The Purchase of Credit Insurance: Prophetic in hindsight or just good risk management?

By Nick Maddalena, Director, Seacurus Ltd.

In October 2006, Seacurus wrote an article for Marine Money entitled ‘Charterers’ Impact on Forecast revenues’. Words such as ‘unprecedented’ and ‘highly volatile’ were used to describe the bulk sector and yet the charter market continued to increase exponentially. The meteoric increase in hire rates encouraged a number of owners to charter in tonnage solely for the purpose of chartering the same vessel out at a higher rate in order to make a profit. Yet too few owners bought protection against counterparty default believing that they would be able to charter the vessel for an even higher amount if the counterparty failed to pay. But surely the market was unsustainable?

Two years ago it was recognised by a number of market

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