Indianapolis based HHGregg filed for Chapter 11 bankruptcy this week, following the footsteps of retailers The Limited, Wet Seal and American Apparel. This brings to light the due diligence of leading trade credit insurer, Atradius Trade Credit Insurance, Inc., that helped deliver timely trade risk information to clients conducting business with the electronics and appliance retailer. The filing occurred shortly after the consumer electronics retailer announced the closure of more than one-third of its store base.
The fact that credit insurance serves as a safety net during turbulent times, and allows companies to safeguard their account receivables when a partner company is about to default on payment or file for bankruptcy, is vital to a business’ sustainability.
For the past several months, Atradius analysts have been closely monitoring the performance of HHGregg, as well as the retail industry generally. Based on intelligence obtained and indications that customers were exposed to an unacceptable risk, Atradius advised several of its clients associated with HHGregg to trade only under secure conditions. This action resulted in minimal losses for Atradius’ clients, ultimately demonstrating the impact of independent risk guidance in an evolving state of international trade.
According to Atradius’ Senior Risk Manager, Christian Mueller “the fact that credit insurance serves as a safety net during turbulent times, and allows companies to safeguard their account receivables when a partner company is about to default on payment or file for bankruptcy, is vital to a business’ sustainability.”
“Overexpansion earlier in the decade, pressure from on-line sellers, and changing consumer behaviour ultimately led to HHGregg’s failure”, according to Mueller. Atradius not only protects its customers’ trade receivables through insurance but also assists in risk management, which, in the case of HH Gregg, meant assessing the warning signs that enabled its clients to avoid the credit losses that often result from Chapter 11 proceedings.
“While we have been following HH Gregg’s deterioration for some time, our concerns peaked in the second half of last year, based on the company’s cash burn and steadily declining same store sales”, Mueller continues. In light of the recent wave of US retail bankruptcies, this sector remains a concern for Atradius. “We continue to see significant headwinds, with brick and mortar retailers particularly vulnerable to ongoing revenue and margin pressures from fierce competition, including the growing dominance of Amazon in many segments, combined with unsustainable debt structures and store footprints. Our number one priority is to safeguard our clients from future trade losses”, concludes Mueller.
Atradius provides trade credit insurance, surety and collections services worldwide through a strategic presence in 50 countries. Atradius has access to credit information on 200 million companies worldwide. Its credit insurance, bonding and collections products help protect companies throughout the world from payment risks associated with selling products and services on trade credit. Atradius forms part of Grupo Catalana Occidente (GCO.MC), one of the leading insurers in Spain and worldwide in credit insurance.
Christian Mueller is the Vice President and Senior Manager of Atradius Trade Credit Insurance, Inc. of the Special Risk Management unit for Risk Services Americas. In this leadership role, he oversees his team of Senior Underwriters, responsible for managing Atradius’ most risky buyers portfolios.
Christian joined Atradius Trade Credit Insurance as a Buyer Underwriter in 2001 moving up to Senior Underwriter analyzing and building his knowledge in many various sectors. In 2015, he became Senior Manager of the Special Risk Management unit and then nominated as Vice President by Management Board in 2016. Prior to Atradius, Christian spent 8 years working for Barmer Erstzkasse, a German health insurance provider underwriting and managing claims.
Christian received his BA in International Business from the University of Applied Sciences in Kiel, Germany and his MBA in Financial Management from Benedictine University in Lisle, IL.