Trade credit insurers have reduced Premier Foods’ suppliers’ cover for the second time in a month.

The credit insurers, who insure suppliers against a customer defaulting while owing money for orders already delivered, are looking to reduce their exposure after having to pay out on several collapsed retailers.

A note from credit insurer Atradius to its policyholders, seen by The Grocer, said: “We are conducting a review on this group while Premier negotiates with banks to restructure its balance sheet. Premier has provided us with trading levels of each supplier. We are reducing your limit to current trading levels.”

Premier Foods supplied information to insurers who then reduced the insurance limit for some suppliers. Suppliers warned that the move would force them to ask Premier to pay earlier in order to stay within their credit limits.

“The previous cut in credit limit took my insurance to a level I wasn’t comfortable with, but didn’t directly impact trading,” said one supplier. “However, this one is likely to. I receive several orders each month from Premier Foods, and given my new limit, I could have to wait for payment on the earlier orders before dispatching later ones.”

Analysts suggested the move said more about the health of the big three credit insurers than about Premier. Euler Hermes, the largest trade credit insurer, was forced to write down profits late last year after being exposed to large payouts on the collapse of Woolworths.

“The credit insurers are reducing their exposure almost across the board,” said one analyst. “Given Premier has its well-known debt issues, on one level it’s not a great surprise they’re reducing their exposure. It’s symptomatic of some people’s concerns that Premier chief executive Robert Schofield will be unable to restructure its debt. However, it does seem an odd move, given that at the moment it’s the non-food retail sector that’s really looking most vulnerable.”