Iceland suppliers have had their cover slashed by a major credit insurer as soaring energy costs place the food retailer under mounting pressure.
Insurer Coface cut cover on Iceland’s suppliers in December, following the lead of both Allianz Trade and Atradius who cut coverage on the frozen food specialist last year, according to The Sunday Times.
The removal of credit insurance means suppliers are no longer protected against the risk of the retailer going bust between an order being delivered and payment being received.
Suppliers can also demand an upfront payment from the retailer, which will restrict its cash flow.
The supermarket’s reliance on large chest freezers means it is more vulnerable to soaring energy prices and therefore likely to be targeted by credit insurers.
In August last year, Iceland issued a profit warning due to higher energy costs and saw its bill jump from £70m to £155m last year.
Iceland is now said to have entered into agreements with renewable energy companies to lock in the price of 50% to 65% of its energy requirements for the next 15 years.
Despite this news, Kantar reported that Iceland’s sales grew 10.6% in the 12 weeks to January 22, 2023.
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