economic developments and the outlook for trade - aman …€¦ · economic developments and the...
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Economic developments and the outlook for trade
AMAN UNION 6TH ANNUAL MEETING
7TH –9TH DECEMBER 2015
MUSCAT -OMAN
about ICISA
● Founded in 1928 (as ICIA)
first credit insurance association
● > 95% of private global market
● > 15% of global trade
● 55 Members
● 34 credit insurance members
● Other members:
● surety bond underwriters
● reinsurance companies
2
ICISA members
3
Association Networking
● AMAN UNION5 shared members (observers)
● ALASECE4 shared members
● BERNE UNION10 shared members
● PASA22 shared members
● SFAA8 shared members
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types of cover
• Domestic / Export
– “Domestic” is just another country
• Commercial / Political Risk
• Whole Turnover / Single Risk Cover / XoL
• Credit Risk / Pre-Credit Risk
• Short-Term / Medium/Long Term
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Economic imbalances
China, E.U., USA
QE: stock markets, emerging currencies
Interest rates
Commodity prices
Partnerships (e.g. TTIP)/geopolitical threats
Inflation/deflation
Sanctions
Terrorism
Migration
New global recession?
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the current TCI market
Mismatch between risk and premium
Fraud and corruption
Neither soft or hard
Stable premium income
Rising claims
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the current TCI market
Increased competition
Claims rising: Brazil, Canada, China, Russia, Indonesia
Insolvencies construction sector
Soft market with exceptions
Ample reinsurance capacity
Growth in Europe, MENA, Asia & N America
Trade Finance: improving, alternatives
Solvency II: implementation 2016
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ICISA TCI members results 2014
(compared to 2013)
• premium + 3%: € 6 billion
– 2007: +35%
• claims – 1%: € 2.9 billion
– 2007: +39%
• claims ratio: 46.9%
– 2013: 48.8 %
– 2007: 45.6%
• insured exposure + 12%: € 2.2 trillion
– 2007: +29%
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Trade credit insurance
premium, claims & claims ratio ICISA Credit Insurance Members
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Claims Ratio in %Amount in EURO
Millio
ns
Premiums
Claims
Claims Ratio in %
Trade credit insurance
Insured ExposureICISA Credit Insurance Members
0
500
1,000
1,500
2,000
2,500
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Billio
ns
Insured Exposure TradeCredit Insurance
Amount in EURO
TCI market trends - premium
56% = stable
24% = decreasing
20% = increasing
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MENA TCI market trends - premium
60% = stable
20% = decreasing
20% = increasing
13
TCI market trends - claims
59% = stable
32% = increasing
9% = decreasing
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MENA TCI market trends - claims
75% = stable
25% = increasing
0% = decreasing
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market trends - insolvencies
61% = stable
29% = increasing
10% = decreasing
16
MENA market trends - insolvencies
86% = stable
14% = increasing
0% = decreasing
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TCI current market – hard or soft?
24% = hard
43% = neither
33% = soft
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MENA TCI current market – hard or soft?
25% = hard
75% = neither
0% = soft
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TCI market trends next 12 months
26% = hard
41% = neither
33% = soft
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MENA TCI market trends next 12 months
25% = hard
75% = neither
0% = soft
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reinsurance market trends 12 months
2% = hard
24% = neither
74% = soft
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outlook 2016 and beyond
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concerns Trade Credit Insurance
Rising claims: Russia, Brazil, Turkey, China
Fraud: Brazil, China
Political unrest: MENA, South East Asia
Lower premium rates
Financing by banks: SMEs
Alternative financing
Construction sector
Solvency regulations (Europe, other regions)
Regulatory – protectionism - systemic
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outlook Trade Credit Insurance
• growth in:
● Europe
● Asia
● MENA
● North America
• Markets hard/soft:
• little change expected
• Hardening markets:
● Latin America
• Softening markets:
● Europe
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the future of Trade Credit Insurance
● internal:
Entry-level for new players was high, now low
Differing risk perception: low rates vs. high risks
Shareholders changing demands
●external:
QE, interest rates, new recession?
Solvency regulations favour diversified insurers
Ample reinsurance capacity
Co-operation public and private underwriters
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current advocacy issues
Solvency CAT Risk
Shadow Banking/Systemic Risk
PML/LGD Study
Opening markets: India, Korea
Bankruptcy legislation
Financial information (MENA, Asia):• transparency
• group structures
• key information lacking
• quality
• reliability
• financials - consolidated financials
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What is Surety?
• Terminology used
– Surety
– Bond
– Guarantee
• Guarantees the performance of a contract
– Construction
– Tax
– Other
Surety Risk Model
Construction
project
Beneficiary Contractor
Surety
Reinsurance
RiskIndemnity
Risk
Risk
Types of Surety Bonds
• Construction Bonds
• Customs or Tax Bonds
• Bond re concessions or licenses
• Lease Bonds
• Judicial Bonds
• Financial Bonds
• Other
The Trade Credit Insurance & Surety Academy
• Training Seminars– Basic and Advanced Training Seminars
• Trade Credit Insurance
• Surety Bond Insurance
– Participants 15 max.
• Tailor-made in-house
[email protected] www.stecis.org
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