in Note 4.2, detailing further disclosures on insurance risk. The overall impact of risk
mitigation on claims provisions (for all underwriting years combined) is approximately 42.5%. Risk mitigation forgross claims incurred as shown in this table varies between 40% and 46%. These differ from the quota share treaties
due to the private instalment credit protection which are not ceded and the inward reinsurance business which iscovered by Excess of loss treaties.

118

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

Bonding - Gross
Claims development per underwriting year – (EUR million)

Year when risk was
taken

2009

2010

Estimate of grossclaims incurred:at the end of the year
when risk was taken

10.7

10.2

19.3

19.0

21.7

19.0

21.0

one year later

22.1

25.7

48.8

48.6

32.6

34.6

26.8

two years later

30.7

36.4

60.8

53.7

39.1

43.6

31.5

three years later

34.8

43.4

62.8

58.4

42.0

45.8

four years later

36.3

43.4

57.4

58.7

41.0

five years later

38.4

42.4

60.7

58.5

six years later

38.1

42.1

64.2

seven years later

37.6

42.3

eight years later

34.9

nine years later
Current estimate of
cumulative claims
Cumulative payments
to date

35.4

Claims provision at 31
December 2018 inrespect of 2009 - 2018
In respect of prior years(before 2009)

2011

2012

2013

2014

2015

2016

2017

2018

Total

16.8

13.6

10.6

22.8

32.0

-

32.9

-

-

38.2

-

-

-

41.6

-

-

-

-

40.2

-

-

-

-

-

58.1

-

-

-

-

-

-

64.6

-

-

-

-

-

-

-

42.3

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

35.4

42.3

64.6

58.1

40.2

41.6

38.2

32.9

32.0

10.6

395.9

26.9

30.7

52.4

39.8

22.0

20.0

7.9

13.7

4.0

0.3

217.8

8.5

11.6

12.2

18.3

18.2

21.6

30.3

19.2

28.0

10.3

178.1
91.3

Total

269.4

The claims costs do not include an estimate for future claim payments on cases where Atradius does not yet haveadverse information. This explains the increase in claims costs over time. For bonding, Atradius typically earns
premium in proportion to the length of time involved, over the tenor of the bond, meaning that while an increase in
the claims incurred can be seen, premium will also be recognised and this cannot be seen in the table above. The
premium earned for underwriting years 2015-2017 in the current financial year was EUR 71.8 million.
The claims development tables are presented on a gross basis. The effect of risk mitigation is in line with our quota
share treaties as included in Note 4.2, detailing further disclosures on insurance risk. The overall impact of risk
mitigation on claims provisions (for all underwriting years combined) is approximately 28%. Risk mitigation for grossclaims incurred as shown in this table varies between 16% and 24%.

119

amountsin
inthousands
thousandsof
ofEuro,Euro,unlessunlessotherwise
otherwisestatedstatedAll amounts

18.2

Insurance liabilities and reinsurance assets

18.2.1 Changes in insurance liabilities and reinsurance assets
Credit insurance

Gross

Reinsurance
asset
2018

Net

Gross

Reinsurance
asset
2017

Net

Balance at 1 January

777,407(342,904)

434,503795,454(376,714)

418,740

Claims paid in the year
Increase/(decrease) in liabilities
arising from claims
Foreign exchange rate and othermovements(639,597)

263,355(376,242)(621,369)

297,288(324,081)

683,421(269,438)

413,983

637,287(277,292)

359,995

709

(541)

168

(33,965)

13,814(20,151)

Balance at 31 December

821,940(349,528)

472,412

777,407(342,904)

434,503

Claims reported and loss adjustment
expenses229,635(119,443)

110,192

222,699(119,645)

103,054

Claims incurred but not reported

592,305(230,085)

362,220554,708(223,259)

331,449

Total

821,940(349,528)

472,412

777,407(342,904)

434,503

Balance at 1 January

250,752(74,095)

176,657

266,079(86,084)

179,995

Claims paid in the year
Increase/(decrease) in liabilities
arising from claims
Foreign exchange rate and othermovements(30,117)

10,085(20,032)(49,389)

19,336(30,053)

52,730(13,500)

39,23038,566(8,206)30,360(4,006)990(3,016)(4,504)859(3,645)

Balance at 31 December

269,359(76,520)

192,839

250,752(74,095)

176,657

Claims reported and loss adjustment
expenses

198,143(69,416)

128,727

186,784(67,005)

119,779

Claims incurred but not reported

71,216(7,104)

64,112

63,968(7,090)56,878269,359(76,520)

192,839

250,752(74,095)

176,657

1,091,299(426,048)

665,251

1,028,159(416,999)

611,160

Bonding

Total
Claims provisions

120

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

18.2.2 Provision for unearned premium
Credit insurance

Gross

Reinsurance
asset
2018

Net

Gross

Reinsurance
asset
2017

Net

Balance at 1 January

287,072(94,938)

192,134

285,841(97,034)

188,807

Movement in the period
Foreign exchange rate and othermovements

18,548(1,118)17,43015,513(3,255)

12,258

2,606

(540)

2,066

(14,282)

5,351(8,931)

308,226(96,596)

211,630

287,072(94,938)

192,134

215,108(73,950)

141,158

213,781(72,430)

141,351

5,202(1,395)

3,807

7,892

(2,617)

5,275

34

273

307

(6,565)

1,097(5,468)

Balance at 31 December

220,344(75,072)

145,272

215,108(73,950)

141,158

Provision for unearned premium

528,570(171,668)

356,902502,180(168,888)

333,292

Restructuring

Litigation

Total

Balance at 1 January

1,131

1,903

3,034

Additional provisions

485

784

1,269

Unused amounts reversed

(180)

(249)

(429)

Utilised

(856)

(339)

(1,195)---

Balance at 31 December

580

2,099

2,679

Current

580

-

580

-

2,099

2,099

Restructuring

Litigation

Total

4,320

1,707

6,027

Additional provisions

523

324

847

Unused amounts reversed

(372)

(54)

(426)

(3,334)(74)(3,408)

(6)

-

(6)

Balance at 31 December

1,131

1,903

3,034

Current

1,131

-

1,131

-

1,903

1,903

Balance at 31 December
Bonding
Balance at 1 January
Movement in the period
Foreign exchange rate and othermovements

19 Provisions
2018

Effect of movements in foreign exchange rates

Non-current
2017
Balance at 1 January

Utilised
Effect of movements in foreign exchange rates

Non-current
Litigation

The litigation provision is related to disputes with third parties that are not related to the insurance business ofAtradius. Insurance business related litigation provisions are included in the provisions for outstanding claims. The

121

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise statedprovision relates to the estimated cost including the costs of legal proceedings of any non-insurance claims against
Atradius. These provisions have not been discounted to reflect present value since the effect of discounting is notmaterial.

20 Deferred and current income tax
Current income tax
2018

2017

Current income tax assets

48,93559,559Current income tax liabilities

47,992

37,636943

21,923Net

The current income tax assets consist mainly of advances paid for local income tax. The current income tax liabilities
consist mainly of income and other local taxes payable.
Deferred income tax
2018

2017

Deferred income tax assets before set-off

136,080

124,023

Set-off of deferred tax positions(98,809)(93,936)

Net deferred tax assets as presented in the statement of financial position

37,27130,087

Deferred income tax liabilities before set-off

199,964

218,887

Set-off of deferred tax positions(98,809)(93,936)

Net deferred tax liabilities as presented in the statement of financial position

101,155

124,951

2018

2017

Balance at 1 January(94,864)(69,864)

Credit (charge) to other comprehensive income for the year

14,926(13,921)

Charge to the income statement for the year

15,955(12,558)

99

1,479

(63,884)(94,864)

The gross movement on the deferred income tax is presented in the following table:

Effect of movements in foreign exchange rates
Balance at 31 December
The movement in the deferred tax assets and liabilities is presented in the following table:

122

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

2018

Balance at 1
January

Recognised in
Recognised
other in the income
comprehensive
statement
income for thefor the year
year

Effect ofmovements
in foreignexchange

Balance at 31
DecemberTax losses carried forward

12,171-489

2

12,662

Technical balances

13,120-20,667

23

33,810Pensions

22,4204,909(5,852)

73

21,550Fiscal goodwill

7,285

-

(2,573)80

4,792

Financial investments(12,772)

10,017(1,603)89(4,269)Equalisation provisions(113,567)

-

8,315

129

(105,123)

Property, plant and equipment(13,545)

-

(175)

(30)

(13,750)

Other(9,976)-(3,313)(267)(13,556)

Total(94,864)

14,926

15,955

99(63,884)2017

Balance at 1
January

Recognised in
Recognised
other in the income
comprehensive
statement
income for thefor the year
year

Effect ofmovements
in foreignexchange

Balance at 31
December

(205)

(166)

12,171

Tax losses carried forward

12,543-

Technical balances

9,916

-

3,230

(26)

13,120Pensions

28,933(9,370)

2,900

(43)

22,420Fiscal goodwill

10,011-(2,617)

(109)

7,285

Financial investments(11,100)(4,551)

2,703

175

(12,772)

Equalisation provisions(109,587)-(4,960)980(113,567)

Property, plant and equipment(14,047)

-

487

14

(13,545)

Other

3,467

-

(14,096)

654(9,975)

Total(69,864)(13,921)(12,558)

1,479(94,863)

Deferred income tax assets are recognised for tax losses carried forward, unused tax credits, and deductible
temporary differences, to the extent that it is probable that taxable profits will be available against which the unused
tax losses carried forward, unused tax credits, and deductible temporary differences can be utilised. In 2018, EUR 1.4
million deferred tax assets on the losses carried forward and deductible temporary difference were written down or
not recognised (2017: EUR 1.4 million). This is offset by the reversals of the impairments, prior year adjustments andforeign exchange, resulting in a net reversal of these deferred tax assets.
Atradius has unrecognised tax losses carried forward balances amounting to EUR 54.1 million (2017: EUR 54.8
million). The expiration of these unrecognised tax losses carried forward is included in the following table:
Expiration unrecognised tax losses carried forward

2018

2017

1 - 3 years

6,199

434

4 - 9 years

6,427

8,573

Indefinite

41,45245,802

Total

54,07854,809The decrease of unrecognised tax losses is mainly due to utilisation of the losses carried forward mentioned above.
The deferred and current income tax charged or credited to other comprehensive income during the year is presented
in the following table:

123All amounts
amounts inin thousands
thousands ofof Euro,Euro, unlessunless otherwise
otherwise statedstatedAll

Deferred tax

Current tax

Deferred tax

2018

Current tax

2017

Revaluation reserve in shareholders equity related to:
Available-for-sale financial investments

10,017-(4,551)

-

4,909

-

(9,370)

-

-

1,231

-

2,248

14,926

1,231(13,921)

2,248

2018

2017

Accounts payable on insurance and reinsurance business

152,802129,822

Payables arising out of reinsurance operations

98,72378,223

Amounts due to policyholders

35,87736,759Amounts due to intermediaries and current account Dutch State

18,202

14,840Trade and other accounts payable

74,206

71,125

Accounts payable

42,85031,716

Other accounts payable

31,35639,409227,008

200,947

2018

2017

Ceded pipeline premium and return premium

203,621

193,678

Deposits received from reinsurers

42,01144,882

Unearned reinsurance commission

59,50356,431

Payroll and bonus accruals

50,05644,944

Reinsurance accruals

27,57130,039Other accruals

84,56973,853Pension reserve in shareholders equity related to:
Recognised actuarial gains/(losses)
Currency translation reserve in shareholders equity related to:Currency translation reserve
Total

21

PayablesTotal
The payables are substantially all current.

22 Other liabilities

Insurance premium tax and stamp duties payable

2,469

4,914

Other taxes

11,047

11,105

480,847

459,846

Total
Other liabilities are substantially all current.

124

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

23 Net premium earned
Credit insurance

Gross

Reinsurers'
share
2018

Net

Gross

Reinsurers'
share
2017

Net

Written premium

1,500,202(620,852)

879,351

1,431,588(625,505)

806,083(18,548)

1,118(17,430)(15,513)3,255(12,258)

197

(173)

24

2,612

(1,142)

1,470

1,481,853(619,907)

861,945

1,418,687(623,392)

795,295

Written premium

171,908(53,486)

118,422

177,363(54,881)

122,482

Change in provision for unearned
premium(5,201)

1,395(3,806)(7,892)

2,617(5,275)

Change in provision for unearned
premium
Other movements
Total
Bonding

Other movements

(33)

10

(23)

(63)

27

(36)

166,674(52,081)

114,593

169,408(52,237)

117,171

1,648,527(671,988)

976,539

1,588,095(675,629)

912,466

2018

2017

Debt collection services

46,65744,711Credit information services

132,511130,829

Business information and other service income

70,34973,600

Total

249,517249,140

Total
Total premium earned

24 Service and other income

Credit information services are part of the insurance segment. All other services are part of the service segment.
Characteristics of service contracts and income:--The contracts of credit information, collections and business information services mostly have a duration of
one year. The contract period of credit information contracts is linked to the insurance policies, which can be
up to two years. But the credit limits are renewed on an annual basis, which requires additional credit
information that is separately invoiced to the customer. The cooperation agreement of Atradius Dutch StateBusiness with the Dutch state has an undetermined period.
The agreed performance obligations and transaction prices, included in the contracts, are clear and contain nojudgements that significantly affect the determination of the amount and timing of revenue.
The contracts contain no financing elements, warranties or obligations for returns or refunds.
Around 15% of total service income relates to variable consideration. In all cases, the conditions for variableconsideration are explicitly stated in the contract.
All costs for obtaining and fulfilling contracts are recognised as expenses. Atradius does not incur costs thatmeet the criteria to create assets for obtaining or fulfilling specific contracts
Applying the practical expedient in paragraph 121 of IFRS 15 Atradius does not separately disclose theremaining performance obligations for service contracts at year end, since the contracts either have a durationof one year or Atradius is allowed to recognise revenue in an amount to which it has a right to invoice.

125All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

25 Net income from investments
Net investment income by type of investment

2018

2017

12,15012,22110

511,772

14,473965

1,045

24,896

27,744

IncomeDebt securities available-for-sale
Loans
Equity securities available-for-sale
Other investments
Total income from financial investments
Investment property

521

416

25,41728,160Debt securities available-for-sale(524)(1,037)

Equity securities available-for-sale(3,230)(2,403)

Handling expenses(4,097)(3,731)

Total expenses from financial investments(7,851)(7,171)

(73)

(403)

Total investment income
Expenses

Investment property
Total investment expenses(7,924)(7,574)

Net income from investments

17,493

20,586

Share of income/ (losses) of associated companies

4,652(7,396)

Net income from investments including associated companies

22,145

13,190126

Atradius || Consolidated
Consolidated financial
financial statements
statements 2018
2018Atradius
AtradiusN.V.
N.V.
Atradius

Net investment income by nature of income/(expense)

2018

2017

Interest

11,946

11,428Dividends

9,383

9,001

Realised gains

3,567

7,315

521

416

25,41728,160Handling expenses(4,097)(3,731)

Realised losses(3,410)(2,100)

Impairment loss

(299)

(1,609)Depreciation of investment property

(118)

(134)

Total

(7,924)(7,574)

Net income from investments

17,493

20,586

Share of income of associated companies

4,652

3,678

Impairments of associated companies-(11,701)

Realised gains

-

165

Other

-

462

IncomeRental income from investment property
Total
Expenses

Total

4,652

(7,396)

Net income from investments including associated companies

22,145

13,190In interest income and expenses reported above, the component related to financial investments available-for-sale is
net EUR 11.0 million (2017: EUR 10.3 million); this is derived from government and corporate bonds.

Net gains/(losses) by category

Impairments

Realised
gains/(losses)
2018

Investment property

Impairments

Realised
gains/(losses)
2017

45

-

(269)

-

Financial assets classified as available-for-sale

(344)

157

(1,340)

5,215

Total

(299)

157

(1,609)

5,215

127

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

26 Insurance claims
Credit insurance

Gross

Reinsurers'
share
2018

Net

Gross

Reinsurers'
share
2017

Net

Claims paid in the year

639,596(263,354)

376,242621,369(297,288)

324,081

Change in claims provisions

43,826(6,084)37,742

15,917

19,99535,912Claims handling expenses

37,463-

37,46336,468-36,468720,885(269,438)

451,447

673,754(277,293)

396,461

Claims paid in the year

30,117(10,085)

20,032

49,389(19,336)

30,053

Change in claims provisions

22,612(3,415)19,197(10,824)

11,132308

Claims handling expenses

1,630

-

1,630

2,163

-

2,163

Total

54,359(13,500)

40,85940,728(8,204)32,524

Total insurance claims

775,244(282,938)

492,306

714,482(285,497)

428,985

Total
Bonding

For more detail on the change in claims provisions, see Note 18.2.1.

27 Net operating expenses
2018

2017

Total administrative expenses

543,083

522,738

Acquisition costs

211,252

207,871(1,128)(233)

Gross operating expenses

753,207730,376

Commissions received for business ceded to reinsurers(283,418)(256,447)

Total net operating expenses

469,789

473,929

2018

2017

Insurance and information expenses

452,607436,372

Recoveries and collections expenses

47,58545,143

Other service expenses

73,86173,024

Group costs

8,123

6,745

Total gross administrative expenses

582,176561,284

Claims handling expenses allocated to insurance claims(39,093)(38,546)

Total administrative expenses

543,083

522,738

Change in deferred acquisition costs

Administrative expenses by type of businessAs part of the gross administrative expenses, depreciation, amortisation and impairment charges for intangible assets
and property, plant and equipment amount to EUR 38.9 million (2017: EUR 29.5 million).

128

Atradius || Consolidated
Consolidated financial
financial statements
statements 2018
2018Atradius
AtradiusN.V.
N.V.
Atradius

Employee benefit expenses

2018

2017

321,422315,972

Restructuring costs and termination benefits

305

150

Pension costs - defined contribution plans

11,382

10,500Pension costs - defined benefit plans

14,26816,057

Total employee benefit expenses

347,377

342,679

2018

2017

17,074

17,065

Net interest on the net defined benefit liability

323

1,243

Other interest expense

1,961

1,483

Salaries and wages (including social security costs)

For an explanation of the employee benefit details see Note 17.

28 Finance expenses
Interest and fees on the subordinated debt

Foreign exchange (income)/expense(4,759)

(520)

Total

14,59919,271The subordinated debt costs include the periodic interest expenses of EUR 16.9 million (2017: EUR 16.9 million) and theaccretion of interest on the debt in the amount of EUR 0.2 million (2017: EUR 0.2 million).

29 Income tax
2018

2017

Current tax

90,66556,514

Deferred tax(15,955)

12,558

Income tax expense/(income) for the year

74,71069,073

The reconciliation from the expected tax rate to the actual tax rate is provided in the following table:
2018

2017

Result before tax

277,365

255,308

Tax calculated at domestic tax rates applicable to results in the respective countries

69,76762,370Tax exempt (income)/loss(2,012)

1,398

Write down/(reversal) of deferred tax assets

(506)

(850)

Reassessment of prior year local tax positions

80

1,313

Impact of change in tax rate

(1,975)

1,326

Other

9,356

3,516

Income tax expense/(income) for the year

74,71069,073

The weighted average applicable tax rate was 25.2% (2017: 24.4%).
Deferred tax assets relating to losses carried forward in certain entities have been impaired. This is included in ‘write
down (reversal) of deferred tax assets’.
The impact of the change in tax rate in 2018 mainly reflects the effect of changes in income tax rate in France,
Belgium, Sweden, UK and The Netherlands.
The category "Other" includes non-deductible expenses, regional taxes such as IRAP in Italy and withholding taxes.

129All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

30 Dividends per share
The dividends paid in 2018 and 2017 were EUR 83.9 million (EUR 1.06 per share) and EUR 76.7 million (EUR 0.97 pershare) respectively.

31 Assets not freely disposable
The financial assets not freely disposable in 2018 are EUR 226.4 million (2017: EUR 235.5 million). Assets that are notfreely disposable consist of financial investments, properties and cash that have been held mainly for local regulatory
purposes and can be used to cover technical provisions. The amount of pledged assets not covering technicalprovisions is EUR 79.3 million (2017: EUR 82 million).

32 Capital commitments and contingencies
Capital commitments of EUR 15.8 million (2017: EUR 18.3 million) are related to contracted obligations for future
payments for outsourcing, networking, imaging and licences.
The Group has contingent liabilities in respect of matters arising in the ordinary course of business. It is not
anticipated that any material liabilities will arise from the contingent liabilities. The Group has given guarantees tothird parties amounting to EUR 1.2 million (2017: EUR 1.0 million).

33 Operating leases
Non-cancellable operating lease commitments are included in the following table:
2018

2017

Less than one year

24,14523,077

Between one and five years

59,172

56,846More than five years

25,801

18,233

Total

109,119

98,156

Atradius leases office equipment and office space under a number of operating lease agreements. The lease contracts
have remaining terms of between 1 and 20 years. The leasing of office space represents around 92.0% (2017: 86.5%) of
the total future payments regarding operating leases.
During the year an amount of EUR 23 million (2017: EUR 26 million) has been recognised as expense.
Further to the implementation of IFRS 16 a lease liability of EUR 99 million will be recorded in the opening balance
sheet as per 1 January 2019. The difference of EUR 10 million between this liability and the reported operating leases
is explained by the fact that the lease liability according to IFRS 16 is a discounted amount and doesn’t include
liabilities for short term- and low value leases.

34 Personnel
The number of employees working for Atradius is included in the following table:
2018

2017

Total average number of employees (full-time equivalent)

3,571

3,591

Total year end number of employees (full-time equivalent)

3,545

3,596

Total year end number of employees (headcount)

3,707

3,756

130

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

35 Related party transactions
The following table provides the total value of transactions which have been entered into with related parties in thefinancial year:
Associatedcompanies

Parent 1)

2018

Associatedcompanies

Parent 1)

2017

Sales to related parties

17,668755

14,3681,205

Purchases from related parties

3,526

6,330

5,416

4,829

Amounts owed by related parties

60

13,11615

28,956

Amounts owed to related parties

1

383

793

437

1) Subsidiaries of Grupo Catalana Occidente, S.A.

Sales to related parties consist of the net effect of Reinsurance business (premiums, claims, recoveries andcommission) and for information services provided to Atradius. Purchases from related parties consist of the net effectof (retro-) ceded insurance (premiums, claims, recoveries and commission). The amounts owed by related Atradiuscompanies consist of the fair value of insurance policies as calculated under the requirements of IAS 19.
Terms and conditions of transactions with related parties
No guarantees have been provided or received for any related party receivables for 2018 or 2017. For the years ending
31 December 2018 and 2017, Atradius has not raised any provision or expenses for doubtful debtors relating toamounts owed by related parties.
Subordinated debt
Plus Ultra, Seguros Generales y Vida, S.A. de Seguros y Reaseguros, Seguros Catalana Occidente S.A. de Seguros y
Reaseguros and Bilbao Compañía Anónima de Seguros y Reaseguros; subsidiaries of the ultimate parent of the Grouppurchased EUR 56.3 million (22.5%) of the guaranteed subordinated notes issued by Atradius Finance B.V.. In 2018 theinterest expense relating to this portion was EUR 2.9 million (2017: EUR 2.9 million).
In 2016 the shareholders of Atradius N.V. provided a subordinated loan to Atradius Reinsurance DAC with a principle
amount of EUR 75 million. In 2018 the interest expense relating to this subordinate loan was EUR 3.5 million.
The related party share for the subordinated debt is as follows:
Lenders

Nominalvalue

Interest
expense2018

Nominalvalue

Interest
expense2017

Plus Ultra, Seguros Generales y Vida, S.A. de Seguros y
Reaseguros

40,0002,098

40,0002,098

Seguros Catalana Occidente S.A. de Seguros y Reaseguros

36,291

1,872

36,291

1,865

Bilbao Compañía Anónima de Seguros y Reaseguros

43,0002,162

43,0002,158

Nortehispana, de Seguros y Reaseguros S.A.

6,000

300

6,000

300

125,291

6,432

125,291

6,421

Total
All relationships with related parties are at arm’s-length.

Compensation of key current and former management personnel of Atradius
The following table provides details on the remuneration for members of the Management Board and Supervisory
Board.

131

All amounts
amounts inin thousands
thousands ofof Euro,Euro, unlessunless otherwise
otherwise statedstatedAll

Remuneration20182017 2)

Short-term employee benefits 1)

2,158

2,140

Long-term employee benefits

773

1,433

Post-employment benefits

354

351

3,285

3,924

5

5

Short-term employee benefits 1)

595

595

Total compensation paid to Supervisory Board members

595

595

Number of members

10

10Management Board

Total compensation paid to Management Board members
Number of members
Supervisory Board

1) Short-term employee benefits include salaries, housing, social security, medical expenses, lease cars and other.
2) For comparison purposes 2017 information has been disclosed on a consolidated basis

From the total compensation for Management Board members, EUR 2.5 million (2017: EUR 2.5 million) has been paid
at the end of the reporting period. The remaining balance payable is subject to meeting the variable pay conditions.
The Management Board and Supervisory Board members also participate in the Boards of some of the subsidiaries.
Apart from this they do not have other relationships with the Company or its subsidiaries.

36 Events after the reporting period
There are no events to report.

132

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Company financial statements 2018 Atradius N.V.

Company financial statements 2018
Contents
Company financial
statements........................................................................................................................................................................134
Company
financialstatements.................................................................................................................................................129
Notes
tothe
thecompany
company
financialstatements.......................................................................................................................... 132
Notes tofinancialstatements................................................................................................................................................136
11 General
information....................................................................................................................................................................................136............................................................................................................................................................... 88
General information
22 Summaryofsignificant
accounting
policies................................................................................................................... 88
Summary of significant accounting
policies......................................................................................................................................136
33 Investments
group
companies.......................................................................................................................................
Investments iningroupcompanies...........................................................................................................................................................
137 8944 Capital
andreserves
reserves..............................................................................................................................................................
Capital and....................................................................................................................................................................................
137 8955 Otherliabilities........................................................................................................................................................................ 90
Other liabilities .............................................................................................................................................................................................138
6 Contingencies .......................................................................................................................................................................... 90
6 Contingencies ................................................................................................................................................................................................138
7 Personnel .................................................................................................................................................................................. 90
7 Personnel ........................................................................................................................................................................................................138
8 Auditor fees ................................................................................................................................................................................ 91
8 Auditor fees ....................................................................................................................................................................................................139
9 Remuneration of Management Board and Supervisory Board ..................................................................................... 91
9 Remuneration of Management Board and Supervisory Board ....................................................................................................139
10 Proposed profit appropriation ............................................................................................................................................ 92
10 Proposed profit appropriation ................................................................................................................................................................ 140
11 Events after the reporting period ........................................................................................................................................ 93
11

Events after the reporting period ........................................................................................................................................................... 141

133

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise statedCompany financial statements
Company statement of financial position (before profit appropriation)
AssetsNote

Fixed assets
Property, plant and equipment

31.12.2018

31.12.2017

1,817,083

1,751,480

10

10

1,817,073

1,751,470

39,04638,8599,265

16,619Deferred income tax assets

-

1,560

Current income tax assets

7,304

5,795

Cash and cash equivalents

22,477

14,885

1,856,129

1,790,339

79,122

79,122

Share premium reserve862,883

862,883

Legal reserve(100,056)(66,408)- Reserve intangibles assets

62,21045,262- Revaluation reserve

25,50863,060(144,400)(137,326)(43,374)(37,404)

Retained earnings

776,818

691,360

Result for the year (unappropriated)

202,638

186,275

1,821,405

1,753,232

34,724

37,107

29,83732,059

4,887

5,048

34,724

37,107

1,856,129

1,790,339

2018

2017

207,068

188,750

3

Investments in group companies
Current assets
Receivables from group companies

Total
EquityCapital and reserves attributable to the owners of the Company

4

Share capital- Pension reserve- Currency translation reserve

Total
Liabilities
Current liabilities
Payables to group companies
5

Other liabilities
Total
Total equity and liabilities

Company income statement
Income after tax from group companies
Other results after tax
Result for the year

134

(4,430)(2,475)

202,638

186,275

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Company financial statements 2018 Atradius N.V.

Company statement of changes in equity
Share
capitalSharepremium
reserve

Balance at 1 January
2017

79,122

Change inrevaluation reserve,
pension reserve andcurrency translation
reserve

Legal reserves
Retainedearnings

Result for
the year

Total(14,349)

568,534

211,795

1,625,470

32,987(23,055)--

18,2358,303

32,987(23,055)--

18,235----

211,795(211,795)

-

-

-

-

-

-

-

186,275

186,275--

12,221---(12,221)

-

-

-

-

-

-

-

-

(76,748)-(76,748)

79,122862,883

45,26363,060(137,326)(37,404)

691,360

186,275

1,753,232

79,122862,883

45,262

63,060(137,326)(37,404)

691,360

186,275

1,753,232---(37,552)(7,074)(5,970)--(50,596)---(37,552)(7,074)(5,970)--(50,596)

Appropriation ofprior year result

-

-

-

-

-

-

186,275(186,275)-

Result for the year

-

-

-

-

-

-

-

202,638

202,638

Change in reserve
intangible assets--

16,948---(16,948)

-

-

-

-

-

-

-

-

(83,869)-(83,869)

79,122862,883

62,21025,508(144,400)(43,374)

776,818

202,638

1,821,405

Reserve
Revaluatio
intangibln reserve
es assets

Pensionreserve

Currencytranslation
reserve

862,883

33,04154,757(170,313)

-

-

-

8,303

Net income
recognised directlyin equity---

Appropriation ofprior year result--

Result for the year-

Change in reserve
intangible assets
Dividends
Balance at 31
December 2017
Balance at 1 January
2018
Change inrevaluation reserve,
pension reserve andcurrency translation
reserve
Net income
recognised directlyin equity

Dividends
Balance at 31
December 2018135-

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise statedNotes to the Company financial statements
1

General information

Atradius N.V. (referred to as the “Company’) is based in Amsterdam (The Netherlands) and registered at the Dutch
Chamber of Commerce under number 34196963,
The Company financial statements are part of the 2018 consolidated financial statements, which are also included in
the annual report. The Company income statement is presented in abbreviated form in accordance with Article 402 ofBook 2 of the Dutch Civil Code.
The Company has applied the provisions of Article 379, Subsection 5 of Book 2 of the Dutch Civil Code. The list referred
to in this article has been included in the appendix and is filed at the offices of the Commercial Register in Amsterdam.
The Company has issued a statement of liability in accordance with Article 403, Book 2 of the Dutch Civil Code for thefollowing Atradius companies: Atradius Collections B.V., Atradius Collections Holding B.V., Atradius Credit
Management Services B.V. and Atradius Information Services B.V.
The Company financial statements have been authorised for issue by the Management Board on 6 March 2019.

2

Summary of significant accounting policies

2.1

Basis of presentation

The Company annual financial statements have been prepared in accordance with Part 9, Book 2 of the Dutch Civil
Code. In the preparation of the Company annual financial statements, the provisions of Article 362, Subsection 8 ofBook 2 of the Dutch Civil Code have been applied. The valuation principles for assets and liabilities and the method ofdetermining the result are identical to those applied in the consolidated financial statements. Reference is made to thenotes thereto.
All amounts in the notes are shown in thousands of Euro (EUR), rounded to the nearest thousand, unless otherwise
stated.

2.2

Investments in group companies

Atradius companies are valued using the equity method in accordance with the accounting principles applied in the
consolidated financial statements.

2.3

Legal reserve

The legal reserve has to be created under Dutch legislation for the reserves established by subsidiaries that cannot be
distributed and relates to:- Reserve intangible assets;- Revaluation reserve;- Pension reserve;- Currency translation reserve.

136

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Company financial statements 2018 Atradius N.V.

3

Investments in group companies

The following table shows the changes in investments in group companies valued using the equity method:
2018

2017

1,751,470

1,627,733-

34,000Share of profit/(loss)

207,068

188,750Dividends received(90,869)(117,248)

Change in revaluation reserve and pension reserve(44,626)

41,290Foreign exchange reserve movements(5,970)(23,055)

1,817,073

1,751,470

Balance at 1 January
Investments in group companies

Balance at 31 December

4

Capital and reserves

4.1

Share capital

The authorised share capital of Atradius N.V. amounts to EUR 250,000,000 and is divided into 250,000,000 ordinary
shares with a nominal value of EUR 1 each (2017: the same) of which 79,122,142 ordinary shares were issued and fully
paid (2017: the same). The fully paid ordinary shares carry one vote per share and carry the right to dividends.

4.2

Share premium reserve
2018

2017

Balance at 1 January862,883

862,883

Balance at 31 December

862,883

862,883

4.3

Legal reserve

The total amount of equity in the Company financial statements equals shareholders’ equity in the consolidated
financial statements. Certain components within equity are different in the Company financial statements due to legal
reserves, established by subsidiaries of Atradius N.V., which in accordance with Book 2, Part 9 of the Dutch Civil Code,
Article 389, Subsection 6, cannot be distributed. In particular:-

costs for research and development to the extent they are capitalisedchanges in revaluation of group companies, which consists of unrealised revaluations within consolidated
group companies presented in the revaluation reserve in the consolidated financial statements, and actuarial
gains and losses
effect of asset ceilings within consolidated group companies presented in the pension reserve in the
consolidated financial statements andforeign currency translations on consolidated group companies, presented in the currency translation reservein the consolidated financial statements

In addition to the legal and regulatory restrictions on distributing dividends from subsidiaries to Atradius N.V., there
are various other considerations and limitations that are taken into account in determining the appropriate levels ofequity in the Group’s subsidiaries. These considerations and limitations include, but are not restricted to, local
regulatory regulations and rating agency requirements, that can change over time. It is not possible to disclose areliable quantification of these limitations. Reference is made to paragraph 4.5 Capital Management in the
consolidated annual report.

137

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

4.4

Retained earnings
2018

2017

Balance at 1 January691,360

568,534

Appropriation of prior year result

186,275

211,795

Transfer between legal reserve and retained earnings(16,948)(12,221)

Dividends(83,869)(76,748)

Balance at 31 December

776,818

691,360

2018

2017

-

157

Long-term employee benefits

1,460

1,451

Other liabilities

3,427

3,440

Total

4,887

5,048

5

Other liabilities

Other taxes

6

Contingencies

The Company has contingent liabilities in respect of guarantees arising in the ordinary course of business. It was not
anticipated that any material liabilities will arise from the contingent liabilities. The Company gave guarantees tothird parties in the ordinary course of business amounting to EUR 0.6 million (2017: EUR 0.5 million).
Atradius N.V. is head of the Dutch fiscal unity for corporate income tax, consisting of Atradius N.V., Atradius Insurance
Holding N.V., Atradius Finance B.V., Atradius Crédito y Caución S.A. de Seguros y Reaseguros, Dutch branch, Atradius
Participations Holding B.V., Atradius Information Services B.V., Atradius Collections Holding B.V., Atradius Collections
B.V., and Graydon Holding N.V. (including its Dutch subsidiaries). All companies included in the fiscal unity are jointly
and severally liable for the corporate income tax payable in the Netherlands by the fiscal unity.
The Company is subject to litigation in the normal course of business. The Company believes that such litigation will
not have a material effect on its profit or loss and financial condition.
The Company acts as the guarantor for the guaranteed subordinated loan, EUR 250 million, (2017: EUR 250 million)
issued by Atradius Finance B.V. (see Note 16 of the consolidated financial statements).

7

Personnel

The number of employees working for the Company:
2018

2017

Total average number of employees (headcount)

6

6

Total year end number of employees (headcount)

6

6

138

AtradiusCompany financial
Atradius | |Consolidated
financialstatements
statements2018
2018Atradius
AtradiusN.V.
N.V.

8 Auditor fees
The following expenses were made for audit and non-audit services rendered by Atradius’ external auditor:
2018 Including VAT

Audit financial statements
Other audit services
Fiscal advisory services

PwC
Accountants
N.V.

Other PwC
Networkorganisations

Total PwC
Network

576

1,694

2,271

-

493

493

34

18

52

Non-audit services

69

545

614

Total

679

2,751

3,430

Deloitte
Accountants
B.V.

Other Deloitte
Networkorganisations

Total Deloitte
Network

Audit financial statements

646

1,831

2,477

Other audit services

147

415

562

Fiscal advisory services

-

-

-

Non-audit services

-

-

-

793

2,246

3,039

2017 Including VAT

Total

These amounts relate to the actual expenses incurred for the audit of the related financial year, and other services, onan accrual basis (expenses and non-recoverable VAT costs are included). The amounts reported on non-audit services
and fiscal advisory service lines are related services performed in previous years but paid in the current one.
The amounts disclosed relate to the services provided to Atradius N.V. and/or its subsidiaries. No non audit services
where delivered by PwC The Netherlands nor to Atradius N.V. or its Dutch subsidiaries after the start of the Audit
mandate9 Remuneration of Management Board and Supervisory Board
For information on remuneration of the members of the Management Board and the Supervisory Board: see Note 36 of
the consolidated financial statements.

139

All
All amounts
amounts inin thousands
thousands ofof Euro,Euro, unlessunless otherwise
otherwise statedstated10 Proposed profit appropriation
Proposed appropriation of result
The Management Board proposes to the General Meeting to allocate the result for the year to the retained earnings andto make, in 2019, a distribution of EUR 91.8 million out of the retained earnings.

140

Atradius | Company financial statements 2018 Atradius N.V.
Atradius | Consolidated financial statements 2018 Atradius N.V.

11 Events after the reporting period
There are no events to report

141

All
Allamounts
amountsin
inthousands
thousandsof
ofEuro,Euro,unlessunlessotherwise
otherwisestatedstatedOther information

142

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Company financial statements 2018 Atradius N.V.

Statutory appropriation of result
In accordance with article 24 of the Articles of Association the result for the year is at the disposal of the General
Meeting143

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

Annual Report Atradius N.V.
Amsterdam, 6 March 2019The Supervisory Board

The Management Board

Ignacio Álvarez, Chairman
Francisco Arregui, Vice-Chairman
Bernd H. Meyer
Dick Sluimers
Xavier Freixes
Hugo Serra
Désirée van Gorp
John Hourican
Carlos Halpern
José Maria Sunyer

Isidoro Unda, Chairman
Andreas Tesch
Christian van Lint
Claus Gramlich-Eicher
Marc Henstridge

144

Atradius | Consolidated financial
statements 2018 Atradius N.V.
Atradius
Atradius || Independend
Independend auditor’s
auditor’s report.
report.
Atradius | Independend auditor’s report.

Independent
Independent
auditor’sreportIndependent auditor’s
auditor’s reportreportTo
To thethe generalgeneral meeting
meeting ofof Atradius
Atradius N.V.
N.V.
To
the
generalmeetingof
Atradius
N.V.

Reportonthefinancialstatements
2018
ReportReport on
on thethe financial
financial statements
statements 20182018
Our opinion
opinionOur
Our opinionIn
our opinion,
Atradius N.V.’s
financial statements
give atrue andfair viewof thefinancial positionof theCompanyInIn ourour opinion,
opinion, Atradius
Atradius N.V.’s
N.V.’s financial
financial statements
statements give
give aa truetrue andand fairfair view
view ofof thethe financial
financial position
position ofof thethe Company
Company
and
the
Group
as
at
31
December
2018,
and
of
its
result
and
its
cash
flows
for
the
year
then
ended
in
accordancewithandand thethe GroupGroup as
as at
at 31
31 December
December 2018,2018, andand ofof itsits result
result andand its
its cashcash flows
flows forfor thethe yearyear then
then ended
ended inin accordance
accordance with
with
International
Financial
ReportingStandards
asadoptedbytheEuropean
Union(EU-IFRS)
and
with
Part
9
of
Book
2 of
International
International Financial
Financial Reporting
Reporting Standards
Standards as
as adopted
adopted byby thethe European
European Union
Union (EU-IFRS)(EU-IFRS) andand withwith Part
Part 99 ofof BookBook 2
2 of
of
the
Dutch
Civil
Code.
the
Dutch
Civil
Code.
the Dutch Civil Code.

What we
we have audited
audited
What
What we have
have auditedWe
have audited
the accompanying
financial statements
2018 of
Atradius N.V.,
Amsterdam (‘theCompany’). The
We
We havehave audited
audited thethe accompanying
accompanying financial
financial statements
statements 20182018 ofof Atradius
Atradius N.V.,
N.V., Amsterdam
Amsterdam (‘the(‘the Company’).
Company’). The
The
financialstatements
includethe
consolidated
financialstatementsofAtradius
N.V.
togetherwith
its subsidiaries(‘thefinancialstatements
includethe
consolidated
financialstatementsofAtradius
N.V.
togetherwithfinancial statements include the consolidated financial statements of Atradius N.V. together with its
its subsidiaries
subsidiaries (‘the(‘theGroup’)
andthecompany
financialstatements.
Group’)
Group’) andand thethe company
company financial
financial statements.
statements.
The
financial statements
comprise:
The
The financial
financial statements
statements comprise:comprise:-- theconsolidated
andcompany statementof financial
position as
at 31
December 2018;- thethe consolidated
consolidated andand company
company statement
statement ofof financial
financial position
position as
as at
at 31
31 December
December 2018;2018;-- thefollowingstatements
for
2018:
the
consolidated
andcompany
incomestatement, theconsolidated andthefollowingstatements
for
2018:
the
consolidated
andcompany
income- the following statements for 2018: the consolidated and company income statement,
statement, thethe consolidated
consolidated andandcompany
statementsofcomprehensive
income,changesinequityandcashflows;
andcompany
statementsofcomprehensive
income,changesinequityandcashflows;
andcompany statements of comprehensive income, changes in equity and cash flows; and-- thenotes, comprising
the significant
accounting policies
and other
explanatory information.
- thethe notes,
notes, comprising
comprising thethe significant
significant accounting
accounting policies
policies andand otherother explanatory
explanatory information.
information.
The financial
financial reporting framework
framework applied inin the preparation
preparation of thethe financial statements
statements is EU-IFRS
EU-IFRS and thethe relevant
The
The financial reporting
reporting framework applied
applied in thethe preparation ofof the financial
financial statements is
is EU-IFRS andand the relevant
relevant
provisions ofof PartPart 99 ofof BookBook 22 ofof thethe Dutch
Dutch Civil
Civil Code.
Code.
provisions
provisions of Part 9 of Book 2 of the Dutch Civil Code.

The
basis forour opinion
The
The basis
basis forfor our
our opinion
opinionWe conductedconducted our audit
audit in accordance
accordance with Dutch
Dutch law, including
including the Dutch
Dutch Standards on
on Auditing. We
We have further
furtherWe
We conducted ourour audit inin accordance with
with Dutch law,
law, including thethe Dutch Standards
Standards on Auditing.
Auditing. We have
have further
described ourour responsibilities
responsibilities under
under those
those standards
standards inin thethe section
section ‘Our
‘Our responsibilities
responsibilities forfor thethe audit
audit ofof thethe financial
financialdescribed
described our responsibilities under those standards in the section ‘Our responsibilities for the audit of the financial
statements’ ofof our report.
report.
statements’statements’ of ourour report.
We believe
believe thatthat thethe audit
audit evidence we
we have obtained
obtained is sufficientsufficient and appropriate
appropriate to provide
provide a basis
basis for ourour opinion.
We
We believe that the audit evidence
evidence we have
have obtained isis sufficient andand appropriate toto provide aa basis forfor our opinion.
opinion.

Independence
Independence
IndependenceWe
are independentof Atradius
N.V. inaccordance withthe ‘Wet
toezicht accountantsorganisaties’(Wta, Audit
firms
We
We areare independent
independent ofof Atradius
Atradius N.V.
N.V. inin accordance
accordance with
with thethe ‘Wet‘Wet toezicht
toezicht accountantsorganisaties’
accountantsorganisaties’ (Wta,(Wta, Audit
Audit firms
firms
supervision
act),
the
‘Verordening
inzakedeonafhankelijkheidvanaccountantsbij
assuranceopdrachten’(ViO– Codesupervision
supervision act),act), thethe ‘Verordening‘Verordening inzake
inzake dede onafhankelijkheid
onafhankelijkheid vanvan accountants
accountants bij
bij assuranceopdrachten’assuranceopdrachten’ (ViO
(ViO –– CodeCodeof
EthicsforProfessional
Accountants,aregulation
withrespecttoindependence)
and
other
relevant
independenceofEthicsforProfessional
Accountants,aregulation
withrespecttoindependence)
and
other
relevant
independenceof Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence
requirementsin theNetherlands. Furthermore,
we havecomplied withthe ‘Verordening
gedrags- en
beroepsregels
requirements
requirements inin thethe Netherlands.
Netherlands. Furthermore,
Furthermore, we
we havehave compliedcomplied with
with thethe ‘Verordening‘Verordening gedragsgedrags- enen beroepsregels
beroepsregels
accountants’
(VGBA
–
Code
of
EthicsforProfessional
Accountants,aregulation
withrespecttorulesofprofessional
accountants’accountants’ (VGBA(VGBA –– CodeCode ofof Ethics
Ethics forfor Professional
Professional Accountants,
Accountants, aa regulation
regulation with
with respect
respect toto rulesrules ofof professional
professional
conduct).
conduct).
conduct).

ReportReport on
on thethe otherother information
information included
included inin thethe annual
annual reportreportReportontheotherinformation
includedintheannualreportInaddition to
the financial
statements andour auditor’sreport thereon,
the annual
report contains
other informationIn
In addition
addition toto thethe financial
financial statements
statements andand our
our auditor’s
auditor’s reportreport thereon,
thereon, thethe annual
annual reportreport contains
contains other
other information
information
thatconsistsof:thatconsistsof:that consists of:-- Thisis Atradius- ThisThis isis Atradius
Atradius-- A
messagefrom theManagement Board;Amessage- A message fromfrom thethe Management
Management Board;
Board;-- BusinessprofileBusiness
profile- Business profile-- Corporate
governance- Corporate
Corporate governancegovernance-- Consolidated
management report- Consolidated
Consolidated management
management reportreport-- theother
information
pursuant toPart 9of Book
2 of
the Dutch
Civil Code;
the
other
information- the other information pursuant
pursuant toto PartPart 99 ofof BookBook 22 ofof thethe Dutch
Dutch Civil
Civil Code;
Code;
Based
Based onon thethe procedures
procedures performed
performed as
as setset out
out below,
below, wewe conclude
conclude thatthat thethe otherother information:
information:
Based
on
the
procedures
performed
as
set
out
below,
weconclude
that
the
other
information:isconsistentwiththefinancialstatements
and
does
not
containmaterial
is consistentconsistent with
with thethe financial
financial statements
statements andand does
does notnot containcontain materialmaterial misstatements;
misstatements;is
misstatements;
contains
contains thethe information
information thatthat isis required
required by
by PartPart 99 ofof BookBook 22 ofof thethe Dutch
Dutch Civil
Civil Code.
Code.
contains
the
informationthatisrequired
by
Part
9
of
Book
2
of
the
Dutch
Civil
Code.

---

We
have readthe other
information. Basedon ourknowledge andunderstanding obtainedin ouraudit ofthe financial
We
We havehave read
read thethe otherother information.
information. Based
Based onon ourour knowledge
knowledge andand understanding
understanding obtained
obtained inin ourour audit
audit ofof thethe financial
financialstatementsorotherwise,
wehaveconsidered
whethertheotherinformation
contains
material
misstatements.
statementsorotherwise,
wehaveconsidered
whethertheotherinformation
contains
material
misstatements.
statements or otherwise, we have considered whether the other information contains material misstatements.
By
performing ourprocedures, we
comply withthe requirementsof Part
9 ofBook 2of theDutch Civil
Code andthe
By
By performing
performing ourour procedures,procedures, we
we comply
comply with
with thethe requirements
requirements ofof PartPart 99 ofof BookBook 22 ofof thethe Dutch
Dutch Civil
Civil Code
Code andand thethe
DutchStandard
720.
The
scope
of
such
procedures
wassubstantially
less
than
the
scope
of
those
performed
in
our
Dutch
Dutch Standard
Standard 720.
720. TheThe scope
scope ofof suchsuch procedures
procedures was
was substantiallysubstantially lessless than
than thethe scope
scope ofof thosethose performed
performed inin ourourauditof thefinancial statements.
audit
audit ofof thethe financial
financial statements.
statements.
The
management
board isresponsible forthe preparationof theother information,
including thedirectors’ reportandThemanagement
The management board
board isis responsible
responsible forfor thethe preparation
preparation ofof thethe otherother information,
information, including
including thethe directors’
directors’ reportreport and
and
the
other
informationinaccordance
with
Part
9
of
Book
2
of
the
Dutch
Civil
Code.
the
the otherother information
information inin accordance
accordance with
with Part
Part 99 ofof BookBook 22 ofof thethe Dutch
Dutch Civil
Civil Code.
Code.
97
97
97

145

All amounts in thousands of Euro, unless otherwise stated
All amounts in thousands of Euro, unless otherwise stated

Report on other legal and regulatory requirements
Our appointment
We were first appointed as auditors of Atradius N.V. on 9 March 2018 by the supervisory board following the passingof a resolution by the shareholders at the annual meeting held on 9 March 2018.

Responsibilities for the financial statements and the audit
Responsibilities of the management board and the supervisory board for thefinancial statements
The management board is responsible for:- the preparation and fair presentation of the financial statements in accordance with EU-IFRS and with Part 9of Book 2 of the Dutch Civil Code; and for- such internal control as the management board determines is necessary to enable the preparation of thefinancial statements that are free from material misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, the management board is responsible for assessing theCompany’s ability to continue as a going concern. Based on the financial reporting frameworks mentioned, themanagement board should prepare the financial statements using the going-concern basis of accounting unless the
management board either intends to liquidate the company or to cease operations, or has no realistic alternative but todo so. The management board should disclose events and circumstances that may cast significant doubt on the
Company’s ability to continue as a going concern in the financial statements.
The supervisory board is responsible for overseeing the Company’s financial reporting process.

Our responsibilities for the audit of the financial statements
Our responsibility is to plan and perform an audit engagement in a manner that allows us to obtain sufficient andappropriate audit evidence to provide a basis for our opinion. Our audit opinion aims to provide reasonable assurance
about whether the financial statements are free from material misstatement. Reasonable assurance is a high but not
absolute level of assurance, which makes it possible that we may not detect all misstatements. Misstatements may
arise due to fraud or error. They are considered to be material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
Materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified
misstatements on our opinion.
A more detailed description of our responsibilities is set out in the appendix to our report.
Amsterdam, 6 March 2019
PricewaterhouseCoopers Accountants N.V.
Originally signed by A.H. Zoon RA

98

146

Atradius | Consolidated financial statements 2018 Atradius N.V.
Atradius | Independend auditor’s report.

Appendix to our auditor’s report on the financial statements 2018of Atradius N.V.
In addition to what is included in our auditor’s report, we have further set out in this appendix our responsibilities forthe audit of the financial statements and explained what an audit involves.

The auditor’s responsibilities for the audit of the financial statements

We have exercised professional judgement and have maintained professional scepticism throughout the audit inaccordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our objectives
are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error. Our audit consisted, among other things of the following:- Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud
or error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,forgery, intentional omissions, misrepresentations, or the intentional override of internal control.
- Obtaining an understanding of internal control relevant to the audit in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control.
- Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimatesand related disclosures made by the management board.
- Concluding on the appropriateness of the management board’s use of the going-concern basis of accounting,and based on the audit evidence obtained, concluding whether a material uncertainty exists related to events
and/or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to therelated disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report and are made in
the context of our opinion on the financial statements as a whole. However, future events or conditions may
cause the company to cease to continue as a going concern.
- Evaluating the overall presentation, structure and content of the financial statements, including thedisclosures, and evaluating whether the financial statements represent the underlying transactions and eventsin a manner that achieves fair presentation.
Considering our ultimate responsibility for the opinion on the consolidated financial statements, we are responsible
for the direction, supervision and performance of the group audit. In this context, we have determined the nature andextent of the audit procedures for components of the Group to ensure that we performed enough work to be able togive an opinion on the financial statements as a whole. Determining factors are the geographic structure of the Group,
the significance and/or risk profile of group entities or activities, the accounting processes and controls, and theindustry in which the Group operates. On this basis, we selected group entities for which an audit or review offinancial information or specific balances was considered necessary.
We communicate with the supervisory board regarding, among other matters, the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.

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Atradius | Other information

Other information

148

Atradius | Glossary

Glossary
Atradius Atrium
Online credit management portal giving customers and brokers access to all the information they need to manage
their policies and apply for credit limits in one place, in real time.

Bonding (product)
The activity of providing guarantees that protect the beneficiary if the supplier fails to meet the agreed performancelevel. Bonding is also known as surety.

Buyer
A customer of our insured customer (i.e. the holder of the credit insurance policy). Buyers carry a credit risk suchas protracted default, insolvency and bankruptcy. This could lead to a financial loss for our customer and/or
policyholder. Buyer underwriting is related to the assessment of this credit risk.

Buyer underwriting
The activity related to the risk acceptance of credit risk of buyers. Buyer underwriting determines the credit limits
that are attached to the credit insurance policy and determines the amount for which shipments are insured. Buyers
are assessed on financial and non-financial criteria, including financial status, profitability, liquidity, size, region,
trade sector and payment experience.

Claim
An application by an insured customer for indemnification of a loss under the policy.

Claims ratio
A performance indicator that is defined as total claims including claims handling expenses divided by total
insurance revenue.

Combined ratio
The combined ratio is calculated using the general insurance standard; the sum of the claims and the expenses
divided by total insurance revenue.

Credit Insurance (product)
Commercial and/or political risk insurance whereby the customer is protected against non-payment of tradereceivables due to insolvency or default.

Credit limit
The maximum exposure specifically approved or otherwise authorised by the insurer in respect of a buyer.

Debt collection
Activity to collect monies owed by a company. Atradius offers this service to both insured customers and third
parties.

Economic capital
The amount of risk capital, assessed on a realistic basis, required by a company to cover its risks assumed underinsurance contracts.

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Atradius | Glossary

Eurozone
Refers to the European Union member states that have adopted the Euro as their currency.

Expense ratio
A performance indicator this is defined as total insurance expenses divided by total insurance revenue.

Exposure
Total amount underwritten by the insurer as cover on a buyer, a country, under a policy or under all policies.

Financial year
A period used for calculating annual financial statements but which does not require that the period reported on
constitutes a calendar year.

GlobalAtradius’ product and service offering to multinational customers, which provides tailored credit management
solutions for customers worldwide in several languages and currencies.

Atradius Insights
An advanced online business intelligence tool to support our customers with a detailed analysis of their debtor
portfolio and help them in managing their buyer portfolios and credit risks.

Insolvency
Legally recognised inability of a debtor to meet its commitments and pay its debts.

Instalment credit protection
Atradius’ offering to financial and corporate policyholders in Belgium and Luxembourg, that protects against shortterm and medium-term risks involved in multiple instalment agreements with private individuals and businesses(business-to-consumer).

Insurance revenue
The total of gross earned premium and information income (i.e. credit checking fees).

Medium-term businessBusiness (capital goods and major projects) transacted on credit terms of between two and five years.

Policyholder
Our insured customer; the party that purchases an insurance policy for protection against the risk of non-payment by(foreign or domestic) buyers and assumes responsibilities and obligations under that policy.

Policy underwriting
The activity related to establishing the terms and conditions of the insurance policy designed to mitigate
unacceptable risks. These terms and conditions include premium rate, maximum credit periods, the insurer’s
maximum liability, the customer’s own retention and other risk-sharing and mitigation aspects.

Political risk
The risk that a government buyer or a country prevents the fulfilment of a transaction, or fails to meet its payment
obligations, or the risk that is beyond the scope of an individual buyer or falls outside the individual buyer’s
responsibility.

Premium
Amount paid by an insured customer to the insurer in return for risk coverage.

Reinsurance
A risk-sharing operation, whereby the insurer obtains cover from a third party (the reinsurer) for part of the credit
risks that it has guaranteed, in exchange for the payment of a premium.

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Atradius | Glossary

Reinsurance business
The activity whereby Atradius acts as a reinsurance company for credit insurance and bonding business of primary
insurers. This activity is performed by a dedicated team of underwriters at Atradius Reinsurance DAC.

SME
Small and medium-sized enterprises.

Solvency II
An EU Directive that codifies the EU insurance regulation. It introduces a new regulatory framework and has comeinto effect on January 2016. The Solvency II Directive aims to create a harmonised, risk-orientated solvency regime
resulting in capital requirements for (re) insurance companies that are more reflective of the risks they run. Its
objectives are to deepen the integration of the EU insurance market, to improve the protection of policyholders andbeneficiaries, to improve the international competitiveness of EU insurers and to instil better regulation of the EU
insurance markets.

Underwriter
Person charged with risk acceptance, control of that risk and the setting of cover conditions on buyer or credit limits,
including any country-specific terms of cover.

Underwriting year
The year in which a risk is accepted for a shipment from a customer or policyholder to its buyer. The underwriting
year performance provides management with important insight into the buyer (risk) underwriting performance. In
addition, it gives information about the most recent underwriting year performance without any impact from previous
underwriting years.

UN Global Compact
A United Nations strategic policy initiative for businesses that are committed to aligning their operations and strategies
with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption.

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Overview of subsidiaries,
associated companies andminority shareholdings
The following table sets forth, as at 31 December 2018, the name and jurisdiction of establishment of the subsidiaries,
branches, associated companies and minority shareholdings of Atradius N.V. All companies are, directly or indirectly,
wholly owned unless otherwise indicated. The companies are listed in alphabetical order.
Name
African Trade Insurance Agency
Atradius Collections B.V.
Belgium branch
Canada branch
Czech Republic branch
Denmark branchFrance branch
Germany branch
Hungary branch
Ireland branch
Italy branch
Poland branch
Turkey branch
Atradius Collections Holding B.V.
Atradius Collections Limited
Atradius Collections Limited
Atradius Collections Limited
Atradius Collections Pte. Limited
Atradius Collections Pty. Limited
Atradius Collections Serviços de Cobranças de Dívidas Ltda
Atradius Collections, S.A. de C.V.
Atradius Collections S.L.
Atradius Collections, Inc.
Atradius Corporate Management Consulting (Shanghai) Co., Ltd.
Atradius Credit Insurance Agency, Inc.
Atradius Credit Management Services B.V.
Atradius Credit Management Services (RUS) LLC
Atradius Crédito y Caución S.A. de Seguros y Reaseguros
Australia branch
Austria branch
Bulgaria branch
Belgium branch
Canada branch
Czech Republic branch
Denmark branch
Finland branchFrance branch
Germany branch
Greece branch
Hong Kong branch
Hungary branch
Ireland branch
Italy branchJapan branch
Luxembourg branch
Netherlands branch
New Zealand branch
Norway branch
Poland branch
Portugal branch
Romania branch
Singapore branch
Slovakia branch
Sweden branch
Switzerland branch
Turkey branch
United Kingdom branch
Atradius Crédito y Caución Seguradora S.A.
Atradius Dutch State Business N.V.
(1)

Minus one share;(2)

Country
OwnershipKenya
1 shareNetherlands
Belgium
CanadaCzech Republic
Denmark
FranceGermany
Hungary
Ireland
Italy
PolandTurkeyNetherlands
CanadaHong Kong
United Kingdom
Singapore
Australia
BrazilMexico
Spain
USA
China
USA
Netherlands
RussiaSpain
Australia
Austria
Bulgaria
Belgium
CanadaCzech Republic
Denmark
FinlandFranceGermany
GreeceHong Kong
Hungary
Ireland
Italy
Japan
Luxembourg
Netherlands
New Zealand
NorwayPolandPortugal
Romania
Singapore
Slovakia
SwedenSwitzerland
TurkeyUnited Kingdom
BrazilNetherlands

Name
Atradius Enterprise Management Consulting (Shanghai) Co., Ltd.
Atradius Finance B.V.
Atradius Information Services B.V.
Belgium branch
Denmark branchFrance branch
Germany branch
Ireland branch
Italy branchJapan branch
Norway branch
Spain branch
Sweden branch
Switzerland branch
Taiwan branch
Thailand branch
United Kingdom branch
Atradius Information Services Vietnam Company Limited
Atradius India Credit Management Services Private Ltd.
Atradius Insurance Holding N.V.
Atradius Investments Limited
Atradius Italia Intermediazioni S.R.L.
Atradius Participations Holding B.V.
Atradius Pension Trustees Ltd.
Atradius Reinsurance DAC
Atradius Reinsurance DAC Escritório de Representação no Brasil Ltda.
Atradius Rus Credit Insurance LLC
Atradius Seguros de Crédito, S.A.
Atradius Trade Credit Insurance, Inc.
Atradius Trade Insurance Brokerage Yuhan Hoesa
CLAL Credit Insurance Ltd.
Compagnie Tunisienne pour l'Assurance du Commerce Exterieur S.A.
Compania de Seguros de Crédito Continental S.A.
Credit Guarantee Insurance Corporation of Africa Ltd
Crédito y Caución do Brasil Gestao de Riscos de Crédito e Serviços LTDACountry
Ownership
China
Netherlands
Netherlands
Belgium
Denmark
FranceGermany
Ireland
Italy
Japan
NorwaySpain
SwedenSwitzerland
TaiwanThailand
United Kingdom
Vietnam
India
Netherlands
Ireland
Italy
Netherlands
United Kingdom
Ireland
BrazilRussiaMexicoUSA
South Korea
Israel20%
Tunisia3.92%
Chile
50%(1)South Africa
25%
BrazilNetherlands

DAP Holding N.V.
Galilean Properties Proprietary Ltd
Gestifatura S.A.
Giant-net B.V.
Graydon Holding N.V.
Graydon Nederland B.V
Graydon Belgium N.V.
Graydon UK Ltd.
Hotel Maatschappij de Wittenburg B.V.
Iberinform Internacional S.A.u.
Iberinmobiliaria, S.A.u.
Iberinform Portugal S.A.
Informes Mexico, S.A. de C.V.
Invercyca, S.A.u.

Belgium
United Kingdom
Netherlands
2.7%
Spain
Spain
Portugal
80%(2)
MexicoSpain

Nederlandse Financieringsmaatschappij voor Ontwikkelingslanden N.V.
OpenCompanies B.V.
PT Atradius Information Services Indonesia
Starzyński i Wspólnicy Kancelaria Prawna spółka komandytowa
Technical Credit Insurance Consultants S.A.
The Lebanese Credit Insurer s.a.l.
Verenigde Assurantiebedrijven Nederland N.V.

Netherlands
Netherlands
Indonesia
PolandBelgium
LebanonNetherlands

minus 3 shares;

152

South Africa
Portugal
Netherlands
Netherlands
Netherlands

2.37%
25%
80%(2)

0.5%

99.99%
48.9%
0.65%

Disclaimer
The information in the chapter ‘The global economic environment in 2018’ is for general guidance on matters ofinterest only. While we have made every attempt to ensure that the information contained in this report reflects carefulanalysis and investigations on our side before publication of this Annual Report, we are neither responsible for any
errors or omissions nor for the results obtained from the use of this information.
The information in this Annual Report does not contain nor imply a warranty as to the completeness, accuracy,
timeliness or otherwise. Atradius, its related partnerships or corporations, or the directors, partners, agents or
employees thereof will in no event be liable to you or anyone regarding any decision made or action taken in relianceon the information in this Annual Report or for any consequential, special or similar damages.

Produced and publishedThis Annual Report is published by Atradius N.V.
Your contact
Christine Gerryn – Director Group Communication & Commercial Development
Phone: +31 20 553 2047
Email: christine.gerryn@atradius.com

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