Second quarter numbers continue to reflect trade credit insurer's forecast
OWINGS MILLS, Md., Aug. 21 /PRNewswire/ -- The number of U.S. business
bankruptcies continues to rise in 2007, as the second quarter filings
showed yet another dramatic increase in the number of businesses seeking
protection from creditors. The increase continues to reflect the business
insolvency forecast produced by leading accounts receivable insurer Euler
Hermes ACI earlier this year.
According to the U.S. Bankruptcy Courts, 6,705 businesses declared
bankruptcy in the second quarter of 2007. This number shows a series of
upward trends, including:
-- A 7% increase over the first quarter of 2007
-- A 38% year-over-year increase from the second quarter of 2006
-- A 45% increase for the first half of 2007 in comparison to the first
half of 2006
"Businesses today are facing serious headwinds, including a slowing
economy and an increase in the cost of doing business," said Euler Hermes
ACI Chief Economist Daniel C. North, who earlier this year forecasted a 51%
increase in business bankruptcies for 2007. North has said that the three
most serious issues remain the effects of increased energy, raw material,
and labor costs; the effects of monetary policy tightening by the Federal
Reserve in 2004-2006; and the "decimated" housing market and its effects on
consumers and businesses.
The housing market's recent effects on the financial markets have
brought the seriousness of the situation to light, but North has been
tracking -- and predicting -- the economic impact for nearly a year. "What
first tipped me off was when median prices on existing homes fell for 10
consecutive months on a year-over-year basis, which is an unprecedented
event since house prices almost never fall; they have never fallen for more
than two months in a row in the 38 years that records have been kept," he
said. "This is an obvious sign of a rapidly deflating asset bubble, the
effects of which will continue to be felt for some time to come."
According to the Euler Hermes business failures forecast, a return to
30,000 business bankruptcies is expected in 2007. This follows a
spectacular, but one-off, reduction in business failures in 2006, when the
number of corporate insolvencies dropped by 50% due to a 2005 change in
U.S. bankruptcy legislation. North said the disappearance of the impact of
the change in legislation, coupled with the slowing economy and reduced
profits, will bring the bankruptcy numbers to "more normal levels."
With business bankruptcy levels increasing, business leaders will need
to be more vigilant regarding their B-to-B accounts receivable by utilizing
accounts receivable management products and services, such as trade credit
insurance and third-party commercial collections. For more information
regarding Euler Hermes ACI products and services, visit
http://www.eulerhermes.com/usa.
Euler Hermes ACI is North America's oldest and largest provider of
trade credit insurance and accounts receivable management solutions and is
the US subsidiary of the Euler Hermes Group. Headquartered in Owings Mills,
MD, the company protects and insures more than $150 billion in US trade
transactions annually. Additionally, Euler Hermes ACI provides a suite of
receivables management services that includes commercial third party
collections, receivables management outsourcing, and international
collections. For more information, visit http://www.eulerhermes.com/usa.
Euler Hermes is the worldwide leader in credit insurance and one of the
leaders in bonding and guarantees. With 5,500 employees in 49 countries,
Euler Hermes offers a complete range of services for the management of
customer receivables and posted a consolidated turnover of 2.01 billion
euros in 2006.
Euler Hermes, a subsidiary of AGF and a member of Allianz, is listed on
Euronext Paris. Standard & Poor's rates the group and its principal credit
insurance subsidiaries AA-.
Press Contact:
Rick Ostopowicz
Euler Hermes ACI Public Relations and Communications Specialist
Phone: (410) 753-0652
Email: rick.ostopowicz@eulerhermes.com
These assessments are, as always, subject to the disclaimer provided
below.
Cautionary Note Regarding Forward-Looking Statements: Certain of the
statements contained herein may be statements of future expectations and
other forward-looking statements that are based on management's current
views and assumptions and involve known and unknown risks and uncertainties
that could cause actual results, performance or events to differ materially
from those expressed or implied in such statements. In addition to
statements which are forward-looking by reason of context, the words 'may,
will, should, expects, plans, intends, anticipates, believes, estimates,
predicts, potential, or continue' and similar expressions identify
forward-looking statements. Actual results, performance or events may
differ materially from those in such statements due to, without limitation,
(i) general economic conditions, including in particular economic
conditions in the Allianz SE's core business and core markets, (ii)
performance of financial markets, including emerging markets, (iii) the
frequency and severity of insured loss events, (iv) mortality and morbidity
levels and trends, (v) persistency levels, (vi) the extent of credit
defaults (vii) interest rate levels, (viii) currency exchange rates
including the Euro-U.S. Dollar exchange rate, (ix) changing levels of
competition, (x) changes in laws and regulations, including monetary
convergence and the European Monetary Union, (xi) changes in the policies
of central banks and/or foreign governments, (xii) the impact of
acquisitions, including related integration issues, (xiii) reorganization
measures and (xiv) general competitive factors, in each case on a local,
regional, national and/or global basis. Many of these factors may be more
likely to occur, or more pronounced, as a result of terrorist activities
and their consequences. The matters discussed herein may also involve risks
and uncertainties described from time to time in Allianz SE's filings with
the U.S. Securities and Exchange Commission. The Group assumes no
obligation to update any forward-looking information contained herein.
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