Credit Insurers Pull Out as Iceland Faces Pressure from Soaring Energy Bills
- Credit insurer Coface cuts cover for Iceland’s suppliers due to rising costs
- Allianz Trade and Atradius also cut coverage last year
- Credit insurance protects suppliers in case of retailer bankruptcy
- Suppliers may demand upfront payment without cover
- Iceland relies on large chest freezers, exposed to rising energy costs
- Energy bill increased from £70m to £155m in a year
- Chairman Richard Walker plans to reduce chilled food sales and increase energy efficiency
Leading credit insurer Coface has withdrawn its cover for suppliers to Iceland amid the supermarket’s growing pressure due to increasing energy costs. This follows Allianz Trade and Atradius, who also cut their coverage last year. Credit insurance protects suppliers in case of a retailer going bust between order delivery and payment receipt. Without this cover, suppliers may demand upfront payments, straining the retailer’s cash flow. Iceland’s reliance on large chest freezers exposes it to higher costs, with its energy bill rising from £70m to £155m in a year. In response, Chairman Richard Walker plans to reduce chilled food sales and increase energy efficiency by stocking more room-temperature products, using modern fridges, and installing solar panels on stores and warehouses.
Factuality Level: 8
Factuality Justification: The article provides accurate information about the credit insurer’s decision to cut cover on Iceland, the reason behind it (rising energy costs), and the potential impact on suppliers. It also mentions the retailer’s response to the situation (reducing chilled food sales, using more efficient fridges, and installing solar panels). The information is relevant and objective without any clear signs of sensationalism or personal perspective.
Noise Level: 3
Noise Justification: The article provides relevant information about the financial challenges faced by Iceland due to rising energy costs and the actions taken by the company to address these issues. It also mentions the involvement of credit insurers, which adds a layer of complexity to the situation. However, it could benefit from more in-depth analysis or expert opinions on the potential long-term consequences for the company and the industry.
Financial Relevance: Yes
Financial Markets Impacted: Iceland’s suppliers and the retail industry
Financial Rating Justification: This article discusses a credit insurer cutting its cover on Iceland, which can impact the company’s cashflow and potentially affect its suppliers. It also mentions the rising energy costs affecting the supermarket industry as a whole.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no extreme event mentioned in the article.
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