Government-owned Hong Kong Export Credit Insurance Corp (ECIC) reported a 2.6 per cent drop in profit to HK$114.9 million for the year to March. Management said increased claims resulting from more default payments from United States and British buyers were partly to blame. Gross claims jumped 208.5 per cent to HK$55.63 million as a few large casualties emerged in the first quarter of this year. The ECIC is a government agency which offers insurance cover to exporters against the risks of buyers defaulting on payments. It pays compensation to exporters if buyers go bankrupt or if payments become overdue for four months. ECIC commissioner Cheung Kam-kay said conditions worsened in the first quarter of this year. 'There was a noticeable increase in cases of default and insolvency among US and European buyers after the Christmas sales,' he said. 'These were isolated big cases; the majority of cases involved small amounts and should not be seen as signs of a worrying trend.' A few large casualties include the bankruptcy of a garment retailer in Britain in February that brought ECIC a claim of HK$5.87 million. Then seven US cases brought a combined claims expenditure of HK$12.84 million in February and March. Mr Cheung is optimistic about Hong Kong's overall export outlook but warned of risks from an economic slowdown in the US. 'The rise in the yuan and raw material prices will push up production costs for Hong Kong exporters, especially small and medium-sized enterprises,' he said He urged exporters 'to exercise effective risk management, handle credit prudently and consider taking out export credit insurance as a tool to minimise credit risks'. Also contributing to the profit decline was less provision write-backs for the year, which totalled HK$12.41 million, down 65.6 per cent from the pervious year. During the year, total insured business reached HK$39.29 billion, up 10.5 per cent from a year earlier.