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TRANSCRIPT
The
2014
is
supporting trade and investment since 1934
Published by TXF Ltd on behalf of the Berne Union. ©TXF Ltd 2014 & the Berne Union. All rights reserved.
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SBerne Union 2014
Contacts
International Union of Credit &Investment InsurersIncluding Berne Union Prague Club1st Floor 27-29 Cursitor StreetLondon EC4A 1LTUnited Kingdom
Tel: +44 (0)20 7841 1110Fax: +44 (0)20 7430 0375
www.berneunion.org
TXFEditor-in-chiefJonathan Bell
Managing directorDan Sheriff
Commercial directorDominik Kloiber
Product development directorMax Carter
Chief technology officerJames Petras
Head of communicationsKaty Rose
Content managerHesham Zakai
Published byTXF: Trade & Export FinanceCanterbury CourtKennington Park1-3 Brixton RoadLondon SW9 6DEUnited Kingdom
Tel: +44 (0) 20 3735 5180Email: [email protected]
www.txfnews.comwww.tagmydeals.com
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Berne Union 2014
Contents1 Introduction
Foreword 9Jonathan Bell, editor-in-chief, TXF
Interview with Berne Union president Dan Riordan 10
2 Data and Statistics
Berne Union totals 16Short-term export credit insuranceMedium- and long-term export credit insuranceInvestment insurance
Analysing Berne Union data trends 22 Fabrice Morel, deputy secretary general, Berne Union
3 Expert Analysis
OVERVIEW
A history of the Berne Union 28Dr Hans Janus, member of the board of management, Euler Hermes AG
Economic overview 32Peter Hall, VP and chief economist, EDC
Global risk overview 36 Alyson Warhurst, CEO, Maplecroft
Short-term export credit capacity 42Ralph Lai, commissioner, HKEC
Medium- and long-term export credit capacity 46 Karin Apelman, director general, EKN
COLLABORATION AND LIQUIDITY
Easing the regulatory challenges 50 Henri D'Ambrieres, ICC advisory board member
Standardisation across export finance 52 Andreas Klasen, partner at PwC, and VP of the Berne Union
Export finance and capital markets 56Jim Cruse, senior VP, policy and planning, US Ex-Im
Collaboration between ECAs and development banks 60 Arun Kumar Sharma, chief investment officer, global financial markets, IFC
NATURAL RESOURCES
Using ECAs to secure energy supplies 64Kazuhiko Bando, chairman and CEO, Nexi
The role of export credit in project financing 66David Godfrey, chief executive, UKEF
Political risk in the mining sector 69Jim Thomas, senior VP and interim MD, Zurich Credit & Political Risk
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3 Expert Analysis continued
SUSTAINABILITY
Sustainable export finance 72Edna Schöne-Alaluf, head of Berlin liaison office, Euler Hermes AG
ECAs and the renewables industry 75Anette Eberhard, CEO, EKF
REGION AND SECTOR FOCUS
Providing support for SMEs 78Dan Mancuso, EDC, and Vinco David, Atradius
The resurgence of shipping 81Kim Young-hak, president, K-sure
Satellite finance and ECAs 83Régine Schapiro, head of energy, telecoms and space, Coface
ECAs and the challenge of Islamic finance 85Topi Vesteri, executive VP, Finnvera, and chairman FEC
ICIEC at 20 87The Islamic Corporation for the Insurance of Investment and Export Credit
Export credit insurance in the Middle East 90Karim Nasrallah, managing director, LCI Lebanon
On the ground activity in Africa 92George Otieno, CEO, ATI
The benefits of providing export credit insurance for banks 95Geetha Muralidhar, executive director, ECGC
Export credit for OECD-based borrowers 98Simon Sayer, head of STEF, EMEA, Deutsche Bank
4 Members Directory
Berne Union members 103
Prague Club members 128
5 80th Anniversary Timeline
80th anniversary timeline and photographs 142
Berne Union 2014
Berne Union 2014
1Introduction
Berne Union 2014
PRESIDENTDaniel RiordanCEO, Zurich Global Corporate in NorthAmerica
Dan Riordan joined Zurich North America in1997 to establish and manage the globalPolitical Risk and Trade Credit business.Before his current post, Dan also led acombined international Surety, Credit, andPolitical Risk group and served as Presidentof Zurich’s Specialty Products unit. Prior tojoining Zurich, Dan was a senior executivemanaging Overseas Private InvestmentCorporation’s (OPIC) portfolio of long-terminvestments in developing countries. Dan hasbeen active in the Berne Union over thecourse of his career, serving as Vice Chairmanand Chairman of the Investment InsuranceCommittee and as Vice President in 2011. Danis a graduate of the State University of NewYork at Oswego, and earned a masters’degree in international development from theSchool of International Service at AmericanUniversity, Washington, D.C.
VICE PRESIDENTAndreas Klasen Partner, PwC Germany
Dr Andreas Klasen leads PwC’s Economics &Policy practice. He is also Managing Directorof the official German export credit andinvestment insurance programmes, theEH/PwC consortium responsible formanagement of the German ECA on behalfof the Federal Government. Before joiningPwC in 2008, Andreas was Head ofGuarantees and Export Finance with Airbus’parent company EADS and advisor to theEuropean Commission and the GermanGovernment on trade and industry policy. Heread law and finance at universities inGermany and the United Kingdom and holdsa doctoral degree in finance from theUniversity of Northumbria at Newcastle.
Short Term Committee
CHAIRRalph Lai Commissioner, HKEC Hong Kong
Ralph Lai has been the Commissioner ofHong Kong Export Credit InsuranceCorporation (HKEC) since July 2009. Prior tothis, he held various senior regional positionswith multinational financial institutions intrade finance and credit insurance. He wasthe Managing Director, Greater China TradeFinance for GE Capital before becoming thefirst head of HKEC from the private sector.Under his management, the Corporation hadrecord business growth with commitmentand net assets at historic highs. Mr Lai holdsan MBA from Bath University, UK and is agraduate of Chinese University of Hong Kong.
VICE CHAIRKhemais El-GazzahICIEC
Medium/Long Term Committee
CHAIRKarin ApelmanDirector General, EKN Sweden
Karin Apelman joined EKN, the SwedishGovernment’s ECA, in 2002, as a member ofthe Board of Directors, and later served assecond Vice Chairman 2006-2007. She wasappointed Director General in 2007. Karin is amember of the Swedish Radiation SafetyAuthority’s financing delegation (SSM) since2009, a member of the Board of Directors ofSwedavia since 2010, and a member of theAdvisory Council at The Legal, Financial andAdministrative Services Agency(Kammarkollegiet) since January 2011. Karinwas the Chief Financial Officer at LFVSwedish Airports and Air Navigation Services2001-2007. Before that she served in variousexecutive capacities at SAAB Aircraft Leasingand Scandinavian Airlines (SAS). Karinreceived her MBA from Stockholm School ofEconomics in 1986.
VICE CHAIRJing Fenglei SINOSURE
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Berne Union 2014
Berne Union 2014
Dan Riordan
Andreas Klasen
Ralph Lai
Karin Apelman
John Hegeman
Investment Committee
CHAIRJohn HegemanSenior Vice President AIG Trade & PoliticalRisk, AIG United States of America
John Hegeman is the global head of AIGPolitical Risk Insurance business. John hasbeen with AIG since 1985 and has many yearsexperience in Credit and Political RiskInsurance. Before joining AIG John worked forFCIA for 10 years where he was Senior VicePresident and the chief underwriter. Johnworked in London from 1987-1994 managingAIG’s Credit and Political Risk business inEurope. He is a graduate of ColgateUniversity where he studied Marine Biologyand has a Masters Degree in Finance fromBoston College.
VICE CHAIRVinco DavidATRADIUS
Prague Club
CHAIRMANKarim NasrallahManaging Director, LCI, Lebanon
Karim Nasrallah is the Founder and theManaging Director of The LebaneseCredit Insurer (LCI), Partner with Atradius. LCIis the first private independent CreditInsurance Company in Lebanon and theMiddle East. Through his different venturesMr. Nasrallah has been involved for morethan 20 years in all aspects of Credit
Management ranging from Credit Insuranceand Factoring to Credit Information and DebtCollection, in the Levant and the Middle-Eastregions. Since December 2013, Mr. Nasrallahhas been the Chairman of Prague Club, partof the Berne Union. The Prague Club is anassociation of new and maturing insurers ofexport credit and investment which supportsits members in developing their activities.
Secretariat
Fabrice MorelDeputy Secretary General
Abbey SturrockAssistant Director
Songhee ChoSecondee, K-SURE
Management CommitteeMembers
ASHRA ATRADIUS
COFACE COSEC
EH GERMANY EGAP
MIGA NEXI
SINOSURE SLECIC
US EXIM ZURICH
7
Berne Union 2014
INTRODUCTIO
N
Jing Fenglei
Khemais El-Gazzah
Vinco David
Karim Nasrallah
Fabrice Morel
Abbey Sturrock
2014 Meetings
March SME Specialist Meeting Amsterdam, ATRADIUS
May BU Spring Meeting London
June PC Spring Meeting Ljubljana, Slovenia, SID Bank
July INV Technical Panel USA, Zurich
October Berne Union Prague Club General Meeting Moscow, EXIAR
November Claims & Recoveries Specialist Meeting Budapest, EXIM HUNGARY
December Specialist Meeting Tel Aviv, ASHRA
During its 22-year existence, EGAP has insured the export of:
Reliable partner of the Czech export
4,770 buses
4,220 trucks
1,550 tractors
991 trolleybuses
251 trams
86 turbines
This is a particularly big year for the BerneUnion, which has now been supportingexporters, borrowers, investors and theoverall export financing sector for the past 80years. It is also a celebratory year, as feworganisations have such an excellent andconsistent track-record of performance inglobal trade. In the case of the Berne Union,members have consistently supported globaltrade flows through the good times and thebad, without fail.
In recent years, the retrenchment fromcertain areas of trade finance by some of thecommercial bank community has left manygaps to be filled. And some of these gaps –particularly the provision of finance for small-and medium-sized (SME) enterprises, havebeen damaging to many. However, the exportcredit agencies (ECAs), developmentfinancing institutions (DFIs) and multilateralfinancial institutions (MFIs) rose admirably tothe rescue through the global financial crisisof 2008-2009, and for the most part theycontinue to perform to keep global tradeflows on track. In this regard, Berne Unionmembers have been, and continue to be,particularly flexible, inventive and open todialogue with all parties.
The increased focus on the SME sector isone which Berne Union members continue toexplore, knowing that these companies formthe ‘life blood’ of the exporting supply chain.Members’ attention to the challenges thesecompanies face through open discussion andcommittee sessions will prove to beinvaluable, today and in future years.
It is an entirely different scene to thatperceived of the sector in the late-1990s, forexample. Today, agencies are very much thedriving force and innovators. As increasedregulation has impacted on the commercialbanking community, so the banks andcorporates have sought the safe haven ofworking in a particular market with agencies,of one form or another. The benefits ofpartnering with AAA-rated institutions hasalso opened up many new avenues for thecommercial banks, many of whom are keen to
explore new territorieswith better margins –but only if the backingis behind them.
Innovation byagencies is, of course,taking many forms,and not least is thedrive to increaseliquidity in the sector.In certain cases this
has led to the involvement of new investors,and this is something which will undoubtedlybe a bigger feature over the next few years.And the increasing involvement of capitalmarket mechanisms is providing somepositive benchmark tools for players in selectmarkets and sectors. At the same time, directlending solutions and mechanisms have beenbrought into play, and these measures haveoften supported industrial sectors andprojects – such as renewables and satellitefinancing – where financing may have beenhard to achieve.
With continued extensive and varied risksin many markets, and the seemingly never-ending news of new conflicts, credit andpolitical risk insurance is, and will continue toplay a crucial role in the export credit sectorand global trade at large. And with abroadening vision, the Berne Union is theprime organisation to house the discussionsand provide the umbrella for all members towork under.
Bringing all members together in order toshare experiences, knowledge andimportantly new ideas, is the desiredobjective of the leadership, secretariat andmembers alike. The future looks healthy andbright for the Berne Union in this respect.
As this is the 80th anniversary year, it is atime not only to reflect, but also to lookforward, and this is very much achieved in thearticles written by the members and othersfor this Yearbook. We hope you find thefeature articles interesting and informative,and the data and directory useful tools foryour work in the year ahead. ■
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ForewordBerne Union members continue to evolve to meet the demands andchallenges of the export credit financing sector. By Jonathan Bell, editor-in-chief, TXF.
Jonathan Bell
Dan Riordan, CEO, Zurich Global Corporatein North America, took over the presidencyof the Berne Union in October last year, andin doing so he became the firstrepresentative of a private insurer to beelected president in 30 years. He comes in aspresident at a time when export creditagencies (ECAs) and export credit financingare arguably playing a more important role inglobal trade than ever before.
The export credit sector has changedimmensely since the global financial crisis(GFC) of 2008-2009. Agencies and insurershave stepped-up to work with borrowers andexporters in a highly proactive way thatcould not have been predicted before theGFC. It is a changed paradigm. And as anorganisation, the Berne Union is playing itspart as it looks to work with a positiveforward vision for its members and theexport credit sector at large. With 2014 beingthe 80th anniversary of the Berne Union, it isalso a big year for the organisation.
“The Berne Union is a membershipassociation made up of a tremendouslyinteresting group of people. We are a diversegroup from around the globe who have acommon interest in export credit andinvestment insurance,” says Riordan. “Thathas been true since day one.” In 1934, apublic sector agency came together withthree private credit insurers in Berne for the
first meeting of whatultimately becamethe Berne Union andPrague Club,membershipassociations of nearly80 companiesrepresenting over 60countries.
“In coming in asthe new president
especially in our 80th year, it was importantto me that our organisation provides to themembers what they value most, whilestaying true to our guiding principles. WhatI’ve learned through discussions and reviewof past documents is that keeping the spiritof the Berne Union alive in the context oftoday’s world has been a challenge for mypredecessors, and one that I accepted gladlylate last year. In a collective processengaging with our members, staff, and pastmembers we set out initially to understandjust what that value is. How do we improveand how do we maximise our activities tocreate that type of environment?” Riordanstates: “We were really challenged by themembers over the year to develop moretransparency, openness and communication,and we have made good progress on thatsince October 2013.”
Riordan stresses that the organisation
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Berne Union 2014
Changed perceptions as members enter a wider sphereJonathan Bell, editor-in-chief at TXF, talks with Dan Riordan, president of theBerne Union, about taking the organisation forward in its 80th year.
Dan Riordan
“Making sure that we are meeting expectations for our members is paramount. On the other hand, how we build on the existing reputation of theorganisation is important as well. There is a tremendous amount of experience and knowledgehoused within the existing membership, and someclosely-tied alumni.”
provides an avenue for the members tonetwork and share experiences, learn newtechniques and come together as acommunity. He adds: “It is a very powerfulassociation. We are looking now at moreregular communication, so that we keep thisorganisation relevant. How we use the datawithin the Berne Union will be a maincontributor to ensuring that we deliver onthat task. At the present time much of thatcapability remains untapped. Refining howwe approach, collect, and analyse memberdata has real significance.”
“Making sure that we are, at a minimum,meeting expectations for our members isparamount. On the other hand, how we buildon the existing reputation of the organisationis important as well. There is a tremendousamount of experience and knowledgehoused within the existing membership, andsome closely-tied alumni. How do weposition the Berne Union in industry, forinstance?”
Fostering further cooperationCloser contact between members of theBerne Union and the Prague Club is a priorityin reducing complexity and modernising thegroups. To that end, there is an addedbenefit that the groups have much to learnfrom and to teach one another. Business withsmall- to medium-sized enterprises (SMEs)and understanding of the associatedrequirements is one such scenario where thetwo groups can leverage knowledge andexperience. For the first time in 2014, theautumn Annual General Meeting will bringtogether Berne Union and Prague Clubmembers.
“This is what we see in our individualbusinesses and in the outside world. Trade,and its finance, is more interconnected thanat any other point in history,” remarksRiordan. “Many of the Prague Club membershave already been focused on SMEs, a trendthat Berne Union members have becomemore involved in as well. This is onecommonality that can encourage morecooperation between members.”
He also points out: “Not only are theparallels between members growing, as inthe SME example, the range of conversationis changing as well. Our bi-annual generalmeetings have been the banner events formany years, but lately members have foundmore ways to get together to attractspecialist activities. Just in the last 12 monthssmall specialist meetings have focused on
issues such as SMEs, country risk, and claimsand recovery trends. In this way more peopleare attracted to the community. Whereas itused to be the senior most representative,now we see the real practitioners – newunderwriters, or middle-level managers –exchanging real time experiences.”
With the broadening of the subject matterand level of discussions, the meetingexperience is enhanced all around.”
Being receptive to new ways of operatingand new ideas is the mark of a progressiveinstitution. In recent years, the Berne Unionhas become much more open which has ledto greater avenues of cooperation with otherorganisations, and it is widely felt that this issomething that needs to be encouragedfurther.
“We are not a shy group, but still Iencourage members to offer feedback aboutnew ideas and concepts. This is important.For the last few years there has been amember-driven effort to increasecooperation with multilateral organisationssuch as the WTO and World Bank. FormerBerne Union president Angus Armour was abig proponent of becoming more involvedwith these entities and getting more involvedwith the G20 at the same time. JohanSchrijver continued much of that good workand I want to also take that forward. I thinkthe members want this too,” states Riordan.“I am also a firm believer in focus – and wecan’t do everything that we would like to.Initially, we should be focusing on a fewthings and doing them well,” he adds.
“To provide a forum for our members,organisations that support exporters andinvestors in tough markets, and to allowthem the opportunities to better supporttheir businesses, I think that’s really wherethe Berne Union shows its worth.”
Members continue to rise to thechallengesIn hindsight, one thing is without question,and that is that Berne Union and Prague Clubmembers have shown their importancethroughout the GFC. This ability of themembers to be flexible and proactive issomething that Riordan is particularly proud of.
He states: “If we look at how membershave helped facilitate trade and investmentin what has been the toughest economysince the great depression, we can clearlysee that a lot of members rose to thechallenge. Some of them became de facto
11
INTRODUCTIO
NBerne Union 2014
lenders, some have expanded their businessmodels, they have increased their limits, andthey have become more creative instructuring to answer the needs in the globaleconomy. ”
“At the same time they have been workingin an environment where the banks were notlending, but rather sitting on cash. To acertain extent, that is still a reality. Banks arestarting to lend and starting to be moretrade finance oriented, but over the past fiveor six years, the private and public membersof the Berne Union have had to really step-up to support the sector. ”
“We say that 10% of world trade isfacilitated by Berne Union members, but Iactually thing that it is higher than that. InUSD that is over 1.8 trillion of exports andforeign direct investment. I think this couldgo as high as 20%. That’s the exciting part –we facilitate through insurance and finance,and it grew on the finance side quitesubstantially because of the lack ofwillingness to lend by banks in response tothe global financial crisis.”
Direct lending, new tools and growthIn certain industrial sectors, and renewablesis certainly one of those, ECAs increased thevolume of direct lending as demand hascome from the market since 2009.Sometimes this has been a controversialissue with commercial banks, sparkingheated debate.
However, Riordan explains: “In the midst ofthe GFC, in relation to the lack of fundsavailable in the commercial bank market –particularly for SMEs – ECAs in manymarkets got involved to find solutions. Acting
as direct lenders on a temporary basis wasone such result. As we see economiesimprove and increased involvement from thebanks, some of the ECAs will pull back a bitas their role is not to be a direct competitorof a bank’s lending operation. There is a rolefor each, investment and credit insurer aswell as lender in a transaction.”
Now, well into 2014, with demand forfinancing intensifying in most industrial andinfrastructure sectors, so is increasedrequirement for greater liquidity. As Riordanpoints out: “The global economy is thawingnow and our members, public and private,are looking at new ways they can raise fundsand capital to help support exporters. Thereis a lot of work continuing in the capitalmarkets. We have also seen more ECAs andmultilaterals get involved using theirguarantees or insurance capabilities to getmore capital into the market for lendingpurposes.”
As an example of this, in September lastyear the Multilateral Investment GuaranteeAgency (MIGA) supported a €400-million($553.6 million) financing backed by notes tobe issued by Hungarian Exim. Specifically,MIGA’s guarantee provided coverage againstnon-honouring of the sovereign financialobligation for the principal and interest onthe bond notes. This deal represented MIGA’sfirst use of this cover for a capital marketsissue.
If we have a good concept then we oughtto share it,” Riordan says. “We have also seenproactive work with EKF in Denmark workingwith the Pension Fund of Denmark to createmore loan capabilities. They are very focusedon their wind industry, so they need more
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Berne Union 2014
“If we look at how members have helped facilitate tradeand investment in what has been the toughest economysince the great depression, we can clearly see that a lotof members rose to the challenge. Some of thembecame de facto lenders, some have expanded theirbusiness models, they have increased their limits, andthey have become more creative in structuring toanswer the need in the global economy.”
capacity and by partnering with the pensionfunds they have created more exportfinance.”
Denmark’ PFA Pension, the country’slargest pension fund is working in concertwith EKF to provide loans to foreigncompanies to help Danish groups includingwind companies such as Vestas WindSystems. The programme has been highlysuccessful and can expect to be emulatedwith pension funds and ECAs elsewhere indue course.
Looking aheadWith ever an eye on the future in all aspectsof the sector, Riordan sees continued strongdemand for export credit financing, withfinanciers continuing to also look at ways toincrease liquidity. He notes: “There willcontinue to be calls for longer-term financeand related insurance. The capital marketswill continue to assist with this. There will beincreasing emphasis placed on thedevelopment of infrastructure and also amanufacturing renaissance in the US.”
“I also think that securitisation willcontinue as a way to get more of the fundsout there in the wider market. The demand isthere, and even picking up, in developed andemerging economies. The pent up demandfor investment in infrastructure – particularlyin energy, whether upstream or downstreamoil and gas, shale oil development, alternativeenergy, for instance, are all going to be big.These will require funding, and in many caseswill showcase expertise of Berne Union andPrague Club members.”
“Some of these infrastructuredevelopments will also involve multilaterals.And we see IFC as key in this regard. Theyare quite creative in their facilities –securitisation, lending and insurance – andthey are active in setting up reinsurancecapabilities as well. We are looking at ways
to bring our two organisations closertogether for the benefit of our members andtheir customers. That will be an exciting thingfor us.”
“Political and economic shifts on a globalbasis are already underway. By the end of2014, 40 national elections will have takenplace across the globe, the effects of whichwill be broad across geographies andsectors. Energy independence in NorthAmerica is also creating a very interestingdynamic, potentially starting a chain reactionthrough the region, and simultaneouslythrough current energy providers in theMiddle East, as they brace for relatedimpacts. It is these types of shifts thatunderwriters are prepared to assess andaddress.”
And as a private insurer, how does Riordansee the role of these companies within thesector overall? “I certainly see a greater rolefor private insurers within ECA-backedactivity. The private members that arealready within the BU have brought a lot ofcollective expertise and innovation into thegroup as it exists today,” he believes, “Thishas generated a lot more cooperation –which has led us to do more co-insuranceand re-insurance between the public andprivate sector. It used to be an event when aprivate insurer did something with an ECA –but that is no longer the case. It is businessas usual. That has created a very welcomingenvironment within the Berne Union.
On a final note, Riordan states: “I do seemore complexity and interdependenceglobally. There is increasing regulation. Someof this makes for a challenging environment,which is becoming ever more interconnectedand complicated – and this can become aroadblock to exports and investment. Sothere has to be a good balance. Localinterests and the interests of companiesneed to be protected, but, as a globaleconomy, we should be enabling anenvironment that encourages trade andinvestment. So that is really the balance forus all.
“What is the Berne Union’s role in that?We are practitioners of the export credit andinvestment insurance sector, and as such asource of information and expertise. We willgrow and change with the times, as willmany of the things we have discussed here,but in all likelihood, we will always be lookingfor new ways to provide information andeducation to appropriate stakeholders, be itinternal or external.” ■
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“We will grow and changewith the times … we willalways be looking for new ways to provideinformation and education to appropriatestakeholders, be it internal or external.”
Berne Union 2014
Berne Union 2014
2Data and Statistics
16
Berne Union 2014
USD
milli
on
0
250,000
500,000
750,000
1,000,000
1,250,000
1,500,000
1,750,000
2,000,000
2,250,000
2009 2010 2011 2012 2013
2,250,000
2,250,000
n
1,500,000
1,750,000
2,000,000
1,500,000
1,750,000
2,000,000
noill
mi
SDU
500,000
750,000
1,000,000
1,250,000
500,000
750,000
1,000,000
1,250,000
250,000
500,000
0
250,000
500,000
2009
2010
1201 2012
2012 2013
New Business – during each year
USD
million
0
250,000
500,000
750,000
1,000,000
1,250,000
1,500,000
1,750,000
2,000,000
2,250,000
2009 2010 2011 2012 2013
2,250,000
2,250,000
n
1,500,000
1,750,000
2,000,000
1,500,000
1,750,000
2,000,000
noill
mi
SDU
500,000
750,000
1,000,000
1,250,000
500,000
750,000
1,000,000
1,250,000
250,000
500,000
0
250,000
500,000
2009
2010
1201 2012
2012 2013
Exposure – at year end
USD
milli
on
0
1,000
2,000
3,000
4,000
5,000
6,000
2009 2010 2011 2012 2013
6,000
6,000
n
4,000
5,000
4,000
5,000
noill
mi
SDU
2,000
3,000
2,000
3,000
1,000
0
1,000
2009
2010
1201 2012
2012 2013
Claims Paid – during each year
USD
million
0
1,000
2,000
3,000
4,000
5,000
6,000
2009 2010 2011 2012 2013
6,000
6,000
n
4,000
5,000
4,000
5,000
noill
mi
SDU
2,000
3,000
2,000
3,000
1,000
0
1,000
2009
2010
1201 2012
2012 2013
Recoveries – during each year
USD
milli
on
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2009 2010 2011 2012 2013
1,800,000
1,800,000
n
1,200,000
1,400,000
1,600,000
1,200,000
1,400,000
1,600,000
noill
mi
SDU
400,000
600,000
800,000
1,000,000
400,000
600,000
800,000
1,000,000
200,000
400,000
0
200,000
400,000
2009
2010
1201 2012
2012 2013
ST New Business – insured during each year
USD
million
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2009 2010 2011 2012 2013
1,200,000
1,200,000
n
800,000
1,000,000
800,000
1,000,000
noill
mi
SDU
400,000
600,000
400,000
600,000
200,000
0
200,000
2009
2010
1201 2012
2012 2013
ST Exposure – at year end
Berne Union: Short Term Export Credit Insurance
Berne Union: Totals
Key■ INV – Investment Insurance■ MLT – Medium/Long Term Export Credit Insurance■ ST – Short Term Export Credit Insurance
17
DA
TA A
ND
STA
TIS
TIC
SBerne Union 2014
USD
milli
on
0
500
1,000
1,500
2,000
2,500
2009 2010 2011 2012 2013
2,500
2,500
n 1,500
2,000
1,500
2,000
noill
mi
SDU 1,000
1,000
1,500
0
500
2009
2010
1201 2012
2012 2013
ST Claims Paid – during each year
USD
million
0
100
200
300
400
500
2009 2010 2011 2012 2013
500
n
300
400
noill
mi
SDU
200
0
100
2009
2010
1201 2012
2012 2013
ST Recoveries – during each year
ST Exposure 2013: Top 10 Countries ST Claims Paid 2013: Top 10 Countries
UNITED STATESGERMANYUNITED KINGDOMFRANCEITALYCHINASPAINNETHERLANDSSWITZERLANDBRAZILOTHER
ESTAATSTTAEDTINUYMANERG
DGNKIEDTINUECANRF
YALLYTTAICHINA
NAISP
ES
MO
NAISPSDANLERHETN
DANLERZTISWLIAZBR
ERHTO
S
IRANITALYUNITED STATESBRAZILSPAINGERMANYUNITED KINGDOMINDIARUSSIAPORTUGALOTHER
ANRIYALLYTTAI
ESTAATSTTAEDTINULIAZBR
NAISPYMANERG
DGNKIEDTINU
ES
MO
DGNKIEDTINUINDIA
ASSIURALGUTRPO
ERHTO
MO
IRANUNITED STATESITALYGERMANYARGENTINASPAINIRAQBRAZILBELGIUMLIBYAOTHER
ANRI
ESTAATSTTAEDTINUYALLYTTAI
YMANERGANITENGAR
NAISPAQRI
ES
AQRILIAZBR
MUIGBELABYYAILERHTO
ST Recoveries 2013: Top 10 Countries
18
Berne Union 2014
USD
milli
on
0
25,000
50,000
75,000
100,000
125,000
150,000
175,000
200,000
2009 2010 2011 2012 2013
Sovereigns Other Public Banks Corporates ProjectsUnspecified Lending
200,000
200,000
n
125,000
150,000
175,000
125,000
150,000
175,000
noill
mi
SDU
50,000
75,000
100,000
50,000
75,000
100,000
25,000
0
25,000
2009
2010
1201 2012
2012 2013
sngireveSodfieciespnU
cilbPur ehtOLending
ksnBa traorpoC
set sctejPro
MLT New Business – insured during each year
USD
milli
on
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
2009 2010 2011 2012 2013
Commitments Aid-Related CommitmentsArrears Claims, Political RiskClaims, Commercial Risk Refinanced/Rescheduled AmmountsOverdues on Refin/Resch Amounts Lending
800,000
800,000
n
500,000
600,000
700,000
500,000
600,000
700,000
noillm
iSD
U
200,000
300,000
400,000
200,000
300,000
400,000
100,000
0
100,000
2009
stnmetmmioC
2010
1201 2012
Cdetale-RdAi
2012 2013
stnmetmmioC
rsaArremmeoCms,ialC
Rnos eurdveO
skiRlarcimmestnuAmoscheR/fineR
caitilPoms,ialCR/dcenafineR
s Lending
skiRlcauAmmodeludescheR
stnu
MLT Exposure – at year end
MLT New Business 2013: Top 10 Countries MLT Exposure 2013: Top 10 Countries
UNITED STATESVIETNAMTURKEYRUSSIASAUDI ARABIAITALYINDIACANADACHINAKOREA REP.OTHER
TEAATUNITED STTAVIETNAMTURKEYRUSSIA
ARABIASAUDI YALLYITTA
INDIA
TES
ARABIA
INDIACANADACHINA
.REPKOREAAOTHER
UNITED STATESRUSSIATURKEYINDIABRAZILSAUDI ARABIAVIETNAMINDONESIAUNITED ARAB EMIRATESCHINAOTHER
TESAATUNITED STTARUSSIATURKEYINDIABRAZIL
ARABIASAUDI VIETNAM
TES
VIETNAMINDONESIA
ARAB EMIRAUNITED CHINAOTHER
TESMIRAAT
Berne Union: Medium/Long Term Export CreditInsurance and Lending
19
DA
TA A
ND
STA
TIS
TIC
SBerne Union 2014
USD
milli
on
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2009 2010 2011 2012 2013Political Risk Commercial Risk Lending
3,500
3,500
n 2,000
2,500
3,000
2,000
2,500
3,000
noillm
iSD
U
1,000
1,500
2,000
1,000
1,500
2,000
0
500
2009lcaitilPo
2010skiR mmeoC
1201 2012skiRlarcimme
2012 2013Lending
Lending
MLT Claims Paid – during each year
USD
milli
on
0
1,000
2,000
3,000
4,000
5,000
2009 2010 2011 2012 2013
Political Risk Commercial Risk Lending
5,000
5,000
n 3,000
4,000
3,000
4,000
noillm
iSD
U 2,000
3,000
2,000
3,000
1,000
0
1,000
2009
2010
C
1201 2012
2012 2013
lcaitilPo
skiR mmeoC
skiRlarcimme
Lending
MLT Recoveries – during each year
MLT Claims Paid 2013: Top 10 Countries MLT Recoveries 2013: Top 10 Countries
IRANSAUDI ARABIAUNITED ARAB EMIRATESUKRAINEEGYPTBRAZILMYANMARLIBYASPAINRUSSIAOTHER
ANRIAABIARIDSAU
EMIAB AREDTINUENAIKRU
YPTEGLIAZBRMARANMYYA
ESTAATR
MARANMYYAABYYAILNAISPPA
ASSIURERHTO
INDONESIAEGYPTIRAQPAKISTANIRANKAZAKHSTANSERBIAUNITED ARAB EMIRATESCANADAECUADOROTHER
AESINODNIYPTEG
AQRIANSTTAAKIPPA
ANRIANSTTAAKHKAZ
ABISER
ABISEREMIAB AREDTINU
AADANCROADUEC
ERHTO
ESTAATREMI
20
Berne Union 2014
USD
milli
on
0
20,000
40,000
60,000
80,000
100,000
120,000
2009 2010 2011 2012 2013
120,000
120,000
n
80,000
100,000
80,000
100,000
noill
mi
SDU
40,000
60,000
40,000
60,000
20,000
0
20,000
2009
2010
1201 2012
2012 2013
INV New Business - insured during each year
USD
milli
on
0
50,000
100,000
150,000
200,000
250,000
2009 2010 2011 2012 2013
250,000
250,000
n 150,000
200,000
150,000
200,000
noill
mi
SDU 100,000
150,000
100,000
150,000
50,000
0
50,000
2009
2010
1201 2012
2012 2013
INV Exposure - at year end
INV New Business 2013: Top 10 Countries INV Exposure 2013: Top 10 Countries
KAZAKHSTANCHINARUSSIABRAZILVIETNAMINDONESIAPERUINDIAUZBEKISTANUNITED STATESOTHER
ANKAZAKHSTTACHINARUSSIABRAZILVIETNAMINDONESIAPERUPERUINDIA
ANUZBEKISTTATESAATUNITED STTA
OTHERTES
RUSSIACHINAKAZAKHSTANINDIABRAZILTURKEYEGYPTINDONESIAVIETNAMUNITED STATESOTHER
RUSSIACHINA
ANKAZAKHSTTAINDIABRAZILTURKEYEGYPTEGYPTINDONESIAVIETNAM
TESAATUNITED STTAOTHER
TES
Berne Union: Investment Insurance
21
DA
TA A
ND
STA
TIS
TIC
SBerne Union 2014
USD
milli
on
0
50
100
150
200
250
300
350
2009 2010 2011 2012 2013
Transfer Political ViolenceExpropriation etc Breach of ContractUnspecified
350
n
200
250
300
noillm
iSD
U
100
150
200
0
50
2009
2010
1201 2012
2012 2013
resfnraTctenoitariproExp
dfieciespnU
loiVlcaitilPoc CfochaBre
cenelctratno
INV Claims Paid – during each year
USD
milli
on
0
20
40
60
80
100
120
2009 2010 2011 2012 2013
Transfer Political ViolenceExpropriation etc Breach of ContractUnspecified
120
n
80
100
noillm
iSD
U
40
60
0
20
2009
2010
1201 2012
2012 2013
resfnraTtenoitariproExp
dfieciespnU
eloiVlcaitilPoct oCfochaBre
cenectratno
INV Recoveries – during each year
INV Claims Paid 2013: Top 10 Countries INV Recoveries 2013
LIBYAVENEZUELAVIETNAMMYANMARSPAINBRAZILKAZAKHSTANSERBIABELIZESUDANOTHER
ALIBYYAVENEZUELAVIETNAM
ANMARMYYAAINSPPA
BRAZILANKAZAKHSTTAANKAZAKHSTTA
SERBIABELIZESUDANOTHER
KAZAKHSTANNIGERIAUKRAINECUBAVIETNAMLIBYAHUNGARYMEXICO
ANKAZAKHSTTANIGERIAUKRAINECUBAVIETNAM
ALIBYYAYHUNGAR
AN
YHUNGARMEXICO
Export credit insurance reaches $1.9 trillion in 2013While international trade seems to haveincreased towards the end of 2013, thegrowth for the whole year has remainedsluggish. Against this backdrop, the volume of exports and investments covered by members of the Berne Unionincreased by approximately 4% driven by growth in short-term export creditinsurance. The total amount of cross-bordertransactions facilitated in 2013 reached $1.9 trillion.
Out of the total business volume, more than $1.6 trillion represented short-term (ST) export credit insurance, while medium and long-term (MLT) export creditinsurance amounted to just over $160 billion.Newly underwritten investment insurance(INV) transactions totalled close to $100 billion.
Based on export figures for the first threequarters of 2013 published by the UnitedNations statistics division, global exportsgrew by 1% compared to the same period in2012. The growth rate for export creditinsurance was therefore significantly higher,and Berne Union members supported 10% ofinternational trade in 2013.
Total claims paid by Berne Unionmembers during 2013 amounted to $4.5billion, a slight reduction compared to theprevious year. While ST and INV claimsmoderately increased, MLT claims reducedby approximately 6%.
Since the beginning of the global financialcrisis in 2008, Berne Union members havepaid more than $24 billion to exporters andinvestors to compensate them for lossessuffered due to defaults by buyers or otherobligors.
Within the continued volatile riskenvironment, Berne Union members provideample insurance capacity to supportinternational trade transactions and fostersustainable economic growth.
Short-termbusiness – healthygrowth and goodresultsShort-term businessrepresents insuranceof exports withrepayment terms ofless than one year –often 30, 60 or 90days. These
transactions are typically shipments ofconsumer goods, and the evolution of STexport credit insurance is closely linked withthe ups and downs of the global economicenvironment.
The volume of ST export turnover insuredby Berne Union members grew by 5.7% in2013 and reached over $1.6 trillion. This issignificantly higher than the growth rate forinternational trade previously mentioned, andmay reflect an increased demand for riskmitigation products to protect internationalsales transactions.
To support these international sales, theinsurance capacity provided by Berne Unionmembers, measured by the amount of creditlimits approved and granted to exporters at agiven point in time, stood at over $1 trillionthroughout 2013. At the end of the year, thecapacity reached $1.1 trillion – the highestlevel ever.
ST claims paid by Berne Union membersto exporters to indemnify them for defaultson their trade receivables went from $1.8billion in 2012 to $1.9 billion in 2013. This 4.7%increase is slightly lower than the growth rateof the business and reflects a soundunderwriting by the industry. It is noteworthythat the total claims figure is influenced byone of the large Berne Union members, whosuffered an over proportional rise in claims.For most of the membership, ST claims paidhave actually remained stable or evenreduced year over year.
In spite of strong pricing competition in22
Berne Union 2014
Berne Union members on theway to cover $2 trillion of exportcredit and investmentBy Fabrice Morel, deputy secretary general, Berne Union
Fabrice Morel
some areas of the market, it seems thatBerne Union members have been able tocommand adequate premium rates,commensurate with the risks they bear.Although not all 2013 data is fully available atthis stage, the ST loss ratio for Berne Unionmembers as a whole is expected to be stableor slightly lower than in 2012.
Historically, export credit agencies (ECAs)tend to have higher ST loss ratios thanprivate market insurers. A plausibleexplanation is that, by mandate, the role ofECAs has always been to support theirnational exporters and to cover transactionsacross the full risk spectrum, and whereinsurance cover might otherwise be difficultto obtain.
The highest volumes of ST claims paid percountry in 2013 resulted from defaults in Iran($191 million), Italy ($186 million), the UnitedStates ($145 million), Brazil ($143 million),and Spain ($108 million).
Many Berne Union members paid claimsdue to buyer defaults in Western Europeancountries and the United States. This is quitenormal and reflects the fact that thesecountries are those with the largest volumesof international trade and, as a consequence,with the largest ST exposures for BerneUnion members. Trade with Brazil hassignificantly increased in recent years andtherefore the amount of insured transactionsand related claims paid has risen as well.
Currently, only a few Berne Unionmembers continue to insure ST exports toIran. The exposure on Iran is small and thehigh volume of claims paid is the result of alimited number of insurers who haveindemnified significant amounts to exporters.
Medium and long-term business –high demand for ECA coverThe MLT statistics of the Berne Unioncapture insurance coverage provided bystate-backed ECAs only. Alongside insurancebusiness, some ECAs in the Berne Union alsoprovide financing, which is also reflected inthe data and represents approximately 10%of the total business reported.
MLT export credit insurance coversexports of capital goods. These aretransactions with longer repayment terms oftypically 5-7 years, and up to 10 years oreven 15 years in some cases. Most of thebusiness is done with banks as the insured.
The total portfolio of MLT transactionsinsured by Berne Union ECAs reached $657billion at the end of 2013. This represents an
increase of 4.5% and is the highest level ofexposure ever recorded.
New business in 2013 reduced by 11% to$161 billion of insured transactions, which islower than the historical records of the years2009 and 2011 ($191 billion in both years), butstill higher than before the global financialcrisis.
It might appear counterintuitive that thetotal portfolio is growing while new businessis reducing. This can be explained by the factthat reductions of the existing portfolio –expirations or cancellations of insurancepolicies – have been limited.
New business has decreased for most ofthe large providers of MLT cover, certainly forthe ECAs in OECD countries. This is not aresult of a change in cover policy by theECAs but reflects the underlying deal flowupon which ECAs are dependent on. In acontinued challenging global riskenvironment, Berne Union ECAs continue tooffer risk mitigation capacity to protectbanks from obligor defaults.
Claims paid to customers by ECAs underMLT transactions reduced by 6% from $2.6billion in 2012 to $2.4 billion in 2013. Thehighest amounts of claims paid per countrywere due to defaults in Iran ($871 million),Saudi Arabia ($221 million), United ArabEmirates ($178 million), Ukraine ($113 million),and Egypt ($99 million).
The background to the various claimssituations is specific and differs significantlyfrom country to country. A number of BerneUnion ECAs have been affected by theIranian situation, where obligors experiencedifficulties to transfer payments abroad. TheIranian claims are linked to long termtransactions signed prior to the imposition ofthe sanctions. Hardly any new cover on Iranhas been issued in 2012 and 2013.
Although the circumstances are23
Berne Union 2014
DA
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ND
STA
TIS
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S
While the situationremains volatile, it isbusiness as usual forexport credit insurers who are used to dealing with commercial andpolitical risks and are well equipped tohandle these.
completely different, a number of ECAs havebeen affected by losses also in Ukraine. Thisis different from the claims profile for SaudiArabia, the United Arab Emirates and Egypt,where the bulk of claims paid were born byone or two ECAs respectively.
If it were not for the Iranian claims, thelosses in the MLT class of business in 2013would have been at their lowest level since2008. However, the fact that a singlesituation significantly affects a large numberof exporters in multiple countries illustratesthe need for risk mitigation in cross bordertransactions. Given the political andeconomic uncertainties in the globalenvironment, the support of ECAs appearsto be more than ever crucial to help banksand exporters trade internationally.
Investment insurance – stable at top levelsInvestment insurance protects investors andlenders against political risks linked toforeign direct investments. Due to the longterm character of investment, coverage cantypically be granted for extended tenors, upto 20 years or even more, depending on therisk appetite of the respective ECA or privatemarket insurer. Also loans to sovereign orquasi-sovereign entities can be insuredagainst payment default and fall under thisclass of business.
After phenomenal growth of new businessin 2012 (an increase of 33% compared to2011), new business reached $96 billion in2013. This was 3.5% lower than the recordlevel of the previous year but, nevertheless,new investment insurance reached doublethe volume of 2009, when global financingwas at a low point. Total portfolio figuresamounted to $235 billion of insuredinvestments at the end of 2013, an increaseby 6% and the highest level ever attained.
Total claims paid by Berne Unionmembers in investment insurance in 2013amounted to $147 million, an increase by 17%.High claims countries included Libya ($28million), Venezuela ($21 million), Vietnam
($19 million), and Myanmar ($15 million).Compared to the exposure, claims levels
have generally been low in this class ofbusiness over the past few years. While thisreflects solid underwriting, it must not beforgotten that investment insurance istypically “lumpy” business, where only onelarge claim could wipe out years of premiumincome. Insurers therefore need a strongcapital base or state backing to be preparedfor the worst.
Outlook – a strong industry preparedto handle international risksWith the exception of claims on Iran, 2013has been a very good year for Berne Unionmembers. The economic outlook ischaracterised by mildly positive signs for therecovery in Europe and other industrialisedcountries, while the growth in emergingmarkets has started to look less robust inrecent months.
While the situation remains volatile, it isbusiness as usual for export credit insurerswho are used to dealing with commercialand political risks and are well equipped tohandle these.
Parts of the credit insurance marketexperience strong competition which leadsto ample capacity and attractive pricing forexporters and banks. However positive thesituation was in 2013, past losses serve as areminder that pricing of risk mitigationproducts needs to be commensurate withthe risks taken.
As usual, the performance of credit andinvestment insurers in 2014 will depend onglobal trade and global growth. With strongrisk management tools and underwritingprocesses in place, Berne Union members,both public and private, have a majorcontribution to make in sustaining tradeflows and further strengthening economicgrowth.
Celebrating its 80th year in 2014, the oddsare that Berne Union members will top the$2 trillion mark very soon. Very best wishesto the Berne Union! ■
24
Berne Union 2014
The economic outlook is characterised by mildlypositive signs for the recovery in Europe and otherindustrialised countries, while the growth in emerging markets has started to look less robust inrecent months.
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investments
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have more than 60 years’ experience in managing
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Berne Union 2014
Berne Union 2014
3Expert analysis
Global trade and foreign direct investmentshave seen dramatic changes in the 80 yearssince the Berne Union was founded. Notsurprisingly, the Berne Union itself haschanged in tandem with these. But the worldof the Berne Union is more complex than thissimple picture. One of the characteristics ofthe Berne Union is its remarkable ability topreserve the qualities, strengths and uniquefeatures of a diverse and truly globalorganisation over decades while internationalpolitics and the world economy havechanged fundamentally –more than once.
We do not know very much about theearly years of the Berne Union. But from thelast thirty to forty years, we do know fromour own experience, and from contacts withcolleagues active in the Berne Union beforeus, that one core value has always been acornerstone of the uniqueness of the BerneUnion and helped to preserve its genuineclub atmosphere: friendship. Despite differentbusiness approaches and the growth of theorganisation, and even transcending theircompetition in the markets, the delegates ofmember companies have very oftendeveloped a bond of real personal friendship.
The regular attendance at Berne Unionmeetings for a couple of days once or twice ayear is a high investment in time for seniorexecutives in the credit and investmentinsurance industry, particularly in our fast-moving times. But the great continuity withwhich leaders of our industry have attendedthe meetings for many years demonstratesthat this investment pays dividends.
I have had the chance to play an activerole in the Berne Union for more than 20years now. This is no more than a quarter ofBerne Union’s entire history. This short periodalone, however, has shown dramatic changesin our business, and there is no reason toassume that the first sixty years might havebeen less dynamic. The promotion of globaltrade and foreign direct investment hasalways been the overarching purpose and the
key competence ofthe Berne Union.
Recipe forsuccessThe recipe for theBerne Union’s successis quite simple: bringtogether the mostexperiencedcolleagues from
member companies and invite externalexperts from banks, research institutions andmultilateral organisations for an extensiveprofessional exchange on developments inthe markets. The focus in this is always clearlypossible future developments, since creditand investment insurers have to cope withthe challenge of predicting future riskscenarios and taking appropriate decisions todeal with them.
Fundamental changes in the organisationof the union became necessary and werecarried out in the 1990s. At that time theworld of export credit and investmentinsurance was still clearly dominated byofficial export credit agencies (ECAs)operating under various legal forms for theirrespective national governments. Privatecredit insurers were strong in domestic short-term credit insurance and bonding business.But in the 1980s several private insurers werealready starting to develop their short-termexport credit businesses; they set upbranches or subsidiaries in other countries,they acquired existing companies anddiversified their product range, and theyexhibited a rapidly growing risk appetite. Thisdevelopment only became possible after theworld’s leading reinsurance companies gaveup their extreme reluctance to reinsure thecommercial risks of export transactions. Forpolitical export risks it even took a few moreyears until they became reinsurable on alarger scale.
These developments triggered a very28
Berne Union 2014: Overview
Nothing changed – but everythingdifferent: the paradox of theBerne UnionBy Dr Hans Janus, member of the board of management, Euler Hermes AG
Hans Janus
fundamental debate in Europe aboutcompetition between public and privateinsurers operating in the same market forshort-term export credit insurance. Theradical step taken in the UK in 1991 toprivatise the short-term business of ECGDand sell it to the Dutch NCM (today Atradius)was only a logical consequence of this, butone which dramatically changed the entirelandscape of credit insurance in Europe.Malcolm Stephens, chief executive of ECGD,president and later secretary general of theBerne Union, was a driving force behindthese developments.
Adapting to changeThe Berne Union had to adapt to thischanged situation, which was a long anddifficult process. Many of the establishedECAs wanted to defend their exclusiveness.To understand just how deep and radical theneeded reforms were, one has to bear inmind that until the 1990s, with the exceptionof FCIA in the USA, Trade Indemnity from theUK (later Euler Hermes), SIAC from Italy (laterEuler Hermes) and Eidgenössische/Federalfrom Switzerland (later Winterthur and thenAXA), only government-linked institutionswere members of the Berne Union.
This contrasts the mere foundation of theunion. Originally founded in 1934 by privateand public insurers, the ECAs got more andmore important after the Second World Warsince export credit insurance was mainlydone by them. The open conflict which brokeout concerning the membership applicationof NCM UK, the former short-term arm ofECGD, in 1993 was probably the most criticalthreat ever faced by the friendship-basedBerne Union community. Although theapplication was rejected this eventsymbolises the entrance of the Berne Unioninto a radically new phase of its history.
The 1990s were also a period which sawgrowth in membership. Important emergingmarkets’ ECAs joined the union. TurkEximbank, PICC (today Sinosure), TEBC(Chinese Taipei), SBCE of Brazil and othersapplied for membership. But the realchallenge for the Berne Union was thenumber of private credit insurers interested inbecoming members. John J. Salinger,president of AIG Global Trade & Political Risk,had for years already argued for morecooperation between public and privatecredit insurers. He finally led AIG as the firstnewly entering purely private insurer into theBerne Union in 1999.
One year earlier at the annual generalmeeting in Cape Town in South Africa inOctober 1998, the Berne Union had set thecourse for its enlargement by private creditinsurers. This was the completion of a multi-year strategic debate which was drivenforward in particular by the presidentsSoledad Abad of Cesce (Spain) and FrançoisDavid of Coface (France) and the thensecretary general, Anne van’t Veer.
A no less important result was the splittingup of the export credit insurance committeeinto two committees for short-term andmedium and long-term business. With thisseparation, the short-term committee couldbe opened up for private companies whereasthe MLT committee remained a closed shopfor government-linked ECAs only. Thislimitation is still in place but it will not persistvery much longer. The investment insurancecommittee has also gradually opened up forprivate political risk insurance companies(PRI) since Cape Town. Several new membersjoined the union after the groundbreakingdecisions had been made in Cape Town: AIG,Sovereign, Zurich, Chubb, Hiscox.
The global geopolitical changes in Europein the early 1990s following the fall of theBerlin Wall in November 1989 also changedthe Berne Union enormously. New ECAs werefounded in most of the former Comeconcountries. The Berne Union proved to be theideal organisation to ease the birth of thesenew agencies.
With the help of funds channeled throughthe newly founded European Bank forReconstruction and Development (EBRD),the Prague Club convened for the first time inPrague by invitation of Czech EGAP in 1993.Other Eastern European ECAs such as KUKE(Poland), MEHIB (Hungary), SID (Slovenia)rapidly joined and later became Berne Unionmembers as well. Today the Prague Club hasmore than 30 members from all parts of theworld and its integration into the Berne Unionis planned.
When I compare 2014 to the late 1980s orearly 1990s, I see two fundamental
29
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Berne Union 2014: Overview
Together with partners from multilateralagencies and the banking industry, theBerne Union and its members willalways generate solutions for fosteringglobal trade and foreign directinvestment.
developments which have completelyreshaped our industry and thus the BerneUnion with it.
First, there is a great shift in the centres ofworld trade. Asia has become a new centre ofgravity on the world map of foreign tradeactivities. China, Korea and India have notonly tremendously increased their exportbusiness, they also play a very important rolenowadays in the Berne Union together withJapan, the traditional strong player from Asia.Important steps forward in this developmentwere the very successful presidency ofHidehiro Konno from Japan, the firstpresident of the Berne Union coming from anAsian country, and the highly constructiverole Geetha Muralidhar from India played asvice president a few years later.
The second great shift is that from politicalto commercial risk. Only 25 years agoapproximately 90% of all claims paid andreported to the Berne Union were politicalclaims. ECAs worldwide suffered from theinternational debt crisis of the emergingmarkets and developing countries. Claimspayments were extremely high, many ECAshad to report financial losses and theunderwriting of new business became verycautious. The transformation from stateplanned economies to market economies inEastern Europe in the 1990s marked thishistoric turning point.
Political risk lost its dominance for creditinsurers and in particular the currencyconversion and transfer risks disappearedentirely as a consequence of the abolition ofcurrency controls in most of the countries.This changed the work of the Berne Union:country discussions became less important,the assessment of private buyer risks tookcentre stage. Is a maxi devaluation and aconsecutive corporate insolvency acommercial or a political risk? How shouldcorporate restructuring schemes be treated?The Berne Union had to deal with questionswhich hitherto had played a rather minor role.
The global financial crisisThe Berne Union’s most dramatic phase,however, was the global financial crisis. Theannual general meeting in Banff in Canada inOctober 2008 was an unforgettable event.During the meeting in the heart of theCanadian Rocky Mountains which was mainlydedicated to corporate social responsibilitymatters, sustainability and environmentaltopics, the delegates were suddenlyconfronted with a historically unprecedented
plunge in stock markets all over the world.The Berne Union decided, for the first timeever and spontaneously in an early breakfastmeeting, to launch an initiative to maintaincover open and to assure the industry of thecountercyclical approach of ECAs based onthe strong intention to help to stabilise tradeflows and support the real economy. Thismessage was much appreciated byinternational organisations, governments,exporters and their associations around theglobe, and helped to stabilise a very criticaland highly volatile situation.
The global financial crisis also shifted thefocus of the Berne Union’s debates to thefinancial dimension of export creditinsurance. The severe difficulties of exportersto get bank financing for their businesssuperseded the risk situation of thetransactions. Direct lending and guaranteeingthe availability of financing for exporters, butalso securing the refinancing for banks,became the most pressing needs and thehottest topics for Berne Union members.Basel III and the global financial crisis led to acompletely different approach to exportcredit insurance and gave it new importance.The business figures of Berne Unionmembers went up dramatically during thecrisis and maintained or even increased thislevel in the following years. It is noexaggeration to say that ECAs, and withsome time lag, the private credit insurers too,helped to pull the world’s real economy outof the most severe crisis of the last decades.
The future challenge for the Berne Unionwill be to spearhead risk assessment, riskcoverage and risk transfer in the field ofexport credits and foreign direct investment.Short-term, medium and long-term exportcredit insurance, direct lending, projectfinance, ship and aircraft finance are all areasin which the union has expertise as well asclaims, multilateral reschedulings, corporaterestructurings and debt recovery. Togetherwith partners from multilateral agencies andthe banking industry, the Berne Union and itsmembers will always generate solutions forfostering global trade and foreign directinvestment. With a combination of thehighest professional expertise, globalnetworks and best practice solutions, andbased on mutual understanding and personalfriendship, the Berne Union will be able toremain unchanged and different at the sametime: a highly efficient group of experts,ready and able to cover the financial risks ofthe future. ■
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www.crlacorp.com
“It’s different this time.” A simple phrase, buta potent one. Its reappearances all feel novel,and more’s the pity. It seems we repeatedlyforget that these four words are a bellwetherof upheaval. They wreaked havoc with theworld economy in the latter years of the lastcycle, inducing excessive risk-taking whichproduced over-activity, creating amountainous, planet-wide surplus of goodsand productive capacity. More than five yearslater, the same phrase has again been trottedout, proclaiming that the structural fallout ofthe crisis will keep growth suppressedindefinitely.
Perhaps this time, the phrase and itsconsequent predictions will prove correct.Yet if history is any guide, it’s unlikely.Without a doubt, every economic cycle hasnew features, but each cycle tends tooperate in roughly the same fashion.Economic recovery always comes assomething of a surprise. At the early stagesof the growth cycle, businesses are typicallycaught flat-footed, scrambling to hireworkers and put plant and equipment inplace that will ensure they meet theirburgeoning order-book. If this pattern isindeed typical, is there any chance that weface an imminent positive shock to globalgrowth?
Key indicatorsseem to suggest so.The OECD leadingindicator saw anuninterrupted 16-month increasethrough January,unseen since the falserebound in 2009-10.Most indicators withinthe 34-country club
supported this upswing, a strong messageon the depth and breadth of the growth.True, there was a flattening in February, butmuch of that was related to severe NorthAmerican weather disruptions. Earlyindications point to a rebound in March.Cynics would rightly note at this point thatpinning hopes on such high-frequency datamovements is flimsy at best, and at worst, adesperate attempt to put a positive spin onthe same old sluggishness. Surely there ismore evidence? Indeed there is.
Basic requirements surfaceTo be sustained, growth needs an underlyingdriver. In the current situation, it’s pent-updemand. In the world’s richest economies,consumers have delayed purchases for years,as they were in many ways able to live off theexcesses of the prior boom. Those excessesare long since exhausted, particularly inAmerica; meeting basic needs now suggestsan imminent upsurge in growth – one thathas already begun in certain sectors.
Industry is also guilty of under-spending.Anxious to preserve the bottom line,businesses have filled orders by using currentcapacity as much as possible. Capacity isnow considerably tighter, and in certaincases, approaching pre-recession peaks.Flush with cash, businesses the world overare poised to spend, but have been shackledby a ‘you-first’ investment psychology.
That, too, is changing. After years ofuncertainty, confidence is growing.Businesses are definitely more upbeat inJapan and Europe. In both the US andEurope, consumer confidence is on animpressive uptrend, and now out of the
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Yet another upheaval?By Peter Hall, chief economist, EDC
Peter Hall
Without a doubt, everyeconomic cycle has new features, but eachcycle tends to operate in roughly the samefashion. Economicrecovery always comes as something of a surprise.
recession-zone. This general improvement inmarket sentiment is all the more eye-catching precisely because of our prolongedstay in the psychological abyss. Pessimismhas an alarming ability to become self-fulfilling, and moreso the longer it is present.As such, the developed world’s nascentemergence from its slough of despond isprobably one of the most remarkabledevelopments of 2013. Its message is simple:pent-up demand says we all have to get outand spend; improved sentiment shows thatfor the first time in a long spell, we want to.
These fundamental strengths are getting apush from an unlikely source.
Government spending and taxationmeasures have for years exacted a scathingtoll from OECD economies, thanks to deepausterity programmes. It is obvious fromrecent data that the measures have done thetrick: one by one, economies all over theOECD are posting dramatic improvements inpublic finances, even among the mostconspicuous of the fiscal sinners. Simply put,the cuts are no longer needed. Governmentswill be far less of a drag on economic growththis year and next. It is a timely, coordinatedfiscal dividend that will contribute no smallamount to near-term global economicgrowth.
If realised, the ‘new-growth’ story is thebest news OECD economies have heardsince the crisis. That covers about half ofglobal GDP. What of the other half? News inemerging markets has been on the grim sidefor months. Excesses in China, bumbling inIndia, delays and insurmountable capacityconstraints in Brazil, conflict in Russia – froma large-emerging-market perspective,nothing seems to be going well. Moreover,the effect is cascading to their smallercousins.
It’s tempting to see in this a leveling, orrebalancing, of developed and emergingmarket growth. But that would be short-sighted. For the moment, emerging markets
as a whole are still followers, capitalising ongrowth in the wealthier economies.Decoupling from the richer economiesduring the crisis occurred only because theirpre-crisis earnings funded substantialstimulus measures. Now they find themselvesbetween the end of policy-propelled growthand the return of global trade. The imminentrevival of the latter is expected to spur onemerging market growth through 2015.
Proper preparation prevents poorperformanceThus far, the story is a surprisingly happyone. It runs cross-grain to ‘new normal’thinking, the fashionable story-lineperpetuated by a large group of pundits whobelieve it is different enough this time to holdworld growth back. In this context, growthwill be a refreshing change, but we are sounprepared for it that it is likely to come as agreat shock. Take, for example, labourmarkets. Their overplayed dirge chronicleshigh unemployment rates and laments thefate of the long-term unemployed. However,a rush of growth could run headlong intomarkets with rapidly aging populations. Itseems preposterous at this point, but inmany economies, labour markets in thecoming cycle will have much narrowerbandwidth than usual. This time around, it’snot just an OECD-area problem.
A second threat is business investment.Not investment itself, but the means toinvest. Once businesses catch on to the factthat the growth they see is here to stay, therewill be no shortage of willingness to invest.Neither will there be a shortage of funds – inmost developed countries, corporations arecash-rich. Rather, the problem lies in theworld economy’s capacity to absorb theinvestment demand. Will we indeed be ableto put machinery in place and build newfacilities quickly enough to absorb growth?Time will tell, but tightening industrialcapacity utilisation suggests the possibility of
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Industry is also guilty of under-spending. Anxious to preserve the bottom line, businesses have filled orders by using current capacity as much as possible.
a sudden tsunami of business spending.Both the labour and investment situations
point to the possibility of another problem.Tighter-than-normal capacity on both frontssuggests that prices may be somewhattougher to control. Central banks will want tostem price increases in an effort to manageour expectations around pre-set targetlevels. The opposite – nagging disinflation – istheir present problem, but the tables mayturn rapidly. Complicating the task is the vastamount of excess liquidity that is currentlyavailable.
At this point, the tale takes an interestingtwist. The injection of vast amounts ofliquidity, primarily by the Federal ReserveBoard (Fed), is historically unprecedented.For decades to come, academics andbusiness analysts will be dissecting itseffects. Even so, the experiment is only halfdone. Withdrawal of the liquidity – whichtheory states is exactly the same mechanismas injection, only in reverse – has also neverbeen done before. Weathering the effects ofthe unwinding of quantitative easing couldwell be the greatest near-term risk the globaleconomy faces.
We already have a sense of the effects wecan expect. The mere mention that the Fedmight be considering tapering the $85 billionof monthly bond purchases sometime in thenear future, maybe, was enough to throwmarkets into turmoil immediately. Emergingmarkets felt the effects disproportionately.Their stock markets tumbled. Currencies didthe same. Bond rates soared. To makematters worse, commodity prices –particularly base metals and energy –swooned. The effects have continued withthe onset and continuation of tapering.
Guidance from the Fed has enabledmarkets to attempt pricing-in the expectedeffects, but it’s not clear at this point ifmarkets foresee a net withdrawal of currencyonce tapering is complete. At the very least,we can expect that emerging markets’access to capital will be somewhatconstrained. Excessive worry about theseeffects may be misplaced, though; in theturbulence, it will be important to rememberthat growth itself is the catalyst for theunwinding of policy measures. One hopesthat any unintended asymmetric effects, ifthey occur, will not be too exaggerated.
Taking off the blinkersAmid the turbulence, an opportunity. Thosewith ready access to capital might find that
as growth ramps up, their access to faster-growing emerging markets increases.Well-capitalised banks and institutionallenders, not to mention sovereign wealthfunds, are almost sure to face a greater rangeof high-growth lending options.
Other risks to look out for include financialmarket vulnerability. Growth together withrevamped regulatory measures is helping toheal structural weaknesses. Still, unforeseendisruptions could still have unpleasantdomino effects, a lingering threat that couldproduce more hesitant lending, exacerbatingtighter-than-normal access to capital. Inaddition, although improved, the fiscalpicture in certain locales is fragile. Alsomaking the short-list is what may well proveto be a lasting legacy of this downturn:political unrest. If the nascent cycle doesprove to be an uneven expansion, unrest ismore likely to persist.
Negative forces are less likely to interruptgrowth than to make it a wilder ride. Givenfundamental strengths, it’s reasonable to seeUS growth rise to just under 4% in 2015. Thiswill be instrumental in pulling along otherindustrialised markets. Collective OECDgrowth will enable emerging markets toregain momentum – enough to get worldeconomic growth above the 4% mark in 2015.
It’s different this time. Of course it is. Butit’s important to entertain the notion that, atthis point in the economic cycle, it may notbe different enough to produce the sluggish‘new normal’ growth trajectory that iscurrently all the rage. If that four-wordphrase works its prescient magic, and theworld economy is indeed set to heave in an unexpected way, at least it will be an up-heaval. ■
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Well-capitalised banks and institutional lenders, not to mentionsovereign wealth funds, are almost sure to face a greater range of high-growth lendingoptions.
TURNINGUNCERTAINTIESINTO OPPORTUNITIES.
Philippe Delignières, our risk underwriter has two passions: his job, and solving puzzles and
brainteasers. So when he learned that his client, a grain trader, had to supply mills and bakeries
in Côte d’Ivoire and that no one could provide the necessary information about them before
the cargo was shipped, he set his brain to work. And sure enough, he cracked it: he took advantage
of the fact that the African executives were visiting Paris so that he could form an opinion.
In under four days, he was able to make a positive assessment of the financial state of these
companies. Reassured by the figures and the people behind them, he gave his go-ahead and
agreed to cover the financial risk associated with the transaction, allowing the cargo ships to sail.
Give Philippe Delignières a few cards and a bit of time, and he’ll always be ahead.
www.credendogroup.com Delcredere|Ducroire and Credimundi are part of the Credendo credit insurance group.
In Abidjan, everything seemed blocked.Yet we managed to unblock the situation from Paris.
Having turned their attention further towardsdeveloping economies to compensate for alack of demand from traditional westernmarkets following the global financial crisis,export credit agencies (ECAs) now face aprogressively complex global, societal andpolitical risk landscape.
The factors driving this risk environmentare increasingly interrelated, with keyflashpoints around the world, especially inthe emerging markets, sharing significantcommonalities. These include rising politicaloppression, the unfulfilled aspirations ofgrowing middle classes, high levels ofcorruption and the inequitable distribution ofwealth derived from foreign directinvestment and natural resources.
As more countries see these issuescombine, the risks are multiplied and thelikelihood of societal and labour unrest andregime instability increases. As a result, theincreased potential for heightened levels ofconflict and political violence, legal andregulatory uncertainty, increased risks ofresource nationalism and expropriation, andan elevated likelihood of the imposition ofsanctions are being experienced by agrowing number of countries.
The refocusing of ECAs’ operations to thedeveloping economies has resulted in greaterrisk exposure of assets and investments,creating a highly challenging environment forthese agencies to operate and prosper in.However, by assessing the root causes ofpolitical risk over time, it is possible to
identify not onlythose countries with aheightened riskprofile, but also thosewhich are making thenecessary reforms tosupport the long termgrowth environment,thus providing keyopportunities forinvestors.
Maplecroft’s Political Risk Atlas 2014: Thepolitical risk landscape, hotspots, drivers andtrends, are as follows.
1. 10% of countries see a significantrise in political riskSince 2010, a rising trend of conflict andsocietal unrest has seen almost 10% of the197 countries assessed by Maplecroftexperience a significant increase in the levelof dynamic, short-term, political risk.Unsurprisingly, given the turmoil whichcontinues to dominate the region in the wakeof the Arab Spring, more than half of thecountries experiencing this deterioration arelocated in the MENA region.
The situation in Syria (ranked 2nd most atrisk after Somalia in Maplecroft’s 2014Political Risk – Dynamic – Index), Libya (8th)and Egypt (15th) has now deteriorated tosuch an extent that these countries will bemired in exceptionally high levels of dynamicpolitical risk for years to come. This ‘viciouscircle’ reflects the self-reinforcing impact ofextremely poor governance, conflict, highlevels of corruption, persistent regimeinstability and societal dissent and protest.
East Africa has also seen a considerablerise in political risk, primarily due tosignificant increases in political violence incountries such as Tanzania (ranked 61sthighest risk in Maplecroft’s Political ViolenceIndex) and Mozambique (62nd). Whencoupled with extreme levels of politicalviolence in Somalia (5th) and South Sudan(10th), along with the high risk in Kenya(24th), which saw 67 people killed in an AlShabaab terrorist attack in September 2013,
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The political risk imperativeBy Professor Alyson Warhurst, CEO of global risk analytics company Maplecroft
Alyson Warhurst
Since 2010, a rising trendof conflict and societalunrest has seen almost10% of the 197 countriesassessed by Maplecroftexperience a significantincrease in the level ofdynamic, short-term,political risk.
this has contributed to East Africa overtakingCentral Africa as the highest risk region forpolitical violence in sub-Saharan Africa.
East Africa’s dynamic political risk profilefor 2014 is further intensified by a significantincrease in the likelihood of ‘soft’ resourcenationalism, which has pushed the regionalaverage from ‘medium’ to ‘high risk’ over thepast year. This score change reflects asubstantial increase in mining royalties paidin Kenya and the imposition of capital gainstaxes in Mozambique. Combined with thetrend of increased political violence, thispresents significant operational challengesfor the oil and gas sector at a time wheninvestors are increasingly attracted to theregion following the discovery of substantialhydrocarbon reserves.
2. Increasing trend of societal riskMany of the dynamic short term political risktrends currently being witnessed are drivenby underlying longer term structuralchallenges. As a result, monitoring structuralpolitical risk trends, including the level ofhuman rights risk, particularly humansecurity factors, such as arbitrary arrest anddetention and extra-judicial killings bysecurity forces, as well as the level of societalresilience, can provide a leading insight intocountries which have a propensity towardsinstability and civil unrest. This insight canthen enable ECAs to take steps to mitigatetheir risk exposure.
Over the past four years, more than 20%of countries have experienced a significantincrease in the level of long term structuralpolitical risk. This dramatic shift has beendriven by a host of factors, pre-eminentamong which is the increase in humansecurity risk and the undermining of politicalfreedoms by oppressive regimes. Therepression of these freedoms creates asignificant risk for investors, either via theirdirect operations, or through their supplychains.
In the short-term, the immediate impact ofan increase in the level of oppression in acountry is reputational, as investors may beperceived as complicit in human rightsabuses committed by the state, especiallywhere state security forces are seen to actwith impunity. However, this source ofreputational risk is also central to driving thewider risk of societal unrest and politicalinstability in the medium to long-term,potentially creating significant operationalrisks, including increased security challenges
and disruption to logistics andtransportation.
The failure of a government toaccommodate the demands of an evolvingsociety significantly increases the risk ofsocietal unrest, which may ultimately result insocietally forced regime change. Even if thisstructural risk does not manifest in regimechange, government efforts to placatesocietal groups may manifest in policieswhich undermine the business environment.These can include increased taxes, localcontent requirements, resource nationalismand asset expropriation.
As seen in Figure 1, a number of countries(located in the shaded areas) are host tosignificantly higher levels of social gains thanestablished political freedoms.Demonstrating how this imbalance canprovide a leading indicator of the potentialfor a significant increase in political andbusiness risks, the year prior to the ArabSpring, Libya had the largest disparitybetween the key structural factors of socialgains and political freedoms of any countryin the world. In addition, Tunisia, Syria andEgypt were also among the top 20. In all fourcountries, an increasingly educated,politically aware and IT-literate youth with aburgeoning middle class grew frustrated withthe failure of the ruling political class toeither reform sufficiently quickly to addresscorruption and growing youthunemployment, or seek to halt a rise inhuman rights abuses by the state securityforces.
Emerging risk hotspots can be identifiedby examining those countries which are hostto a rapid deterioration in their level ofpolitical freedoms. The increase in tensioncreated by the loss of rights which werepreviously enjoyed significantly increases thepotential for unrest and instability,particularly in countries with comparativelyhigh levels of societal, including educationaldevelopment.
The value of this trend analysis is aptlydemonstrated by recent events in Ukraine.The downward trajectory for the country(illustrated in Figure 2) was the result of asignificant deterioration in the level ofpolitical freedoms over the past four years. Inparticular, during the tenure of formerPresident Viktor Yanukovych, theundermining of civil and political rights andjudicial independence and a significantincrease in human rights violations by thesecurity forces combined with ‘extreme risk’
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levels of corruption created the conditionsfor societally forced regime change.
In contrast, while countries such as Chinaare identified as being host to a criticaldisparity between political freedoms andsocial gains, Maplecroft believes that thecurrent pace of government reform issufficient to keep pace with popularexpectations. Recent significant reformsinclude the further loosening of investmentrestrictions on foreign and private capital,the relaxation of the one child policy, and theintroduction and enforcement of anti-
corruption measures.A further example is Myanmar, which
although presenting significant challengesparticularly with regard to human rights, it ishost to one of the fastest improving legaland regulatory environments, highlightingthe potential for a significant improvementsin the investment environment.
3. The growth of the global middleclassIn the long term, the expansion of a country’s middle class should significantly
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Figure 1: Social gains vs. Political freedoms
Pol
itica
l fre
edom
s
Social gains
reduce both dynamic and structural politicalrisks, considerably improving the investmentclimate by increasing stability and reducingcomplicity risks. However, in the short tomedium term the rise of this income grouphas substantial implications for the politicalrisk environment, with the following issuespresenting particular challenges for investors:
1.) Increased pressure to combatcorruption, which is significantly raisingcompliance challenges for investors.
2.) Demands for political accountabilityand improved services, aspirations which, ifunmet, may result in widespread protests, aswitnessed in Brazil and Turkey in 2013.
3.) Rising inequality and the risks
associated with the failure to maintain highlevels of economic growth to whichpopulations have become accustomedsignificantly increase the potential forsocietal unrest.
4. Heightened political risk indeveloped economies due to thefallout of the global financial crisisIn the wake of the global financial crisis, aheightened level of political risk alsocontinues to prevail within the USA andEurope. Despite a tentative return toeconomic growth in the majority ofdeveloped economies, the impact of theglobal financial crisis remains evident. High
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Figure 2: Social gains vs. Political freedoms in selected countries 2011-2014
Pol
itica
l fre
edom
s
Social gains
levels of unemployment combined withausterity measures introduced in order toaddress fiscal deficits and restore investorconfidence, have contributed to growingincome inequality and stagnating ordeclining living standards. The dissatisfactioncreated by this decline is contributing to therise of populist parties both in Europe andthe USA, leading to the fragmentation andpolarisation of the political landscape.
The influence exerted by emerging partiesand pressure groups, and the responseprovoked in mainstream political parties asthey attempt to retain their support base,has undermined the stability and predictablyof governments, significantly increasingmacroeconomic, regulatory and operationaluncertainty for investors.
How do planners allocate risk for eachcountry?
By quantifying risk, it is possible tocompare the relative risk in differentcountries, either for the overall level ofpolitical risk, or for a specific issue ofconcern. This enables ECAs to assess theirrisk exposure, and to take steps to diversifytheir portfolio where necessary. Using thisinsight, they can also identify countrieswhich are performing comparatively well,and thus present significant opportunities.
A number of leading growth economieshave experienced a significant fall in the levelof political risk over the past four years,reducing both the reputational andoperational challenges in these countries.Examples include the Philippines, India andUganda, which were all host to a significantreduction in the level of political violence,while Ghana has seen its risk level improvedby continued improvement in its businessenvironment and in the rule of law.
When allocating resources, it is alsoimportant to assess the sub-nationalvariation in the level of risk across a country.The risk of political violence for example, israrely uniform across an entire country. Byassessing risk at a sub-national level, it ispossible to take advantage of opportunitiesin regions which might otherwise have beendismissed if one had simply focused on the‘headline’ risk level. India, Philippines andColombia are among the countries whichMaplecroft classifies as ‘extreme risk’ in thePolitical Violence Index 2014, but all haveareas which experience significantly lowerlevels of conflict and terrorism, reducingoperational risks to businesses operatingthere.
By quantifying and continuouslymonitoring political risks – in particular thestructural risks which serve as leadingindicators of the potential for unrest andinstability – ECAs should be well placed toreduce their risk exposure in the short,medium and long-term. ■
Professor Alyson Warhurst is CEO andfounder of risk analysis and mappingcompany Maplecroft. Over the last 10 yearsshe has built Maplecroft into the leadingsource of extra-financial risk intelligence forthe world’s largest multinational corporations,financial institutions, governments and NGOs.Coming from an academic background, shenow advises at board level on societal andpolitical risks, human rights, supply chainmanagement, corporate reputation andsustainability. Alyson is a consultant to theWorld Economic Forum, where she is alsopart of the faculty; she is a contributor to theClinton Global Initiative and on the board oftrustees at Transparency International UK.She is a non-executive director of the FTSE250 listed New World Resources. From 1999to 2009 Alyson was professor of strategyand international development at WarwickBusiness School, where she won theinaugural Faculty Pioneer ‘Beyond GreyPinstripes Award’ (called by the FT the‘Business School Oscars’) and regularly wonthe ‘Outstanding Teacher Award’. She wasmade an honorary professor in 2010. She isan accomplished speaker at high-levelinternational events and has written severalbooks and more than one hundred articles,including a column for Business Week. In2010, Alyson was a recipient of a BusinessInsurance Magazine ‘Women to Watch’award.40
Berne Union 2014: Overview
A number of leadinggrowth economies haveexperienced a significantfall in the level of politicalrisk over the past fouryears, reducing both the reputational andoperational challenges inthese countries.
Capacity in short-term credit insurance hasbeen steadily returning since the 2008 globalfinancial crisis (GFC) and premiums haverecovered. According to Berne Union’s data,commitment of its short-term members hascome back to the pre-GFC level since late2012 (America and Asia even exceeding,Europe slightly below). It may not be in thesame exuberant mood as before the crisis,but supply is coming to the market strong.
One strong supporting factor is that theloss ratios have been on the low side overthe last few years, and in general corporateperformance in advanced economies hasbeen improving. Although the marketexpects a slight increase in loss ratios in2014, overall sentiment of credit insurers isquite positive.
In reinsurance, the January 2014 renewalssaw reinsurance premium very stable.Placements have frequently been heavilyoversubscribed, given the return of somelarge reinsurers to the credit and suretymarket, as well as new entrants even as lateas in early 2014. Ceding insurers are nowenjoying favourable reinsurancecommissions, highest levels since the GFC. Ifasked how well they are prepared for anotherfinancial crisis, credit insurers would nowargue that underwriting is still very prudent,and an efficient warning system has beenimplemented to monitor buyer’s payment.
While there is obviously more supply,demand is affected by both positive andnegative factors. For the latter, exporters arefully aware of the low loss ratio, andimproved buyer performance, and thus self-insurance is gaining its ground.
Self-insurance isnever a difficultchoice for exporters,especially those whodo not haveestablished internalcredit managementguidelines. Thepremium payment,already meagre, isfrequently deemed as
an expense (rather than what insurers wouldargue as an investment), and is quite oftentaken out from the cost formula as soon asthe economy recovers.
On the positive side, world trade is set togrow modestly but steadily. In mid-April2014, the World Trade Organisation (WTO)forecast a 4.7% growth in world trade thisyear (IMF 4.3%). Some may argue thatgrowth in emerging market economies wasstill sluggish and some experienced capitaloutflows and currency depreciation. There isalso the common belief that China is goingto grow much slower, as can be seen in thecountry’s export growth in February andMarch of this year, which was negative.However, the biggest export country of theworld is still forecasting a 7.5% growth of its$2.2 trillion-strong export volume.
Technology plays important roles ininternational trade. World trade in high-techgoods will outpace growth in totalmerchandise exports. Developed countriesare leading the supply chains for high-techproducts through global supply chains.Global products (such as smart phones) arewooing the rapid growing middle class in the
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An update on the short-termcredit insurance marketBy Ralph Lai, commissioner, Hong Kong Export Credit Insurance Corporation
Ralph Lai
Although the market expects a slight increase in lossratios in 2014, overall sentiment of credit insurers isquite positive.
developing economies. Besides furtherstrengthening Western brands positions inthese markets, it also opens up the localmarkets in developing their own brands.Technology advancement also helps theincrease in non-traditional payment methods.Already, uncollectible receivables were onthe rise, due to the sheer growth in B2Bpayment, especially in China (someonecalled the China e-Commerce market the“most important business battlefield in theworld”).
Short-term credit insurance andbanksBanks continue to be restrictive in growingtheir on-balance sheet assets due to morestringent regulation. They are more willing toseek credit enhancement either to grow theirasset-backed lending (such as factoring inshort-term business) or simply to reducecapital requirement. Traditionally the need ismore for longer-term commitments, butconsidering the revolving nature of short-term business, the aggregate commitmentand exposure may well be worth the bank’swhile to seek support from credit insurance.The experience of many Berne Unionmembers is that they are now doing morewith commercial banks.
Furthermore, some structures which arenormally for longer term transactions arenow being considered for short-term as well,such as buyer credit. This also illustrates thestrength of those who can leverage theirinternational presence to offer efficientfinancing options to the bank customers inthe global supply chain.
On the other hand, partly due to banks’internal counterparty risk management, thusaffecting their capability to finance export,and partly due to the straight-forward needto cover risks in trading with emergingmarkets, exporters or their banks may turn tocredit insurers for insurance against the non-
payment of letter of credit (LC) issuingbanks. This may not be the conventionalarena for a credit insurer. However, throughsuch an arrangement, the credit insurer infact is reaching out to overseas buyers (ie.the LC applicants) who otherwise may bedeclined a buyer limit by the credit insurer.
Public export credit agencyExport credit agencies (ECAs) whoendeavoured to fill the market gaps duringthe GFC continued to play a significant partin the pursuing years. While in some parts ofthe world, ECAs still serve as the insurer oflast resort, and only cover ‘non-marketablerisk’, in other parts of the world, ECAs’ short-term business flourished. According to BerneUnion’s figures, ECA members of the short-term committee contributed to 43.5% of allthe short-term insured business volume in2013, compared to 23.8% in 2008. The Asianmembers contributed much to this growth,given the leading position in exports theyenjoyed in the last decade, with Chinasurpassing Germany and then the US as theworld’s number 1 exporting country.
Public ECAs will continue to be importantplayers for international trade especiallywhen financing is harder to come by. ManyECAs who operate at no cost to thetaxpayers have satisfactory experience inshort-term business. Since there is a vastportfolio of self-liquidating short-term
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Since there is a vast portfolio of self-liquidating short-term receivables, whose performance can bemonitored regularly, ECAs normally cover short-termbusiness with their own resources (and with the help ofprivate reinsurers). It is one of the drivers in fast-growing economics in pursuing export-growtheconomic models.
Some structures which arenormally for longer termtransactions are nowbeing considered forshort-term as well, such as buyer credit.
receivables, whose performance can bemonitored regularly, ECAs normally covershort-term business with their own resources(and with the help of private reinsurers). It isone of the drivers in fast-growing economicsin pursuing export-growth economic models.
Emerging marketsOn short-term world trade, traditionalattention is on the trade flows from the Asiancountries to the US and Europe. It is nowvery much noticeable that growth in South-South trade (between emerging markets)and intra-regional trade is leading thegrowth. As supply chains become moreinternational, movement of parts and semi-finished products are adding to world trade,albeit covering shorter distance among theproduction bases in each region. To illustrate,in 2000, intra-regional trade only accountedfor 41% of Asia’s total trade, and in 2012, itwas 53%, adding a 12% share in its $5.6trillion of exports.
Short-term business to emerging marketsstill sees limited growth as households indeveloping economics tend to consume localproducts, except for global products such assmart phones. That said, the internationalsupply chain does render global productionan important demand for short-termbusiness. Electronics in the cluster of smartphone production are key merchandiseunder short-term cover. Volumes on thosetransactions are huge, but pricing usually isthin, further exerting pressure on premiumrates.
DevelopmentCredit insurance not only turns exportopportunities into sales, it could also be theexporter’s companion in the whole processfrom negotiation of sales contract topayment. Insurers in short-term business areoften asked to think more in terms ofinnovation, besides just providing capacity.
In addition to the standard credit checkfunction, insurers can now cover pre-shipment risk, in the event the overseasbuyer goes bankrupt before the shipment ismade. Besides suffering losses in material,the exporter still needs to repay the bankwho provides pre-export finance. And insome other cases, even if shipment has beenmade, the goods may not have beendelivered (such as in an in-transitwarehouse). As long as the sales contract isenforceable, insurers can still cover lossesarisen before the actual delivery. Given the
closer cooperation with banks, moreproducts are being developed with banks:some ECAs may go further in insuring thebanks export finance, especially the pre-export portion.
In recent Berne Union meetings, membersdiscussed the application of E-commerceand many are using online systems toaddress the burden of high frequency andvoluminous declaration and buyer limitapplications. Easier online access toinformation online by the insured is anotherdeveloping area.
For ECAs, to further enhance its service,
they may need to liberalise their cover tomeet the challenge of the global supplychain. As most ECAs do not operate in anycountry other than their own, in order tosupport local companies going overseas,they may enter into a reinsurancearrangement with another ECA if the latterhappens to be in a country where theexporter sets up an overseas operation.
During the GFC, the biggest drop inpolicyholders was from the SMEs. BerneUnion members are sharing experience inhow to address the need of the SMEexporter mass. Some are developing newinsurance policies, some devising simplifiedadministration and policy management.
One of the key challenges post-GFC is theneed for the short-term credit insurers torebuild their reputation. Among theinnovation in the market, many aim at thecertainty of cover, such as non-cancellablelimits, excess of loss policies. The process willcontinue for the insurers and the insured tofind the equilibrium among innovation,affordability and consistency of qualityservice. ■
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Credit insurance not only turns exportopportunities into sales, it could also be theexporter’s companion inthe whole process fromnegotiation of salescontract to payment.
When I was appointed chairman of themedium and long-term (MLT) committee atthe annual general meeting last October, thetotal volumes for insurance of long-termexport credits worldwide had once againreached the highest level ever for the firsthalf year. We might not see record levels inthe years ahead, but I am positive that theworld economic developments over the lastyear have created a new platform of demandfor long-term risk coverage in global trade.This new level of demand implies bothchallenges and opportunities for us beingpart of the export credit insurance sector.
I am delighted by this vote of confidenceand I look forward to managing the workingpartnership within the Berne Unioncommittee for medium and long creditterms. Furthermore I am also pleased to leadthis committee together with Jing Feng Leifrom Sinosure as deputy chairman.
ECAs and banks are neededSome years ago, before the financial crisis,the role and existence of export creditagencies (ECAs) were sometimes subject todiscussion. The lingering uncertaintyfollowing the crisis confirms that theguarantees offered by ECAs are still in highdemand for guarantees to high, middle andlow income countries. Since 2009, notablythe demand for guarantees covering exporttransactions to OECD’s high incomecountries has increased significantly. Asgrowth strengthens in the USA and in Japan– as well as in the European countries whichwere severely hit by the last recession – it islikely that exports to countries in Asia, Africa,Latin America and the Middle East will onceagain dominate the requests for ECAguarantees.
In other forums, where efforts are beingmade to analyse issues regarding exportfinance in a global perspective, the necessityand benefits of cooperating with banks has
lately been discussed.It has becomecustomary in manyglobal transactions toput together a teamwith exporters,financiers and ECAsin order to offer acompetitive financialsolution, which isjointly structured and
monitored throughout the entire maturityperiod. I am convinced that the ability ofinternational companies to obtain securityand funding has been further strengthenedby this cooperative approach.
Steady long-term growthLooking at the statistics of the Berne Unionfor the latest six or seven years, one wouldnote that medium and long-termcommitments stand at an all-time high, $657billion for 2013, representing a steady growthfrom the $292 billion of 2005. In comparison,new business has not been showing thesame upward trend without exception as hasthe total MLT exposure at each year end.However, the differences are not veryimportant, but may be explained by theheavy increase in demand for MLT coverduring the years of the financial crisis,leading to long-term repayments of export
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Continuous high demand formedium and long-term risk mitigationMedium and long-term export credit insurance and lending is often crucial tothe enabling of global trade. Cooperation among different market players is akey factor, explains Karin Apelman, director general of EKN.
Karin Apelman
Before the financial crisisthe need for riskmitigation was very oftenquestioned but nowadaysit is generally recognisedthat official support isnecessary.
credits which are still not completelyreimbursed.
These figures are also – to some extent –dependent on the exchange rate of the USdollar versus all other currencies which givesa somewhat “jumpy” graph around the year2010. Short-term is an exception; here thetrend is quite a steady increase and this isalso valid for Investment Insurance.
Worth mentioning is the increasingexposure that Berne Union members have ontheir own country, assumed to represent inall or part support of working capital. Somemembers have introduced working capitalcredit guarantees much later than others,which could prove that the product itself isnot only a relevant tool in crises but a muchneeded standalone guarantee.
A better world – steady growth inemerging countriesTwenty years ago many of the sovereignstates that defaulted on their external debtpayments, are now emerging economies withhealthy finances. Not too many years ago,people in the Western part of the world werebecoming accustomed to reports of soaringgovernment debt and reduced credit ratings.Yet on continents beyond Europe and NorthAmerica, steadily the opposite trends aredeveloping.
A while ago, EKN, the Swedish ECA that Iam heading, conducted a survey thatshowed that most Swedish companiesexaggerate the risk of payment default ontheir exports to emerging economies in LatinAmerica, Africa and Asia. Their assessment isconsiderably more pessimistic than EKN’swhich also exposes them to another risk, therisk of losing key export opportunities.
Moreover, to determine generally the mostimportant reasons for a positivedevelopment is not an easy task. It could
depend on a variety of favourable marketconditions or decisive political decisions.Some of the factors that are often identifiedare reduced indebtedness, rising commodityprices and reforms. As growth picks up,infrastructure and other areas are improved,which in return generates new growth.
ECAs from emerging markets areincreasing their activities much faster thanother Berne Union members. Three of theseECAs are now in the top ten. Significantincreases are reported for SBCE, K-sure andSinosure. Another group of ECAs that haveincreased their activities can be found in theNordic countries with increases of about400% in outstanding MLT commitments. Itshould also be noted that all ECAs haveexpanded their activities during this timeperiod, which partly reflects the need forofficial support during the financial crisis.
All markets availableIn recent years, economic activity has beenrising in the emerging and developingcountries of the world. Behind this positivetrend, growth-promoting policies have beenimplemented for a long time. In contrast tohigh income countries, the public sectors inmost emerging and developing countries aremoderately indebted. These countries havebecome increasingly important for the worldeconomy.
The extensive purchases of governmentbonds by the central banks of the USA andEurope have also contributed to this trend.The liquidity in global financial markets hasthereby increased and its ability to supplycapital to many emerging countries has beenstrengthened.
An important motive for the expansion ofthe private sector is direct investment andthe transfer of knowledge to emerging anddeveloping countries. Over the last twentyyears, direct investment has increased nearlyten-fold, demonstrating the productionbenefits that many emerging and developingcountries are enjoying. For another set ofdeveloping countries the key to earn hardcurrency and to import essentialcommodities and services, are the highprices of raw materials which hopefully willremain a stable source of revenue for thesecountries.
All markets need to be available in orderto create growth opportunities for exports.For eighty years, the members of the BerneUnion have been offering security in exporttransactions. More and more companies in
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The development of newmore SME targetedguarantees has led to aninterest from largecorporates, even thoughthe product was firstintended to meet SMEdemand.
the world consider ECAs as a strategicpartner in their business planning and creditinsurance as a natural part of the businessmodel.
Increased focus on SMEsDuring the most recent encounters betweenmembers, an increasing number of ECAshave reported a stronger focus on small andmedium-sized enterprises (SMEs), describinghow they have established new teams and inwhat way they both meet demand fromSMEs and how they market their productstowards SMEs.
In terms of the products offered to SMEs,both MLT and short-term (ST) products haveproven to be relevant. The development ofnew, more SME targeted guarantees has ledto an interest from large corporates, eventhough the product was first intended tomeet SME demand.
Opportunity to influenceExperience shows that trade is important fordevelopment if it is done responsibly. MLTcredits provide an opportunity to influencehow companies manage environmental andhuman rights issues. With the relatively newUN guiding principles on business andhuman rights, ECAs are explicitly targeted asimportant institutions with a particular
responsibility to respect human rights. Astrade promoters I believe we have aresponsibility to ensure trade is positive andbuild confidence within and betweensocieties.
As most business development, alsosustainability is a never-ending journey,where ambitions are constantly raised.Experience proves that there is a connectionbetween sustainability issues and financialrisk. Inadequate management of CSR-issuescan cause disruption in the production, forexample as a result of governmentintervention, riots or other types of unrest. Inaddition to assessing environmental andsocial issues in the transactions, anti-corruption measures and sustainable lending
to poor indebted countries are also included.The development of new sustainability
processes must be done in closecollaboration with the exporters to ensurethat the application of for example the UNguiding principles on business and humanrights fits with the exporters’ and banks’sales and finance process and is specific tothe issues of the particular industry.
A new landscapeGlobalisation is being increasingly evident inthe transactions guaranteed by all BerneUnion members and internationalcooperation is becoming increasinglyimportant to all of us. It has becomeinevitable as many companies haveproduction, research and development,marketing and management operations bothin their home countries and abroad. Theissuing of guarantees for subsidiaries is anexample of how ECAs can promote theinternationalisation of business.
Recent years’ world economicdevelopments have created a new platformof demand for long-term risk coverage inglobal trade. However, ECAs have animportant role to play in any marketcondition. Before the financial crisis the needfor risk mitigation was very often questionedbut nowadays it is generally recognised thatofficial support is necessary, as acomplement to the market players and thenmost notably during a situation of marketfailure.
From this point of view, one can see thestrong need for ECAs to continue ouractivities. During the last few years differentattempts have been made to create a levelplaying field among ECAs in the world. Fromdifferent sources initiatives have been takento streamline the activities on a worldwidebasis. The International Working Group(IWG) is an initiative to create a level playingfield among ECAs from all parts of the world.
We can in the future foresee that there willbe a gradual increase in the cooperationbetween the ECAs in the world. In differentforums the need for cooperation amongECAs and other players has been discussed.The cooperation could take different forms,stretching from bridge-building activitieswith IFIs to creating funds and also poolingof risks among ECAs. During our upcomingmeetings I foresee extensive discussionsaround cooperation among ECA’s andprivate insurers, partnership with banks andcontinued focus on sustainable trade. ■
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We can in the futureforesee that there will be agradual increase in thecooperation between theECAs in the world.
Uzbekinvest International Insurance Company LimitedThe AIG Building, 58 Fenchurch Street, London EC3M 4ABTel: +44 (0)20 7954 8397 web : http:// www.uiic.co.uk
Uzbekinvest International Insurance Company Limited is authorised and regulated by the UK FCA and PRA, FRN: 202923. Registered in England company no.: 2997845.
Unlocking Uzbekistan
Uzbekistan contains some of the most promising investmentopportunities in the world, and some of the most stable conditions inthe CIS. However, as with all emerging markets, the key tosuccessfully unlocking the upside is effectively to cover the downside.
No insurance company is better placed to offer you political riskinsurance for trade with, investing or doing business in Uzbekistanthan Uzbekinvest International Insurance Company Limited (UIIC).
The main objective of the company is to offer political risk insurance toencourage new foreign investment in the infrastructure, naturalresource development and industrial production in Uzbekistan.
UIIC plays an integral part in stimulating trade and investment flow intoUzbekistan. Since its establishment, UIIC has issued 164 policies forsuppliers and investors from 14 countries with total trade andinvestment coverage issued approximated USD 1/2 billion, which bycombining all co-insurance activities with AIG has encouraged morethan USD 1.74 billion of foreign trade and investment into economy ofthe Republic of Uzbekistan.
UIIC shares the risks on co-insurance basis with AIG. All businessinsured by UIIC is accepted on its behalf by an underwriting agency,AIG Uzbekinvest Limited, established for this purpose and owned 51%by AIG and 49% by NEIIC ”Uzbekinvest”. The use of such an agencyenables the company to be established in a cost-effective way and toemploy the considerable world-wide resources of AIG to assist in theproduction of business. Underwriting process, claim handling andother insurance issues are affected in the United Kingdom.
UIIC has access to both unrivalled local knowledge and unparalleledinternational expertise. As such it is the vital key to unlockingsuccessful investment in this remarkable market.
Export credit is a tool which has been usedfor decades to support exports in a worldwhere the main driver of economic growthhas been international trade. The need forexport finance has been questioned for 40years, but today after several years of crisis,most people recognise the importance of thistool to support the economy.
The main stakeholders of this lendingactivity are the export credit agencies (ECAs– and the authorities they represent), thebanks, the exporters and the importers. Theinterventions of the first two groups in thatbusiness are highly regulated with cross-border rules. In a changing world, theregulatory frameworks are becoming stricterand stricter. Export finance will have to adaptitself to these rules or convince regulatorsthat there is a need for some amendments tomake them applicable to export finance.
Relevant frameworksThe relevant framework for the organisationof ECA business and its self-regulation is theconsensus of the OECD.
ECAs were established by most OECDcountries after World War II as a tool tosupport their own exporters – and developexports – competing with exporters fromother countries and offering financings toimporters that faced difficulties in raisingfunds. In 1978, ECAs agreed on rules for faircompetition (the arrangement) and sincethen they have respected a soft law, althoughit has no strict legal value.
While most people do not accept state-aid, and others even question the validity ofany public support to the industry, ECAs haveto show to their stakeholders that they are asustainable activity in their home countries.Two good reasons for this are:
� They support their exporters andexports out of their home countries (beingmore flexible to consider the impact ofglobalisation on foreign and local content)and are an efficient counter-cyclicalinstrument to support the economy in tensesituations when no other solution is available.
� They are a profitable activity over a
long-term period. Theobjective is not tomake large profits,but to prevent theneed for any subsidyfrom the tax-payers.This was achievedover the last 15 yearsthanks to theKnaepen Package,which imposed
minimum premiums, and a better selection ofrisks. It should not be forgotten.
The consensus has to integrate evolutionsof a globalised economy and to recognisethat it will be effective if its rules remainstable, simple and acceptable to non-participants.
Some challenges ECAs will have to dealwith are:New exporting countries: The arrangementwas designed by rich countries which werethe largest exporters of capital goods. Overthe last 10 to 15 years, some emergingcountries have seen the emergence ofnational providers of capital goods whichcompete efficiently with the established ones.Without being a member of the OECD, Brazilsupported the last agreement on aircraft(ASU). Will it be possible to extend thisbeyond aircraft? The extension of theconsensus would be important to maintain alevel playing-field among old and newexporters.
A new financing landscape will be designedby financial rules under implementation(Basel III): Banks were the traditional financialactors dealing with ECAs; they will beaffected by limitations on long-term fundingfor large amounts. Other fund providerslooking for long-term investments exist butare less flexible. A refinancing is anopportunity for a commercial bank whichlooks for new activities generating fees, but itis a threat for an investor which selectsstable long-term investments to pay for aretirement plan. Contrary to investors, banksmanage easily large and flexible drawing
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Easing the regulatory challengesfacing export finance By Henri D’Ambrieres, ICC advisory board member
Henri D’Ambrieres
periods. The capacity to accommodateopposite but complementary constraints willbe a key challenge for ECAs and fundproviders.
The focus on sustainable projects as mostshareholders (ECAs, financial institutions,large corporates) cannot put at risk theirreputation:
� The need to know perfectly itscustomers, being exporters or importers,imposes itself on banks and ECAs.
� Global warming is a growing concern.ECAs will have to accommodate the need fora cleaner industry, in order to contribute to theprevention of global warming and to make thisactivity compliant with the expectations ofcivil society. This should not prevent themfrom supporting projects with a high-carbonintensity as long as they comply with local andinternational regulations and they support thegeneral trend. As an example, some low-income countries might have no otherresources other than a coal-fired power plantsto support their initial growth at an affordablecost for the local economy.
� Prevention of corruption is recognised(apart of any moral consideration) as anefficient tool to support growth by limitingthe costs of the projects financed throughECA loans.
On the contrary, ECAs should not be usedfor purposes other than their mission ofsupporting exporters. The respect of humanrights in a country is important, but it is apolitical issue as long as the corporatesinvolved in a project respect them.
Financing of contracts awarded to SMEs:These contracts usually require for exportcredits with limited amounts. They alsoinvolve as borrowers smaller companieswhich have often weaker ratings, if any, thanlarge corporates, thus presenting higher risksof defaults. As costs of implementation ofsmall export credits are mostly fixed (andthen proportionally higher for small loansthan for large ones) and costs of risks arehigher, commercial banks consider themreluctantly. While maintaining a safe risk-analysis, simplified (and less-costly)procedures will have to emerge for smallprojects. The ‘one-size fits all’ approachexplains the vanishing offer in small exportcredits, and simpler processes are requiredfor these smaller loans.
Its image of a subsidised activity: Insiders
know that ECAs have been able to develop aself-supported business since theimplementation of the Knaepen Package in1997. However, the general perceptionremains that it is a highly subsidised activityas it was the case in the mid 80’s. In addition,the crisis which appeared in 2007/2008made clear their contra-cyclical role tosupport international trade when otherfinancings vanished. In a fiscal constrainedenvironment for most governments, ECAsshould make their positive contributions toglobal growth even more visible.
Simplicity and stabilitySimplicity is very important: the consensus isa soft law which cannot be dealt with in acourt. As such, it has to be easily accessible toits users. Today, ECAs use two differentguidelines for the analysis of environmentalimpacts, promoted by the World Bank forsovereign and public entities on the one hand,and by IFC for corporates on the other hand.Hence corporates established in the publicsector are in a grey area. One unique set ofapplicable environmental rules would makesense as long as it also recognises that a $10million investment does not require the sameanalysis as a $5 billion one.
The strength of a rule comes from itsstability. The consensus has to manage trendsand should not be used to deal withprovisional situations. As an example, a stablerule for the determination of the CommercialInterest Reference Rates (CIRR) (treasurybonds + 100 basis points) was very efficientfor decades and will be efficient again in astabilised financial market once Basel IIIbecomes operational.
Rules established by the consensus applyfirst to the ECAs themselves, but then tofinancial institutions, exporters and importers.While a dialogue, more or less extensive,exists in most individual countries amongthese stakeholders, global exchanges arerather limited.
The stakeholders’ meeting organised bythe export credits group of the OECD is theonly place where stakeholders of differentcountries meet once a year. The Berne Unionalso sometimes invites its partners to somemeetings. These large gatherings are veryimportant, but not the right place for in-depth exchanges. Focused working groups(like an advisory board) with limitedassistance might make sense if an importantreform (such as minimum floating rates) wereto be considered. ■
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Export-oriented economies benefit from newjobs, more innovation, reduced welfare costsand economic stability. Creating growththrough trade is an elemental part of thepolicy approach of many industrialisedeconomies. Although emerging countrieswere latecomers to global trade, they haveconsiderably benefited from tradeliberalisation. India and Brazil, for example,have developed competitive exportindustries over the past decade and havebeen rewarded with significant economicgrowth.
Supporting exporters in global tradeExport credit insurance for large industrialsectors such as manufacturing, aerospace orshipbuilding is of great importance in matureeconomies. For example, order values forAirbus aircraft insured by the German exportcredit agency added up to $4.8 billion in2013, accounting for more than 10% of totalnew insurance cover. Innovative small andmedium-sized companies (SMEs) engaged inthe export economy also received strongsupport and are considered to be especiallyeligible for cover.
In addition to highly industrialisedeconomies such as Germany, Italy or Korea,many developing countries have understoodthe importance of government financinginstruments. Russia has recently establishedan export credit agency (ECA), known asEXIAR, and intends to further develop otherforeign trade programmes. As commerciallenders in the Middle East are often not
willing to financetransactions withextended creditperiods, several GulfCooperation Council(GCC) countries havelaunched exportpromotioninstruments or intendto do so. Qatar’sapproach is a goodexample: After oil and
gas have contributed significantly to thecountry’s wealth, the government nowfocuses on diversifying the economy and onboosting other exports with the newlyestablished ECA ‘Tasdeer’.
Exporters frequently require insurancecover for risks linked to export transactions.Typically, these risks arise from non-paymentfor political or commercial reasons. As exportcredit coverage available from privateinsurance companies is sometimes restricted,export transactions can often only berealised on the basis of governmentalsupport. Export credit agencies pursue theiraims by providing export credit insurancefacilities for privately financed transactionsthrough direct lending or pure cover support.This enables buyers particularly in emergingmarkets to finance transactions wherecommercial lenders fail.
Export credit support during thefinancial crisisThe sovereign debt crisis in Europe and the2008-09 recession had a massive impact onexporters. This was because banks providingfinancing were more selective, concentratingon primary markets and core clients as wellas on smaller transactions with shortermaturities. The economic situation inemerging markets also led to a decrease incover possibilities from private insurers.ECAs were able and willing to offer moresupport. For short term export creditinsurance covering transactions withrepayment terms of one year or less, creditlimits were substantially reduced by privatecredit insurers which affected especially
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Standardising export credit in thepost-crisis environmentBy Andreas Klasen*, partner at PwC and vice-president of the Berne Union
Andreas Klasen
Given the importance of international trade inthe economic strategies of many governments and given the fiscalneutrality of export credit agencies, ECAs canmake a significantcontribution to growth.
importers from EU countries. ECAs increasedcapacities filling the gap in export creditinsurance supply.
During the financial and economic crisis,ECA coverage also grew significantly formedium and long-term cover for transactionsof more than one year. Especially in highlyindustrialised economies, governments saw ahuge increase in demand in this area. TheirECAs also proved to be flexible by adaptingtheir supply to the high demand for cover inan environment in which general financial riskperception had increased. ECAs financiallysupported numerous industrial andinfrastructure projects.
During and after the 2008-9 recession,there has been great innovation amongstECAs. This has included establishing newproducts such as securitisation and exportfunding guarantees in Belgium, theNetherlands or Spain. The United States,France and the United Kingdom have beentrendsetters introducing a bond coversolution for Boeing and Airbus aircraft exportfinancing. New or amended direct lendingschemes have been launched, for instance inthe United Kingdom. Existing products werealso improved, for example with reducedretention in France, Germany andSwitzerland or enhanced working capitalfacilities. Governments around the world thus
responded quickly by expanding operationsin order to support the banking systemproviding liquidity and restore lending.Having facilitated international trade formany years, ECAs stepped in with new andinnovative cover policies to fill the gap left byprivate export finance markets.
Continuous support on different levelsThe footprint of government support in tradeand export finance continues. Somecountries have undertaken efforts for a morestrategic use of government or government-backed institutions, which has been criticalto export success. For example, the ChinaExport-Import Bank, the China DevelopmentBank and Sinosure achieve the country’s goalof supporting foreign trade by providingliquidity to exporters and investors abroad. Inaddition, they insure commercially financedtransactions through pure cover support.Using the instruments of various governmentinstitutions in a concerted manner, thisstrategic framework is one of the key successfactors for Chinese exporters and investors.
The economic success of China’s supportbecomes obvious, for instance, when lookingat sub-Saharan Africa. Despite a number ofserious challenges on the continent,countries such as Angola, Mozambique andNigeria have been growing rapidly over the
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IN THE SERVICE OF HUNGARIAN EXPORT FOR 20 YEARS
Hungarian Export-Import Bank Plc.Hungarian Export Credit Insurance Plc.
EXPORT BANK INSURANCE
last decade, amongst others facilitatedthrough China’s economic and politicalsupport.
Construction and telecommunications arebooming due to a strong involvement ofChinese exporters. Government institutionsplay a decisive role in financing thesetransactions, fostering both domestic growthand global trade. For instance, an innovativefinancing solution in the telecommunicationssector has attracted a great deal of marketattention. China’s export credit agency hasprovided competitive advantage in terms ofpricing and capacity for a large transactioninvolving one of Africa’s largest integratedcommunication service providers.
China’s role has resulted in positivefinancial effects not only for the Chinese butalso for sub-Saharan economies. Through theopening up of important sectors withattractive interest rates and repaymentschedules, African countries havesubstantially benefitted from infrastructuredevelopment. Long-term growth is alsodriven by investments in other sectors suchas manufacturing, wholesale and retail.
Using a ‘strategic econsystem’It is important for governments to realisethat policy initiatives work best whenembedded in a strategic framework.Enhancing trade policies is not the onlynecessary measure to lead economies ontothe growth path. But given the importance ofinternational trade in the economic strategiesof many governments and given the fiscalneutrality of export credit agencies, ECAscan make a significant contribution togrowth. As part of a ‘strategic econsystem’,focused and interconnected policyprogrammes are a key factor for innovationand growth.
By using a ‘strategic econsystem’,governments also have to evaluate if theirstrategic aims and policies are in accordancewith the motivation for exporters to apply forinsurance cover. It is worth assessing ifinsurance products, cover policies andconditions are adequate to accommodatedemand. This is in line with the question if,for example, small and medium-sizedcompanies’ needs are fulfilled.
Further considerations to simplifyproducts and to offer specific cover solutionsfor SMEs might be necessary. Understandingexporters’ current financing needs is highlyrelevant concerning product offerings. Asexport credit insurance provided by
governments supports exporters in securingfinancial resources from commercial lenders,products have to be designed accordingly tomeet demand for financing and refinancingpurposes.
Standardising export creditinsuranceWith the global economy moving back ontrack, exporters face new challenges: besidescontinuous government support throughexport credit insurance as part of a national‘strategic econsystem’, exporters now ask fora global equality of opportunities andcompetition. This applies, in particular, for theapplication of international rules andregulations as well as a comprehensiveadoption of global standards to provide alevel-playing field. Furthermore, individualmeasures have created cover policies whichare often still focusing on the latest financialand economic crisis from a nationalperspective.
For decades, many ECAs have cooperatedin a fair competition for the benefit ofnational exporters. Since the 1970s, ECAshave jointly improved rules and regulationsthrough gentlemen's agreements like the'OECD consensus' and the 'commonapproaches'. They agreed on common rulesand definitions for terms and conditions forexport credit cover. Examples are minimumadvanced payments and interest rates,maximum credit periods as well as limits forlocal costs and environmental guidelines. The‘common approaches’ ensure, in particular,coherence between exports supported bynational governments, and environmentalprotection. International trade affecting theenvironment such as hydropower plants orlarge infrastructure are subject to a screeningwith the objective of anticipating, minimisingand mitigating ecological impacts.
As the compliance with standards islimited to OECD participants, for example toJapan, Italy and the United States, there is a
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If common rules for exportcredit agencies aredeveloped further withoutexcessive regulationendangering growththrough trade, globalstandards are theappropriate way forward.
need to establish environmental rules andregulations on a global level. Ambitions toamend and tighten these OECD regulationsmight endanger the competitiveness ofexporters from the OECD. Therefore,improved standards for financial terms andconditions have to be agreed upon jointly.The development and application of trulyinternational norms ensuring ‘ethical’behaviour is obviously necessary. The currentmultilateral initiative to build new globalstandards on export credits is a vividexample. Many exporters would acclaim thesuccess of the ‘International Working Group’agreeing on international rules for mandatorypractices for financing global trade.
Common rules for export support are,however, not only restricted to existingOECD regulations. Many exporters regardnew products introduced during or after thefinancial crisis only in a few economies as acompetitive disadvantage for theiroperations. Small and medium-sizedenterprises often need working capitalfacilities, but only a small number ofgovernments currently offer support. SomeECAs focus more on the national interestthan the national content threateningcompetition in global markets.
For a growing number of financial servicesproviders, it is difficult to understand thedifferent and often complex terms andconditions. Assessing the legal protectionand financial quality of export creditinsurance products is a further challenge forbanks. Therefore, providing a level playing-field for exporters can also be associatedwith products and cover policies.
Rules and regulations have to bedeveloped further in a changing world. Thisis a crucial point to substantially reducepotential negative effects. Despite premiumlevels and credit periods, there is a variety ofreasons why common agreements for globalstandards on a product or cover policy levelwould make sense.
ConclusionIn order to foster growth through trade,export credit agencies have to provide
sufficient insurance facilities. They have toconfirm their strong commitment to remainreliable partners for exporters and financingbanks where the private market fails tosupply sufficient financing and insurance.ECAs have to act counter-cyclical and provetheir capability as an effective instrumentagainst market failure. However, it isimportant for governments to realise thatpolicy initiatives work best when embeddedin a permanent framework that focuses onimportant sectors of the economy. If theyuse a ‘strategic econsystem’, governmentscan make a significant contribution togrowth through trade.
Will excessive regulation endangereconomic growth? Do global standardsimpair successful examples of self-regulation? Rethinking cover policies andnegotiating international rules andregulations needs a compass. There is nodanger for economic growth if governmentsform a comprehensive ‘trade policy’. If thereis a willingness to create the institutionalframework that provides a fertile breedingground for trade to flourish, both exportersand governments will benefit. If commonrules for export credit agencies aredeveloped further without excessiveregulation endangering growth throughtrade, global standards are the appropriateway forward. This includes an integration ofthe BRICs economies as well as otherdeveloping countries to create a levelplaying-field for exporters around the world.
There is a need to further develop oramend existing OECD rules to gainworldwide acceptance. Furthermore, it iscrucial not to limit the question of globalrules and regulations on existing approachesbut to include the question of products andcover policies. By collaborating to adjustpolicies and practices, ECAs are in theposition to improve exporters' globalcompetitiveness. ■
*Andreas Klasen is a partner at PwC andvice-president of the Berne Union. He is alsohonorary fellow in the Institute of GlobalPolicy at Durham University.
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Assessing the legal protection and financial quality ofexport credit insurance products is a further challengefor banks. Therefore, providing a level-playing field forexporters can also be associated with products andcover policies.
An arguably common theme in medium- andlong-term (MLT) export finance circles todayis that full implementation of Basel III willelicit the end of commercial banks as thefunding source for long-term financing – withlong term export finance1 as one of manysegments affected. Typically, exportfinanciers assert that the capital marketsmust, can, and will fill in the void – eitherdirectly under a perfected export creditagency (ECA) guarantee, or indirectly as thefunding source for official financing (i.e. directlending by ECAs). This paper reviews thethree attempts by the Export-Import Bank ofthe United States (US Ex-Im) to bring capitalmarkets directly into case-specific long-termexport finance and examines the issuessurrounding the latest effort to see if morepermanence may follow the current effort.
Historical evolution of capitalmarkets and export financeAlthough commercial banks and capitalmarkets have both been involved in MLTinternational finance for hundreds of years,until the late 1960s there was a fundamentaldivision of labour: commercial banksgenerally funded transactions withrepayment terms under 10 years, while capitalmarkets (first in Europe, then since WorldWar II mostly in the US) tended to fundgeneral purpose bonds to sovereigns andother major entities. If transaction-specificlong-term funds were needed, governmentsset up special institutions2 to provide directlending.
Starting in the 1960’s with thedevelopment of the eurodollar market, theunraveling of post-WWII capital controls, andincremental easing of regulatory limits,commercial banks began a 40 year period ofexpansion—sometimes rapid, sometimesragged—of their role in international andexport finance. When the banks weregrowing rapidly, they took over many of theroles of capital markets; when the banks were
ragged, financierswould look to seewhat capital marketscould do.
Due to a relativelyunique combinationof both housing theworld’s major capitalmarkets in the post-World War II era andhaving a domestic
political environment inherently tilted tooppose government involvement incommercial activities (like lending), US Ex-Imhas tried to access the capital marketsdirectly for case-specific long term exportfinance three times3 in this 40-year period.The next section briefly reviews each effort toexplain why US Ex-Im made each effort andidentify what issues emerged.
US Ex-Im and capital market accessfor individual casesEvery country (or currency area) tends tohave a variety of sources of long-term debtcapital (eg. pension funds, insurancecompanies, etc.) willing to invest funds for 5-20 years for governments, projects andbuyers. Accessing these sources is typicallydone in one of two ways – directly (onetransaction to one investor), or indirectly(through the use of a security such as a bondsold by an entity to multiple investors). Whilethe former has advantages in its flexibility ofmechanisms and handling of both the timingand number of disbursements, the lattertends to be cheaper (if there is a marketablesecurity format available). The US isconsidered to have the largest and mostefficient (meaning you can generally get thelowest costs) debt capital markets in theworld.
Although US Ex-Im has researched thedirect method every time a capital marketseffort has been attempted, the responseshave always been the same – there is little
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Capital markets and exportfinance – is the third time a charm?By Jim Cruse, senior vice president, policy and planning, Export-Import Bankof the United States
Jim Cruse
appetite in the investor community in being adirect investor in the fairly complicated andunusual business of export finance (and whatlittle there is would be quite expensive).
As every US Ex-Im attempt to accesscapital markets was to be gauged by howwell it achieved rates comparable to what USEx-Im direct lending could provide, eachattempt has focused on the indirect method.This choice means that the fundamentalissues that US Ex-Im has had to addressrevolved around how to take an exporttransaction and create a marketable securitywith as little ‘story’ as possible. Developingthat instrument and refining its features hastaken decades.
US Ex-Im’s first attempt to access thecapital markets for individual cases camealong in 1976. Confronted with the largestcase in its history to that time (the Philippinenuclear power project), the FordAdministration pushed to use the case as atest of the feasibility of accessing the capitalmarkets for an individual transaction.Although the transaction was successfullyfunded through the capital markets, itrequired major exemptions from theDepartment of Treasury, such as 100% coverand transferability of the guarantee, and it didnot achieve particularly good pricing (largelydue to a relatively cumbersome structure).Given changing political administrations, thelack of a ‘forcing’ aspect such as budgetcutting, the difficulties encountered inmoving the transaction into and through thecapital markets, and the need for continuingexemptions from Treasury (which was notlikely to be forthcoming), no further testswere tried for another 15 years.4
US Ex-Im’s second attempt to access thecapital markets for individual cases was itsoriginal capital markets guarantee‘programme’ put in place in the early 1990s.This attempt was driven by a US governmentbudget crunch greatly curtailing directlending, and made possible by (1) Congresspermitting US Ex-Im guarantee transferability,and (2) Treasury allowing US Ex-im toprovide 100% cover on principal and interest.Using the just-obtained capacities US Ex-Imsolved the basic problem of a marketable
security form by putting each case into asingle-use special purpose vehicle (SPV) andstandardising how the many loose ends of anexport transaction can be covered to fitcapital market needs.
This programme averaged perhaps $0.5 to$1 billion per year in activity during themiddle years of the 1990s, then dipped toperhaps $100 million per year as commercialbanks began a decade-long practice ofaggressively pricing under an US Ex-Imguarantee. Nevertheless, while eventuallyeclipsed by exceptional bank pricing, theprogramme features attained in the 90’sestablished the tools and procedures thatcould regularly allow non-project financeindividual cases to access capital markets atrates approximating what US Ex-Im directloans would provide.
US Ex-Im’s third attempt to access thecapital markets for individual cases is itscurrent capital markets guaranteeprogramme, introduced in 2009. This effortwas stimulated by the commercial bankingcollapse and subsequent pull-back followingthe financial crisis of 2007-2008 and Basel IIIregulations. The major changes in this latestattempt at capital market access are reallynothing more than a) insisting that allinstitutions ‘designing’ a structure follow thesame framework (thus maximisingstandardisation in the instrument), and b)taking full advantage of the improvedDepository Trust Certificate (DTC).
The DTC is a crucial facilitator of both acentralisation of the operations of the SPV(necessary for efficiency) and to attain forindividual investors a certification that theyhave direct access to the issuer (enablingminimum regulatory processing and costs).US Ex-Im has seen major success in theaircraft sector, as well as for large corporatebuyers. However, complicated project financestructures are still figuring out how toefficiently use the mechanism to accesscapital markets.
Reflecting the fact that this time the forcesdriving the US Ex-Im attempt arefundamental changes in the availability andcost of commercial banks as funders of long-term assets, there has actually been a broad
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Over the last five years US and European ECAs haveaccessed some $20 billion from capital markets forindividual transactions.
array of attempts by ECAs in Europe toaccess capital markets for individual cases.Both the British and French ECAs haveintroduced enhanced guarantee products (sofar just for aircraft products) that are beingused to create marketable securities similarto what US Ex-Im’s guarantee generates.Other European ECAs (eg. EKF in Denmark)are exploring (and doing) some deals thatbring long-term investors (eg. pension funds)directly into specific transactions.
Over the last five years US and EuropeanECAs have accessed some $20 billion fromcapital markets for individual transactions.
Future of capital markets in long-term export financeThe earlier efforts to access capital marketsdid not have legs because either banks camecharging back to undercut both cost andease of access, and/or the US Ex-Im effortwas limited by the lack of an external driver.Today, however, there is clearly a multilateralconsensus emerging that the likelihood ofcommercial banks coming back as a costcompetitor is so low that it is worth theconsiderable up-front effort by ECAs todevelop an ongoing capacity to accesscapital markets for individual transactions.
As an observer with over 40 years ofexperience in accessing capital markets forindividual cases, US Ex-Im notes thefollowing:
1. Capital markets are a reliably efficientsource of large amounts of competitivelypriced funding for transactions with simplestructures and short disbursement periods(like aircraft). Hence, capital markets canalready be one of the tools of possiblesupport in an ECA’s tool box.
2. In its most efficient form (ie. the US Ex-Im programme today), the pricing on thecapital market instruments for a specifictransaction can regularly (and sometimessignificantly) beat the standard arrangementCIRR level.
3. Project finance faces real obstacles toaccessing capital markets funding. Inparticular, borrowers do not want to waityears to fix their borrowing rate (especially atthe low part of rate cycles), and the capitalmarkets can’t handle the uncertainties duringthe construction period. Possible solutionsexist within the current arrangement rules,but it will probably take some time to find theright combination of steps which will allowthis part of the ECA portfolio efficient andeffective access to capital market funding.
In sum, the trends look favourable todayfor capital markets to become a standardoption for the funding of many long-termECA cases. However, this funding source isnever going to become a ‘stand alone’ source,able to handle on its own the many ‘uh-ohs’of MLT export finance.
Except for those ECAs dominated bydirect loan programmes, a successfulintegration of the capital markets fundingsource into the ECA tool box will probablyrequire that commercial banks become the‘financing manager’ of a case – doing theorigination, structuring, and deciding whichsource of funding to use at what time and towhat extent. With some innovation andexperimentation (but no required changes inthe arrangement), capital markets could wellplay a major role throughout the long-termECA arena within the next few years. Withthe right kind and level of ECA andcommercial bank cooperation, this ‘ideal’ ECAstructure may emerge even more quickly. ■
Notes1 Long term financing defined as loans with repayment
terms beyond 10 years.2 Examples of special institutions include US Ex-Im in
the 1930s, the World Bank Group in the late 1940s,and the many topic-specific European officialinstitutions set up in the 1960’s.
3 There have also been several attempts at“institutional” access to capital markets. An“institutional” access to capital markets differs from acase-specific in that a separate institution is createdwhich finances multiple individual export financetransactions, and funds itself with generalinstitutional notes (not related to any specifictransaction) in the capital markets. Such an effortentails significant up-front cost and a long-termcommitment to the business. Success here has beenreal (e.g. PEFCO, and a variety of “inside thebank/outside the balance sheet” entities like Citi’sGOVCO), but the constraints greatly curtail the scalepossible. Moreover, the financial crisis of 2009 andthe resulting Basel III regulations appear to haveended (or will end) the prospects of any of the bankentities
4 This transaction also created major problems as theproject never became operative.
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With some innovation and experimentation,capital markets could well play a major rolethroughout the long-termECA arena within the next few years.
www.exiar.rut: +7 (495) 783 11 88
e: [email protected]: +7 (495) 783 11 22
Covering risks. Discovering new markets.EXIAR is the national export credit agency of Russia, established in 2011. Our mandate is extended to insurance export and trans-border investments cover.
EXIAR’s sole shareholder is state corporation “Bank for Development and Foreign Economic Aff airs (Vnesheconombank)”. Our activities are fully backed by the Russian State.
Export credit agencies (ECAs) anddevelopment finance institutions (DFIs) havevery different purposes, mandates and in thecase of multilateral institutions, ownershipstructures. However, there are manyimportant areas of overlap where the pursuitof different mandates and different policyobjectives open up the possibility and oftenthe necessity of active collaboration.
ECAs, by and large, are owned directly orindirectly, by the national governments andhave as their principal focus, a contributionto their domestic economies by promotingand financing exports from the homecountry. DFIs typically have wider mandatesto promote the social and economicdevelopment of their member developingcountries by fostering inclusive andsustainable growth through the provision offinancing, advisory services and other formsof development support.
The opportunities for collaboration arise inemerging markets where both these types ofinstitutions are active and are serving thesame customer segment from theirrespective perspectives. In the past thiscollaboration opportunity has arisen mostlyin projects in developing countries whichhave involved the import of equipment andservices from an ECA’s home country and atthe same time represented a source ofdevelopment impact and have thereforebeen eligible for financing support from theECAs. Such projects can be in a variety ofsectors such as natural resources, energy,infrastructure, transportation, logistics,aviation, communication, climate change,and so on.
Collaboration between ECAs and the DFIshas been useful, and in some cases fairlyactive. However it has also beenopportunistic, on a project by project basis,and has been fraught with challenges thatemanate from a range of issues. Such issuesinclude roles in transactions for each party,intercreditor issues, different approaches to
documentation, andthe availability ofspace in specificdeals toaccommodatedifferent types offinancing. The desireof sponsors to limitthe number of partiesin a financing has alsooften been a
challenge to project level collaboration.
Rapid acceleration of opportunitiesHowever, both the need and opportunitiesfor collaboration between the ECAs and DFIsare growing rapidly. A number of factors aredriving this trend. As the emerging markets’share in world economic activity grows withhigher growth and consumption rates,favourable demographics, lowering of tradeand investment barriers and increasingmobility of production and service locations,the demand for trade and investment flowsfrom these markets is creating increasingopportunities and challenges for both groupsof institutions.
Project sizes are also getting larger whichmeans that any one institution is less able tofinance the entire project on its own andthere is a need to find other financingpartners. For both the development financeinstitutions (DFIs) as well as the ECAs, thehigher volumes of project as well as tradefinance risk are giving rise to the need forbetter diversifying and distributing risk toother partners with an appetite for suchexposures.
As Basle III recommendations areimplemented by central banks, there isgrowing reluctance on the part ofinternational commercial banks to takelonger term exposures making it incumbenton long term lenders like the ECAs and DFIsto fill the gap. As production gets distributedacross the globe and projects increasingly
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Collaboration between ECAs andDFIs enters a new eraBy Arun Kumar Sharma, chief investment officer, global financial markets,International Finance Corporation
Arun Kumar Sharma
involve multi-country sourcing of equipmentand services, there is a need to find newsolutions.
The increased market volatility, especiallywith respect to currency risk for long termfinancing is driving the need for localcurrency financing solutions that needpartnerships with DFIs. The growing role oflocal financial institutions in local and globalproject finance offers yet anotheropportunity for collaboration between theECAs and DFIs.
ECAs and DFIs bring different butcomplementary capabilities to the table.ECAs have very significant risk appetite, highcredit ratings, a willingness to provide orguarantee long tenor financing andcompetitive financing rates. They have astrong customer base in terms of theirexporter communities of their home markets.DFIs on the other hand have a very strongpresence in emerging markets, very deeplocal relationships, and the ability tointervene using a wide range of financialinstruments across the capital structure of atransaction. DFIs and ECAs share very similarcommitments to global best practices in keymatters impacting their business includingenvironmental and social standards, anti-money laundering and financing of terrorismsafeguards, ‘know your customer’ standardsand due diligence procedures.
Hurdles to overcomeAt the same time many challenges toincreasing collaboration remain. Eachinstitution is governed by its own internalpolicies and approaches and the difference inmandates is real. This limits the number oftransactions where common participationacross ECAs as well as DFIs adds value to allparties. There is relatively less interaction,especially at the business operations levelbetween the DFIs and the ECAs which asinstitutional groups, tend to interact moreclosely amongst themselves. There aredifferences in operating procedures, creditand pricing parameters, tenor and currencypreferences, and in eligibility criteria fortransactions that can be financed.
Despite all these challenges, there is agrowing recognition that collaborationbetween ECAs and DFIs is too important anopportunity to ignore and that many of thechallenges in this area, are surmountablewith the right level of focused effort on thepart of all stakeholders. There are severalpossible areas where such focused efforts
could go a long way in addressing thechallenges and in the process unlocking themany latent synergies that the potential forcollaboration between these two types ofinstitutions affords.
One of the first steps toward greatercollaboration is clearly the need for a betterunderstanding of mutual operating practicesand procedures as well as of the areas ofbusiness priority. ECAs and DFIs oftenoperate in the same markets and speak tothe same customers but do not have anefficient channel of communicating witheach other to understand their respectivevalue proposition and business approaches.
Very often there are cases whereopportunities that can be shared or passedon to another entity are simply passed overdue to lack of adequate cross institutionalcommunication. Increasing communicationboth in terms of business approaches andbusiness opportunities is an important firststep in fostering greater collaboration.
Both ECAs and DFIs have been operatingin the same markets for several years andhave access to valuable data on varioussubjects of common interest including trade,insurance and investment volumes. Greaterexchange of this data and information acrossthese institutions will be very helpful inimproving the effectiveness of marketanalysis and strategy development as theseinstitutions continually adjust to fastchanging political, economic and marketconditions across many of the emergingmarkets in which they operate.
Accessing the local networks of DFIsAnother important step toward increasingthe collaboration between the ECAs andDFIs is the leveraging of the DFI networks inemerging markets. Global, regional andbilateral DFIs have established a veryextensive local network across emergingmarkets and have local offices and staff onthe ground. This could be a very usefulresource for ECAs who wish to expand their
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Another important steptoward increasing thecollaboration between theECAs and DFIs is theleveraging of the DFInetworks in emergingmarkets.
reach in new markets in an efficient, costeffective way as it could provide valuablecommercial contacts. Local marketintelligence and mutual collaborationopportunities on specific transactions couldprove invaluable.
The local relationships with borrowers,state-owned agencies and local financialinstitutions can also be an importantresource that DFIs can share with the ECAs.Most DFIs are always looking to mobiliseadditional sources of financing for theirrelationship counterparts and should behappy to support increased flow of financefrom ECAs to their clients as it wouldrepresent an new source of cost effectivelong-term finance. This is generally in shortsupply in most emerging markets.
ECAs can offer to the DFIs access to theirdomestic client base to provide solutions inemerging markets that they cannot providethemselves. Local currency financing, equityinvestments, financing of smallertransactions and support to localmanufacturing in a variety of ways could besourced through the DFIs for ECA clientsmaking the ECA value proposition morecomprehensive while still being consistentwith their overall mandates.
Diversification of risk benefitsBoth ECAs and DFIs are keen to diversifytheir risks. Given the nature of their businessthe risk profile of their emerging marketasset portfolios is quite similar and lendsitself to risk sharing amongst each other. Bysharing risks in large exposures to emergingmarket projects or clients, both groups ofinstitutions stand to benefit from theresulting risk diversification and exposuremitigation. Risk sharing amongst ECAs andDFIs is also attractive for both as all partiestend to have very high credit ratings whichrenders them highly desirable risk transfercounterparties.
Policy coordination is another importantarea of collaboration between the ECAs andDFIs. Both these institution groups havesimilar objectives when it comes to globalbest practices on environmental and socialissues, corporate governance, know yourcustomer norms, and anti-money launderingand combating the financing of terrorism. Acontinuous exchange of views andincorporation of common terms indocumentation will be very helpful in smoothexecution of transactions involving bothtypes of institutions.
Knowledge transfer and capacity buildingof client groups such as local borrowers, localfinancial institutions and local authorities ontopics relevant to promoting trade andinvestment flows is also an important area ofcollaboration. Different institutions havedifferent areas of interest. Expertise andcoordinated delivery of these knowledgetransfers will improve overall market standardsand efficiency and avoid duplication of effort.A combined approach could potentially resultin initiatives being launched which otherwisewould not be undertaken due to individualresource constraints.
ECAs and DFIs also need to look moreclosely at how they can leverage further therisk capacity and transaction expertise oftrade and credit insurers who are morewilling to diversify their product offeringsbeyond traditional trade and credit insuranceto longer term exposures including projectfinance. Some DFIs already haveprogrammes in place where they sell downrisk to trade credit insurers. Greater use ofsuch programmes by ECAs will openopportunities to do more business in thesmaller markets where the DFIs can offergreater levels of support.
Mutual benefits aboundClearly, a systematic effort is needed tocapitalise on these promising opportunitiesfor collaboration between the ECAs and DFIsfor mutual benefit and for the benefit of theemerging market countries and customerswho are the common target segment. Onesuch effort has been launched between theBerne Union and IFC which is focusing on asystematic, practical approach to addressmany of the possibilities discussed above.The initial discussions have generatedconsiderable interest and support for thisapproach and it is expected that this willresult in incremental business opportunitiesfor all parties in the short to medium term.This initial momentum for collaboration willbe sustainable only if it results in tangible anddemonstrated value-added for all parties.
Such initiatives need to be encouraged atall levels. There is initial momentum forcollaboration but it will be sustainable only ifit results in tangible and demonstrated value-added for all parties. A clear focus needs tobe maintained to ensure that the objectivesare realistic and consistent with the businessand policy goals of all stakeholders and allparticipants are fully committed. The benefitsare likely to far outweigh the effort. ■
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Societe Generale is a French credit institution (bank) and an investment services provider (entitled to perform any banking activity and/or to provide any investment service under MiFID except the operation of Multilateral Trading Facilities) authorised and regulated by the French Autorité de Contrôle Prudentiel et de Résolution (“ACPR”) (the French Prudential and Resolution Control Authority) and the Autorité des Marchés Financiers («AMF»). This document is issued in the U.K. by the London Branch of Societe Generale, authorized in the U.K. by the Prudential Regulation Authority and subject to limited regulation by the Financial Conduct Authority and Prudential Regulation Authority. Details about the extent of our authorisation and regulation by the Prudential Regulation Authority, and regulation by the Financial Conduct Authority are available from us on request. 2013 Societe Generale Group and its affi liates. © David Despau - FRED & FARID
DELIVERING SMARTFUNDING SOLUTIONSTO FOSTER EXPORT ACTIVITIES
W I T H Y O U , A S O N E T E A M
When I first worked for Nippon Export andInvestment Insurance (Nexi) during 2003 to2006, seconded from the Ministry ofEconomy, Trade and Industry of Japan asthe head of planning and administrationdepartment, Nexi was a very busyorganisation. Yet, returning to Nexi as thechairman and CEO in April 2013, I realisedwhat used to be ‘busy’ had become‘overloaded’.
The obvious reason for this was thechanges that occurred as a result of twofinancial crises; the bankruptcy of LehmanBrothers and the eurozone crisis, hadweakened the commercial banks anddramatically increased the needs of ECAs.
In fact, over a five-year period at Nexi, theunderwritten amount of long-term insurancehad risen six-fold, and the number oftransactions insured had almost doubled.
Nexi’s current workforce is atapproximately 140, which I understand is oneof the smallest among ECAs, especiallytaking into account the business volume weactually handle, which was more than JPY8trillion ($78.3 billion) in 2012.
How has Nexi’s headcount change sincethe ‘busy’ days in 2003 to 2006? The answeris almost unchanged, pursuant to therequest of the Japanese government.Accordingly, Nexi is making every effort tofulfill the role, by being as effective andspeedy as possible, while also continuing to
improve customerservice at the sametime, even thoughthis sometimes is atrade-off.
Energy andpower at the coreAmong the industrialsectors, the energyand power sector is
definitely one of the core areas which hasbeen making, and will continue to make Nexiand other ECAs busy in the coming years.This is obvious from the United Nations’forecast that the world population willincrease from the current seven billion andwill reach 9.6 billion by 2050, and theInternational Energy Agency’s (IEA’s) viewsthat energy demand will increase 1.3 timesby 2030 accordingly. Energy company BPalso forecasts world demand for energy willgrow by 41% by 2035, driven by growingconsumption in the booming economies ofChina and India.
IEA data shows that in 2011, nearly 1.3billion people worldwide lacked access toelectricity. Due to this issue, globalinvestment in the power sector is expectedto amount to up to $17 trillion through 2035.Such growth will be led by Asian economicgrowth, as non-OECD Asian countries’ percapita power consumption is only 6.1% of
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Using ECAs to secure energysupplies Kazuhiko Bando, chairman, Nippon Export and Investment Insurance (Nexi)
Kazuhiko Bando
As an ECA, we understand that through the original functions of our duty to support our country’sexports, our overall contribution – even partially to the energy and electricity poverty matter – is extremely important.
that of North America. This growth has ahuge buffer and the potential to increase.
The Asian Development Bank (ADB) saysthat the demand for energy is projected toalmost double in the Asia-Pacific region by2030 and that there is an urgent need forinnovative ways to generate power in asocially, economically, and environmentallysustainable manner. This implies that there isstill a long, long way to go to balance thedistribution of the global accessibility toenergy and power.
It is fair to state that sustaining thestability of energy concerns, human rights,climate, and overall society is the commonissue for the whole of humanity. Thesolutions of energy and power challengesshould contribute to a bright future of thedeveloping world. As an ECA, weunderstand that through the originalfunctions of our duty to support ourcountry’s exports, our overall contribution –even partially to the energy and electricitypoverty matter – is extremely important. Weare also aware that we should bear in mindthe indirect functions of ECA’s from thisaspect as well.
Ensuring environmental stabilityMeanwhile, balancing the stability of energyand environmental concerns also needs tobe carefully focused. Reducing climatechange and limiting environmental impactsfrom energy production and use are a globalconcern. IEA foresees that CO2 emissionsfrom the power sector will rise from 13.0Gt in2011 to 15.2Gt in 2035. It also states that
today’s share of fossil fuels in the global mix,at 82%, is the same as it was 25 years ago.
This should be an area in which Nexi andJapan can contribute, not only for thenation, but also for the entire world. Japan’sPrime Minister Shinzo Abe made the thirdgrowth strategy speech in 2013 and statedthat: “The footsteps of resource-poor Japanare a history of taking in any sort ofinnovation possible”. After the oil crisis ofthe 1970’s, Japan has improved energyefficiency by 40%, and this improvement is abig global lead.
Our country has been proactivelyengaged in the global warming issue byimproving energy efficiency, and with thissuperior technology, we are in a position tocontribute greatly to the solutions of globalwarming. Japan’s industries have beenaccumulating know-how of energyefficiency, and it is important to implementthem globally by integrating thesetechnologies.
Because of the scarcity of domesticnatural resources, advanced technologieswere developed to convert power facilitiesinto high-efficiency thermal power plants inorder to efficiently and effectively utilise
fossil fuels. Carbon capture and storagetechnology with Japan’s major companies,for example, has a leading global marketshare in equipment for recovering carbondioxide from manufactured chemicals. Japanhas a number of patent-protectedtechnologies regarding renewable energy,and as to geothermal generation based onthe world’s third largest geothermalresource, Japan has been maintainingoutstanding market share for many years.
It seems Nexi will surely and steadily bebusy in the coming years as well. ■
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Because of the scarcity of domestic naturalresources, advancedtechnologies weredeveloped to convertpower facilities into high-efficiency thermal powerplants in order toefficiently and effectivelyutilise fossil fuels.
Japan’s industries have been accumulatingknow-how of energyefficiency, and it isimportant to implementthem globally byintegrating thesetechnologies.
Although the operations of Berne Unionmembers are diversified across variousproducts, geographies, governance models,and regulatory systems, the growing role ofECAs in facilitating large medium- to long-term (MLT) export transactions has beenclear for all to see in the years since theLehman Brothers collapse almost toppled theworld’s financial systems.
The subsequent period has hosted amassive boom in MLT transaction volumesunderwritten or financed by ECAs, with aparticular focus on the project financemarket. Commercial banks, by contrast, havestruggled to provide the project liquidity thatwas so prevalent in earlier years, when theywere regularly able to lend the entirety of aproject’s debt requirements, often inemerging markets.
The new financing paradigm was perfectlyillustrated in mid-2013, when UKEF took amajor role in a massive $12.5 billion lendingpackage that was secured for the $19.3 billionSadara Petrochemical Plant in Saudi Arabia.This transaction involved ECAs from sixcountries providing a huge $8.5 billion infinancing and guarantee facilities to the twostrong and experienced sponsors, SaudiAramco and Dow Chemical (see case studybelow).
Sea changeThe key function of export credit in thecurrent project financing landscape is nowhardly recognisable from the situationpertaining in early 2007, before the financialcrisis began to break apart the benignfinancial climate which had prevailed for theprevious five or so years. During this period,when financial institutions could lend on theirown balance sheets at low costs, and theproject financing was very much led bybanks, ECAs were very much seen in aperipheral light, as lenders and insurers of lastresort. For large project financings, it wasalmost perceived in some quarters as a sign
of failure to seek ECA-backed financing.
However in thepost 2008 world, arange of major issueshave afflicted theproject financemarket, increasing theremit of ECAs incomplementingprivate sector
financing. With pressures heaping up onbanks, such as the requirements torecalibrate and recapitalise, Basel IIIregulations and a consequent reduction incommercial lending capacity, the inevitableresult was shrinking tenors, moreconservative structures and a rise in the costof bank funding. All project participantswitnessed a surprisingly large draining ofcommercial bank liquidity from the market,especially in cases where non-US basedbanks required long-term dollars.
Within this context, UKEF and other ECAshave stepped up to fill the gap and supporttheir exporters by facilitating a far broadervolume of official MLT financing. As trade andinvestment has re-established itself on agrowth path, export credit has beenespecially notable for its much bigger role inproject finance deals, both in terms of thequantity of deals in which it is now playing a part, and also in the indispensability of that role.
An examination of some of the major dealssince 2008 in Australasia and the Middle East,in sectors such as liquefied natural gas,reveals the mobilisation of tens of billions ofdollars worth of ECA facilities. Sponsors withwhom I have talked since taking over thereins at UKEF tell me that not only is it now impossible to put together a largescheme without ECA involvement, but that it is almost seen as a badge of honournow to bring ECA-backed funding into their projects.
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The rising role of ECAs in enabling liquidityThere has been a marked difference in how project markets view exportcredit agency (ECA) support in the wake of the 2007-08 financial crisis,writes David Godfrey, chief executive, UK Export Finance (UKEF)
David Godfrey
Not just liquidityWhy has the relationship between ECAs andproject finance sponsors proved to be such ahappy marriage? Liquidity is undeniably a keyfactor, given the sheer scale and size ofSadara and other projects, and theinsufficient volume of private sector financingcapacity. However another factor, whichperhaps attracts less publicity, is that ECAshave brought to the table a new approach tostructuring deals.
Effective collaboration is an intrinsicelement here. Before 2008, it was unusual tohave more than two or three ECAs workingtogether, whereas the sight of half a dozenECAs now cooperating and working closelyon deals with financial and other expertadvisers is now commonplace. Bycollaborating with regard to the due diligenceand sharing collective experience, it makesfor an efficient process and is a goodframework for productive negotiations withthe sponsor side.
Particularly noteworthy is how projectsponsors and their advisors are talkingdirectly to ECAs very early in the financingprocess. The ‘new normal’ in project finance isfor ECAs and other international financialinstitutions to be involved in term sheetnegotiations from the outset. Sadara showedjust how helpful this can be for all sides inunderstanding what will work best and howto maximise the benefits of the ECA facility.
Arranging banks have played their full partin this, via their capability in going tosponsors early in the project process andidentifying the countries which can providecompetitively structured ECA support, orthose with other competitive sourcingadvantages, such as low local contentrequirements. At UKEF, we are extremelycompetitive, in that we can support up to80% non-UK content, which can provide asignificant leverage factor for the UK supplychain to projects. While a project’s mainengineering, procurement and construction(EPC) contract is always an award to becoveted, our challenge is often to link in ourcompanies to the first tier of contracts, wherethe UK’s distinct lead in areas such asengineering and design is seen as a stamp ofgenuine quality.
Trend continuationLooking ahead, there is little reason to believethat Berne Union members will not continuetheir ongoing roles in facilitating some verysizeable project investments. While there are
signs that dollar liquidity is returning, bringingsome French and Japanese banks back intothe market, the reality is that banks areconstrained by leverage ratios, and penalisedby some regulators for holding long-datedassets. The ability of ECAs to fund directly, orto allow free transferability of their guaranteeto support capital markets issuance will allbecome increasingly important, and in thisregard the outlook for ECA support looksvery favourable.
When I look at the pipeline of UKEF’spotential deals, I see such a breadth ofpotential business that it is difficult toenvisage any near-term change to the trend.In fact the strength of our project pipeline isstronger than many have ever known. Thereare a healthy number of projects andprogrammes that need to be funded..
To help build our armoury of relevantsupport products, it was announced in theMarch 2014 UK Budget that capacity will bedoubled for UKEF’s Direct Lending Facility(DLF), with the chargeable interest rates alsobeing reduced to the lowest level permittedinternationally. The DLF was first announcedin autumn 2012, with an initial £1.5 billion($2.52 billion) capacity. The Export-ImportBank of the US has shown just how attractivesuch a tool can be, as evidenced at Sadara,where Ex-Im Bank provided nearly $5 billionin direct lending. By widening UKEF’s rangeof services and products in this and otherareas, we should be able to exert a greaterinfluence on sponsor decisions.
One move in this direction is our introductionof two International export finance advisors.Based in Rio de Janeiro, Brazil and Istanbul,Turkey, these positions were created in order tofacilitate further engagement with projectsponsors in their own market and representpart of a general 15% increase in headcount overthe financial year 2013-14 to allow UKEF torespond to an expected increase in businesslevels. Another is the target of setting up anExport Refinancing Facility (ERF) by the end ofApril 2014, to ensure that long-term funding is
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The ‘new normal’ in projectfinance is for ECAs andother international financialinstitutions to be involvedin term sheet negotiationsfrom the outset.
available to overseas buyers of UK exportswhen supported by UKEF. The ERF will providean undertaking to banks making export loans ofat least a five-year tenor that UKEF willpurchase the loan 12 months after the final drawdown, if it has not already been refinanced (eg.in the debt capital markets). We are alsoconsulting on whether to amend our Act ofParliament to allow us a more generalised abilityto support UK export business.
Indeed UKEF has undergone variouschanges over recent years. Good examplesare the move from Docklands to within theTreasury building at the heart of Whitehall;and the introduction of the trade finance andinsurance solutions division. We are also doingbetter at marketing ourselves, both throughthe auspices of our sister body, UKTI, and viaa doubling of our regional export financeadvisers.
Case study: Landmark Saudichemicals projectThe financing put together for the SadaraIntegrated Chemical project in Saudi Arabianotched up a number of milestones, andcould hardly have been surpassed as ademonstration of how ECAs are able to injectvery large chunks of liquidity intocreditworthy projects.
To support several key contracts awardedto British exporters, UKEF provided a hefty$700 million repayment guarantee on aproject financing loan to the Sadara ChemicalCompany, a joint venture developed by TheDow Chemical Company and Saudi Aramco.The banks comprising the lending syndicatewere HSBC Bank USA, National Association,JP Morgan Chase Bank, Mizuho CorporateBank, Standard Chartered Bank andSumitomo Mitsui Banking Corporation.
This marked the largest single projectfinance facility ever supported by UKEF, andwas also the second largest covered ECAfacility for the project, where the sheer scaleand size of ECA involvement was eye-catching. The other participating ECAs wereEx-Im Bank of the United States, Korea’s K-Exim and K-sure, Germany’s Euler Hermes,Spain’s FIEM and France’s Coface. The debtpackage for the project also encompassedlending from the official Saudi financinginstitution, PIF, in addition to a ground-breaking $2 billion commercial sukuk, orIslamic bond.
Strong benefits will accrue to the UKeconomy from the UKEF-supported loan,which will help finance engineering and EPC
contracts awarded to Jacobs, Fluor andFoster Wheeler. Other contracts awarded toUK contractors on the project may alsobecome eligible for financing under the UKEFfacility or from the other financing sourcesavailable to the sponsors.
For Saudi Arabia, the project is of vitalstrategic importance to its downstreamcapability. Formerly known as the Ras TanuraIntegrated Project, the complex at JubailIndustrial City II in the country’s EasternProvince will be the largest integratedpetrochemical complex ever constructed in asingle phase. With initial start up expected tooccur in the second half of 2015, the projectwill comprise 26 process units and isexpected to produce more than 3 milliontonnes per year of ten major product familiesof chemical products and specialty plastics.
The output will be used in a range ofindustries including energy, transportation,construction, infrastructure, packaging,consumer, electrical, electronics, coatings,adhesives and sealants sectors. Key marketswill include the emerging growth regions ofAsia, the Middle East and Africa. The widearray of products is expected to provide verystrong long term credit fundamentals, giventhe different end use markets for each of theproducts. Also the marketing expertise ofDow and Aramco is significant.
Saudi Aramco and Dow officials have beenfulsome in their appreciation of the proactivepart played by ECAs in structuring thefinancing deal, where one of the standoutfeatures was a strong partnership with thesponsors from the outset. UKEF formed partof the group of official insurers and financierswhich substantially negotiated the term sheetwith the project sponsors and their advisersbefore it was released to the commercialbanks. The involvement of very able adviserson both sides was a critical success factor inwhat proved to be a very productive andfocused set of negotiations.
This highly collaborative approach typifiesthe structuring process that has come tocharacterise most ECA-backed projectfinance deals since 2008. UKEF is one of anumber of ECAs which are increasinglyproficient at sharing their experience witheach other to resolve financing and otherchallenges. By blending their expertise withthe skill sets provided by the traditional arrayof legal, financial, technical, marketing,environmental and other advisors, ECAs arehelping to drive best market practice forhugely complex project developments. ■
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Oruro, Bolivia sits on the High Andean Plain180 km south-east of La Paz. As the sun roseover this bucolic community of miners on 9February, 2007, soldiers of the Bolivian Armywere amassing at a nearby tin smelter. Theformation of approximately two-hundredtroops descended upon the smelter to seize itfrom its owner, a European mining company.The smelter’s workers, who opposed theexpropriation of the facility, stood behind thechained gate in a futile effort to block thesoldiers. By midday, Bolivian President EvoMorales had arrived on the scene. He stood infront of a banner that read ‘Nationalised’ anddeclared that the smelter was now theproperty of the government.1
While the details of this actual event mayappear sensational, governmentnationalisation of mining assets is notunusual. In fact, a recent report on the miningand metals industry by Ernst & Young citedresource nationalism as the biggest risk thatmining companies face today, ahead of otherrisks such as capital costs and price volatility.The report states: “Resource nationalismcontinues to be the number one risk facingmining and metals companies asgovernments go beyond taxation in seeking agreater take from the sector. The uncertaintyand destruction of value caused by suddenchanges in policy by the governments ofresource-rich nations cannot beunderstated.”2
Operating in challengingenvironmentsThe growing global demand for metalsmeans that mining companies cannot shyaway from challenging operatingenvironments. A recent United Nations studyforecasts an increase of as much as 1,000% inthe use of metals in the coming years due torapid growth in the emerging economies ofAsia, Africa and Latin America.3 Unlike otherindustries such as manufacturing, mining
companies havelimited ability todecide where toundertake projects.Simply put, minershave to go where theresources are, even ifit means operating inchallenging politicalor securityenvironments.
For example, the Democratic Republic ofthe Congo has seen a number ofexpropriations and investor disputes in recentyears, and it was ranked 181 out of 185countries in the 2013 World Bank DoingBusiness report.4 However, the country holds50% of the world’s reserves of cobalt, whichis a critical component of batteries used incellphones, laptops and electric vehicles.Mining companies will increasingly look todevelop projects in challenging markets asdemand for non-ferrous and precious metals,as well as rare earth elements, increases.Therefore, it is not only important for miningcompanies to be fully aware of the politicalrisks that they face, but they should alsounderstand what causes these risks and, ofcourse, how these perils can be mitigated.
Causes of resource nationalismThere are many theories on what causesgovernments to pursue policies of resourcenationalism. Some studies demonstrate thatperiods of high commodity prices arecorrelated with increased expropriation ofassets and investment disputes.
For example, a recent Chatham Housestudy on the political economy of naturalresources states: “The propensity of agovernment to expropriate or intervene isoften closely linked to resource prices. Therecent upsurge in disputes and expropriationsis reminiscent of earlier waves that alsocorresponded with periods of high resourceprices. Compulsory nationalisation or the
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Political Risk in the mining sector:understanding and mitigating the perilsBy Jim Thomas, senior vice president and interim managing director, Zurich Credit & Political Risk
Jim Thomas
assumption of a controlling interest, theconfiscation of foreign-owned assets, windfallprofit taxes and similar measures cantherefore be expected to become morecommon in an era of high resource prices.”5
Alternatively, lower commodity prices havealso led to instances of nationalisation wherecommodity-dependent governments havesought to maintain a certain level of incomein the face of falling prices. This risk isparticularly acute when there is a precipitousdrop in prices and governments are suddenlyfaced with the challenge of meetingexpansive budgets in the face of dwindlingrevenues.6
Mitigation strategiesThere are a number of ways to help mitigatethe wide array of political risks that areinherent in any mining project.
A clear understanding by all parties of therights and obligations that are granted underthe concession agreement and associatedlicences is essential. All efforts should bemade to ensure that the host government hasreasonable expectations of the anticipatedrevenue from the project. There are manyexamples of investment disputes or forcedcontract renegotiations that wereprecipitated by a government’sdisappointment with the amount of royaltiesthat it was receiving for a project. In many ofthese cases, reliance on inaccurateproduction estimates and price forecasts wasat the root of the problem.
Because mining concessions are usuallygranted by a federal government ministry oragency, it is critical that the local governmentand the local community are also aware ofthe rights that are granted to the companyand that they are vested in the project.Natural resource projects are rife withsensitive issues ranging from local land rightsto social, labour, and environmentalconsiderations. A project that operates in achallenging political or security environmentis far more likely to be successful if the localcommunity benefits from the project.
Many investment disputes have originatedwith grievances from the local community,which in turn created problems with the
regional or federal government. If the projectagreements do not allocate any revenuesharing to the local community, then theproject will certainly come under increasedpressure to provide education, health andsocial programmes to the community.
Corporate social responsibilityprogrammes — such as educational, socialand environmental initiatives — not onlycreate a lasting positive impact on thecommunity, but can also be an effective wayto mitigate project disputes. One studystates that the success of corporateresponsibility programmes: “is measured interms of what doesn’t happen rather thanwhat does; the absence of local tensions, oftime spent in dispute or litigation, and of nothaving to absorb the costs of regulatoryimpositions which were unplanned andunbudgeted.”7 A company that implementsresponsible social and environmental policiesand adheres to recognised standards, such asthe Equator Principles and the World BankEnvironmental, Health and Safety Guidelines,might not only help reduce the political risksthat it faces at the project level, but it will alsofind it easier to attract lenders and politicalrisk insurers who will only participate insocially responsible projects.
Employment opportunities are the mostobvious benefit to the local community, yetmining companies should consult with localcommunity leaders while staffing theirprojects. A company can help reduceproblems with the community by beingmindful of local cultural sensitivities. Forexample, during a mine site visit in theDemocratic Republic of the Congo, thisauthor witnessed first-hand the tension thatcan be created when part of a mine’sworkforce believes that a certain tribe orethnicity has been favoured in the hiringprocess or assignment of specific tasks.
The threat of political violenceMining projects in challenging locations oftenface risks stemming from political violence,including regional conflicts, civil wars andlocalized violence specifically directed towardthe project. The impact of political violenceon a mining project can range from damage
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It is not only important for mining companies to be fullyaware of the political risks that they face, but theyshould also understand what causes these risks and, ofcourse, how these perils can be mitigated.
and destruction of assets to the inability tocontinue operations and possibly the forcedabandonment of the project in its entirety. Inrecent years, a number of mining projectshave experienced violence-related issues inmany countries, including the SolomonIslands, Kyrgyzstan and Peru, among others.
It is noteworthy that a number of newdeposits have been discovered in West Africaand several large-scale mining operations arecoming on-line in that part of the worlddespite recent and continued political turmoil
in Sierra Leone, Liberia, Cote d’Ivoire, Guineaand other countries in the region. TheSimandou Range in south-eastern Guineacould become the largest combined iron-oremine and infrastructure project everdeveloped in Africa. Income from the projectcould more than double the GDP of Guinea, ifthe project can overcome significant politicalhurdles.
It is also important to consider thatepisodes of political violence can lead toexpropriation or forced contractrenegotiation, as it is not unusual for a newgovernment in a politically unstable part ofthe world to re-examine the revenue-generating projects in the country,particularly when a new government isstarved for cash after a long conflict.
The dollar revenues from a mining projectcan be an alluring target for a governmentthat is experiencing prolonged currentaccount deficits and downward pressure onits currency. While the proceeds from amining project are usually collected in dollar-denominated offshore accounts, there havebeen instances where a host government hasabrogated the right to sell production andmaintain project-related accounts offshore.
For example, Argentina ordered oil andgas and mining companies to cash-in all oftheir project-related export revenue on thelocal foreign-exchange market in a move toprotect dwindling currency reserves.8 Apartfrom the problems that such actions pose to
a company’s cash flow management, it canalso expose a company to increased taxation,as well as the risk of currency devaluation.
ConclusionAs the global demand for minerals continuesto grow, mining companies can beincreasingly forced to seek revenues incountries that present difficult political andsecurity operating environments. Whileprudent management practices can helpmitigate some risks, the nature of extractiveprojects and the difficult countries in whichmany of them operate result in heightenedexposure to political risk for the miningindustry. There are a variety of means tomitigate risk in this sector, and insurance isone of the most useful for risk managers andlenders concerned about low frequency, highseverity political risk. ■
About the author: Jim Thomas managesZurich’s political risk and structured creditunderwriting in the United States, Canadaand Latin America. In his 13 years with Zurich,he has underwritten political risk coverage onnumerous mining projects throughout theworld and he is a frequent speaker on topicsrelating to political risk mitigation strategies.
Notes1 Tin Soldiers. February 15, 2007. The Economist
(www.economist.com/node/8706221)2 Ernst & Young. “Business Risks Facing Mining and
Metals 2012 – 2013”, Pg. 11.(www.ey.com/Publication/vwLUAssets/Business-risk-facing-mining-and-metals-2012-2013/$FILE/Business-risk-facing-mining-and-metals-2012-2013.pdf)
3 United Nations Environment Programme.“Environmental Risks and Challenges of AnthropogenicMetals Flows and Cycles.” April 2013.(www.unep.org/resourcepanel/Portals/24102/PDFs/Environmental_Challenges%20Metals-Full_Report_150dpi.pdf)
4 United States Department of State. 2013 InvestmentClimate Statement – Democratic Republic of theCongo. April 2013.(www.state.gov/e/eb/rls/othr/ics/2013/204623.htm)
5 Lee, B. et al., 2012. Resource Futures (London: ChathamHouse)http://www.chathamhouse.org/sites/default/files/public/Research/Energy,%20Environment%20and%20Development/1212r_resourcesfutures.pdf. See also, Joffé, G. etal., 2009. Expropriation of Oil and Gas Investments:Historical, Legal and Economic Perspectives in a NewAge of Resource Nationalism, World Energy Law &Business, Vol. 2, No. 1, pp. 3–23.
6 Young, R., Devine, R. Expropriation – A Very Real Risk.April 6, 2009. Energy Risk (www.risk.net/energy-risk/feature/1523570/expropriation-a-real-risk)
7 Humphreys, D., A business perspective on communityrelations in mining. Resources Policy, 2000. pg. 127-131
8 Fitch downgrades Argentina Oil Companies FollowingCentral Bank Dollar Move. October 29, 2011. MercoPress(www.en.mercopress.com/2011/10/29/fitch-downgrades-argentine-oil-companies-following-central-bank-dollar-move)
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A project that operates ina challenging political orsecurity environment is farmore likely to besuccessful if the localcommunity benefits fromthe project.
Think back some 30 years ago: what were themain concerns of an exporter participating ina large dam project requiring significantresettlement actions and with considerableeffects on the ecosystem of the country? Inmost cases the project management wasmainly focused on technical and financial risksof the transaction. The project managementwould not have expected the export creditagency (ECA) to exhaustively scrutinise theforeign project’s environmental and socialimpacts, and nor did they havecomprehensive internal processes to addressthe reputational risk of their own involvementin the undertaking of the foreign buyer. Was itthe good old days then, with less bureaucraticburdens from the bank financing the exportand the ECA backing it, less explanationsabout uncomfortable questions to the buyerand no worries to become the object of anNGO campaign?
Sustainability: awareness changesdramaticallyThere is no doubt that today the world forexport finance stakeholders has dramaticallychanged compared to 30 years ago. Toassess the sustainability of a projectbenefitting from ECA support for exports toit has become an integral part of ourbusiness. Notwithstanding the undoubtedlyhigher transaction efforts and costs oftoday’s sustainability processes, thisdevelopment is being embraced by mostplayers in the business. It has emerged as aresult of experience with numerous projectsin emerging and developing countries withinternational participation, be it ECA backingor participation of a development bank.
Over the past two decades, it hasincreasingly been recognised by thecommunity that infrastructure and otherdevelopment projects without a concept toaddress possible environmental and socialimpacts are likely to fail in their developmentgoals, even generating social conflict. For the
companies and ECAsinvolved, such failurecan translate intopolitical, reputationaland financial risks.
But not only havethe risks ofunsustainable projectsbecome evident,today, many playersare convinced that
there is a business case for sustainability inexport finance. Exporting countries such asGermany and their ECAs are considered andacknowledged as principal supporters ofsound projects with higher output and life-span, lower operational costs through energyefficiency and lower risks of time and costoverruns by environmental accidents,concession withdrawals and civil opposition.
Systematic approach: establishingcommon guidelinesWhen looking at eligibility of support,environmental and social aspects ofsupported projects have always played animportant role in the decision making processin the German export credit guarantee system.However, while these aspects were looked atentirely on a case-by-case basis for manyyears, in the late 1990’s, export credit agencieslooked for a more systematic approach. InGermany, the Interministerial Committee, thedecision making body of the German scheme,established its first guiding principles forassessing environmental and social aspects inApril 2001. One important target was to – outof thousands of applications each year –identify those projects in need of in-depthreview due to potential adverse effects ontheir environment.
Secondly, there are the guidelines aimed atsafeguarding a responsible assessmentagainst a defined set of principles. Before theadoption of the guiding principles, an intensediscussion with the export industry and
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Sustainable export finance – a challenging task for ECAs and exportersBy Edna Schoene-Alaluf, head of Berlin liaison office at Euler Hermes AG
Edna Schoene-Alaluf
German NGOs had taken place, both partiesof which had very differing views on what theguidelines should incorporate and inparticular what standards they should referto. Even though the guidelines wereestablished as governmental guidelines, theywere discussed in the German Parliamentwhich by a majority supported their passage.The intense and broad discussion of theenvironmental guidelines for Hermes coverrevealed that the Federal Export CreditGuarantee Scheme had evolved from being atechnical insurance product for exporters toan instrument of political interest, closelymonitored by the public.
Birth of a new idea: the ‘commonapproaches’In parallel to the development outlined above,international discussions on commonguidelines for officially supported exportcredits took place in the OECD with a view toachieving equivalence among the measurestaken by the members and to reducing thepotential for trade distortion.
The first negotiations on ‘commonapproaches’ for OECD export credit agenciesresulted in a ‘draft recommendation oncommon approaches on environment andofficially supported export credits’ which thevast majority of member states agreed toapply on a voluntary basis in 2001.
Only in 2003, all OECD members agreedto a revised text. The status of the text asofficial recommendation of the OECD councilunfolds a high level of binding force. OECDrecommendations are not legally binding, butpractice accords them great moral force asrepresenting the political will of membercountries and there is an expectation thatmembers will do their utmost to fullyimplement a recommendation. Since 2003,the ‘common approaches’ have been revisedthree times already (in 2005, 2007 and 2012).For sustainability at Euler Hermes, the‘common approaches’ are certainly thecenterpiece of operations.
International standards instead ofnational solutionsWhat can be seen as the major changestriggered by the German environmentalguidelines and the OECD ‘commonapproaches’? Certainly one of the ground-breaking developments was the change fromhost country standards to ‘internationalstandards’ as reference for the environmentaland social assessment. This change was
certainly not an easy one: German exporterspointed out the difficulties for them toconvince their project sponsors in emergingmarkets or developing countries to adhere tostandards other than the legal framework inthe project country. Nevertheless, in thecourse of the discussion it became clear thatnot in all cases could host country standardsgive enough comfort to the Germangovernment to support a transaction.
Taking into account that the FederalRepublic of Germany is actively involved with international institutions as part ofEuropean and multilateral developmentcooperation, including the World Bank andthe regional development banks, it seemedappropriate to use the standards of theseinstitutions. At OECD level, the same processof alignment with international standardstook place.
Sustainability at Euler HermesIn the process of time, the sustainabilitydepartment of Euler Hermes has grown fromone full time engineer at the turn of themillennium to a department with 11 expertswith different academic and professionalbackgrounds (e.g. environmental engineers,geologists, political scientists, experts insocial standards, economists and lawyers).The team screens and reviews far more than200 transactions on average each year. Itsexperience and know-how is considerabledue to the large number and wide variety ofoften complex projects being reviewedagainst applicable international standards.This environmental and social due diligence isconducted in the context of many buyercountries and industry sectors mirroring thediversified portfolio of German exports andindustry landscape (e.g. from renewableenergy such as wind, solar, geothermal powerto chemical, steel, metal producing industriesor infrastructure projects).
Germany constantly reports the highestnumber of projects to the OECD. In 2013, afinal commitment for cover was made for 60projects which had undergone anenvironmental and social due diligenceaccording to the ‘common approaches’. Thevariety of projects is significant not only interms of sectors or buyer countries. Whilemost projects have limited and manageableenvironmental and social impacts, we do seesome major infrastructure projects with verychallenging features requiring a high level ofproject management skills, engagement, hardwork and political sensitivity.
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The scope of sustainability growsIn the early days of the ‘commonapproaches’, the focus of attention and thusthe know-how was clearly on environmentalimpacts of covered projects. With growingexperience of ECAs and an ever increasingmagnitude of projects, the focus hasextended to social issues with sometimesmuch more complex challenges. This hasincreasingly required site-visits by the projectmanager in the sustainability departmentinstead of mere desk-reviews, or even theutilisation of experts to assess and monitorcompliance with very sophisticatedinternational standards.
Today’s understanding of a sustainableexport credit scheme even goes far beyond.Euler Hermes sustainability activities includesefforts to support environmentally friendlyindustries, international exchange andnegotiations on the further development ofOECD and guidelines, bribery prevention andanti-corruption processes and acommunication and transparency conceptincluding regular stakeholder dialogues withNGOs, business associations, exporters andbanks on sustainability aspects of exportscredits.
The public interest in the German schemeis constantly high with around 200 externalformal requests in the last four years fromParliament, media and NGOs. Euler Hermesundertakes considerable transparency effortsto act in a transparent way. However, publicinterest needs to be balanced with businessconfidentiality interests. The complexity ofsustainable export finance continues toincrease. Future challenges presently underdiscussion include further integration ofproject-related human rights, aspects into thedue diligence and the question on howgreenhouse gas emissions should be takeninto account and reported.
The border zoneFrom the exporters’ standpoint the mostchallenging aspects of the environmental andsocial due diligence are directly related to therole of the exporter within a project. Dependingon the type of transaction, the exporter andthus the ECA, have a varying degree ofinfluence on the buyer and the overall socialand environmental performance of the project.Depending on the level of social andenvironmental risks and the level of complexityof these risks, differing informational needs ofthe ECAs have to be met.
The main environmental and social issues
can vary significantly between sectors andhost countries. For many projects, publiclyavailable information such as environmentalstudies disclosed on the project’s website,press releases, NGO statements, etc is limited.Usually, the exporter or the financing banksas contractual partner of the ECAs areresponsible for providing the necessaryinformation. Sometimes therefore, thesustainability requirements of ECAs areextremely challenging for exporters. It isimportant not to cross the border line offeasibility.
Global standards: A consistentmessageIn addition, the objective of contributingtowards sustainable development throughECA support is depending on a level playingfield for officially supported export credits. Ifthere is no consistent message to public andprivate buyers worldwide that publiclysupported export finance is subject tointernational environmental and socialstandards, sustainable development in thebuyer countries is disfavoured. Only globally
accepted standards could send theappropriate message to project sponsorsworldwide that their projects would onlyreceive ECA-backed favourable financing ifthose standards were applied andimplemented.
The importance of global standards,accepted by all exporting nations and notlimited to the OECD, is today more obviousthan ever before, taking into account thegrowing share of export companies fromnon-OECD countries in all markets. Thisnecessity has been confirmed by Berne Unionmembers in the medium to long-termoperational guidelines to the guidingprinciples. Those were adopted as early as in2008 and acknowledge the need for all BerneUnion members to move in the direction ofbest practice in sustainable export finance indue course. ■
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Certainly one of theground-breakingdevelopments was thechange from host countrystandards to ‘internationalstandards’ as reference forthe environmental andsocial assessment.
The world’s ECAs have been and remain avital element when piecing together fundingfor renewable energy. Denmark's exportcredit agency, EKF, is an active partner with aportfolio that is currently completelydominated by wind turbines.
“As far as renewables are concerned, mostmarkets are emerging markets. Obviously,some are more emerging than others, buteven in the most mature markets we areconstantly facing new challenges. Forinstance, we are currently devotingconsiderable resources to Cape Wind, whichwill be the first ever US offshore wind farm,”says Jørgen Kragh, head of project finance at EKF.
For years, EKF has been an importantpartner in ensuring financing solutions forrenewable energy, mainly wind turbines. Overthe past three decades, the Danish windturbine industry has established itself as theglobal leader. Today about 30,000 employeeswork in Denmark at leading companies suchas Vestas, Siemens Wind Power and thecountless subcontractors and advisorsspecialising in everything from foundations totransmission solutions.
The wind turbine industry startedattracting serious attention in EKF’s financial statements almost 10 years ago, andsince 2009 growth has been positivelyexplosive. Wind turbine guaranteesaccounted for an impressive 64% of newissues in 2013, and at the end of the yearamounted to 59% of EKF’s total exposure of
€10 billion ($13.9billion).
Such a largeconcentrationnaturally represents achallenge, but oncloser inspection therisk is appropriatelydiversified. Thus, mostof the wind farms forwhich EKF has issued
guarantees are in OECD countries with strongeconomies such as Australia, New Zealand,Germany, the Netherlands and Belgium.Naturally, this benefits a sector that relieslargely on public-sector subsidies.
The projects and their remaining usefullives also play a role. EKF’s wind farmguarantees typically run for 15–18 years, yetthe risk is normally highest in the initialphases, including the construction phase. Insubsequent phases, it is often possible toreinsure the entire risk or parts of it – anoption EKF chooses with increasingfrequency. Today, EKF has reinsured 12% of itstotal portfolio and is experiencing increasinginterest from ECAs and the private market inreinsuring risk associated with wind turbines.
Finally, it makes a considerable differencewhether the wind turbines are onshore oroffshore. The latter is considered a less well-tested technology subject to increasedintegral risk.
Offshore: growing in size andcomplexityAnother important distinction is betweenbalance-sheet financing and projectfinancing. Project financing of offshore windfarms, in particular, is an area where EKF hasclearly left its mark. In 2006, EKF covered25% of the senior debt in the first-everoffshore project financing: Q7 (later renamedPrincess Amalia Wind Farm) off the coast ofthe Netherlands. This loan has now been paidoff, and the guarantee has lapsed with no
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ECAs and their vital role inrenewables financingBy Anette Eberhard, chief executive officer of EKF
Anette Eberhard
Today, the Danish state’sexport lending scheme(ELO), which EKFadministers, is a fundingsource just as important asthe banks.
problems at all, and to date EKF has notexperienced any losses on offshore windfarms.
“We have financed five offshore projectssince the first one in 2006, and I expect wewill close two more either this year or in thefirst half of next year,” says Kragh.
The importance of ECAs for offshoreproject financing of wind turbines can hardlybe overstated. Without their participation, along list of projects would never have beenpossible.
“Over the years, EKF itself has taken anincreasingly large share of the risk, but wehave also shared risk with other ECAs. Forexample, in the Northwind project in theBelgian part of the North Sea, we joinedforces with our Norwegian colleagues at GIEKand Belgian colleagues at ONDD (now knownas Delcredere Ducroire). There is enough riskfor everyone,” remarks Kragh.
This corresponds well with the trend ofwind projects becoming larger and morecomplex. Wind financing has always involved‘club deals’, but the clubs are getting bigger.Today, a range of partners are required towork together if the projects are to achievetheir goals.
“I sense that the banks are to some extentreturning to the market after the financialcrisis – and that also applies to long loanperiods. However, bank financing alonecannot satisfy demand. We are thereforeseeing more alternative funding sources thanjust five years ago,” states Kragh.
If you consider EKF’s activities, the figuresclearly confirm that alternative fundingsources play a vital role. Today, the Danishstate’s export lending scheme (ELO), whichEKF administers, is a funding source just asimportant as the banks. International financialinstitutions (IFIs) such as EIB and KfW alsoaccount for a large portion though they werefar less involved just five or six years ago.
Accordingly, this year EKF will head a
Berne Union task force on risk sharingbetween ECAs and international financialinstitutions such as the IMF and EIB.
Kragh notes: “We will try to systematiseand prioritise the experiences ECAs have withco-financing and risk sharing with IFIs whilefocusing on project finance.
“Finally, we have concluded agreementswith two large Danish pension funds,PensionDanmark and PFA, which are readywith DKK20 billion ($3.7 billion) in funding,and we will continue our efforts to encouragemore institutional investors to step forward.”
EKF also played a very active role indeveloping and improving the sectorunderstanding on export credits forrenewable energy which was agreed to in 2012.
“Our work on ensuring financing forrenewables spans from specific solutions inindividual projects to broad collaboration inthe EU and OECD with other countries’ ECAsand ministries on international rules such asthe consensus agreement and the sectoragreements. Danish export companies have astrong position within green ecotechnologies,so we are almost obliged to,” commentsKragh.
The five-year forecastThe outlook for the coming years involves notleast new and emerging markets. SouthAmerica and Central America, where EKF hasso far participated in nine projects, areregions already well under way, and there isplenty to indicate that the next breakthroughwill occur in Africa.
Therefore, EKF was involved in March thisyear when the Lake Turkana Wind Powerannounced that financing was in place for a300MW wind farm that will be the largestprivate investment in the history of Kenya.According to the plan, the park will beginoperation in early 2016 and will, in due course,supply almost 20% of Kenya’s total capacity.
South Africa also has ambitious plans andis currently developing a large number ofprojects – in some of which EKF expects toparticipate.
Looking a few years further ahead, Kraghhas high hopes for the Asian market: “Asiahas lots of countries in risk categories 3 and4. Classic ECA territory, in other words. Infact, I recently met a group of investors fromjust such an Asian country, so maybe thefuture will arrive faster than expected? Frommy experience, in renewables that is almostalways the case.” ■
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This year EKF will head aBerne Union task force onrisk sharing between ECAsand international financialinstitutions such as theIMF and EIB.
Berne Union members’ support for SMESmall and medium-sized enterprises (SME)are a key driver of many national economies.However this segment faces challenges ingrowing and competing internationally. In aneffort to better understand the growingneeds of SMEs, in May 2013 the Berne Union(BU) identified this as a priority segment forfurther research.
The then president of the Berne Union,Johan Schrijver recognised the increasingimportance of SME businesses and asked theBerne Union Management Committee andmembership for their support to establish anSME Working Group. This initiative was wellreceived as many members noted thatsupporting SME business was becoming anew priority for their organisations andincreasingly of common interest to ECAs.
Following the BU’s 2013 Spring Meeting inNew York, seven organisations volunteered toparticipate in the SME Working Group(group) that would explore the issues facingcompanies and members and report back tothe broader membership at the fall BUAnnual General Meeting (AGM) in September2013.
The group began working in June 2013and it was clear from the initial call thatmembers all had a different approach to thissegment of business. The group decided thatit would be best to start by understandingwhat the BU members were doing for SMEswith a goal of using this intelligence todetermine next steps. The group launched aBU member wide survey which wascompleted by almost all members and askedthe following questions, among others:� How do members define SME?� Do members have special schemes to
support SMEs? If so how?� What challenges do members have in
supporting SMEs? and,
� What do memberssee as SMEchallenges?From discussions
with the group, it wasquickly realised thatthe members had awide differentiation inhow they addressedthe above questions.For the purpose offurther work the groupdecided to defineSMEs as companieswith less than €50million ($69.4 million)in revenue and/or 250employees.
The following arethe high level insightsthe group obtainedfrom the survey.
When asking members how they supportSMEs today some common themes emergedbut also a wide range of responses. Below arethe member survey responses to this set ofquestions:� Over half the members use a different SME
definition and it varies significantly acrossthe BU;
� 70% of members have, or are developing,an SME support scheme;
� 75% support SMEs due to policy ormandate;
� Over 90% support SMEs throughinsurance, while only one third throughfinancing, with a close split betweenoffering these solutions directly and/orthrough partners;
� Majority of members see their SME business growing but less than half have special SME teams/departments;
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Providing support for SMEsAn increasing amount of attention has been focused on SMEs in recent years,as their role in supporting national economies has been emphasised. Howhave Berne Union members worked with this particular group? What are thechallenges that SMEs are facing and how have ECAs specifically attempted tocombat these issues? And what strategies and initiatives has the Berne Unionadopted in order to better understand and support SMEs? Vinco David, Atradius, SME specialist meeting chair and Dan Mancuso, EDC, SME workinggroup chair provide some insight and answers.
Dan Mancuso
Vinco David
� Two-thirds have special SME products withdifference being in process, coverage andrisk appetite.From the above the group gleaned that
most members are being asked to supportthis segment and have started to developspecial products and approaches. That said,when asked what they saw as the topchallenges SMEs face in accessing foreignmarkets, BU members identified the followingin order of priority:� Obtaining financing (either for their buyers
or to support their own growth);� Understanding market opportunities and
conditions;� Complexity of market regulation, taxation,
legal etc;� Willingness to take risks with going
abroad; and� Cost of doing business including double
taxation, trade agreements, etc.As the above list highlights, making and
taking the decision to expand internationallyrequires a much broader range of risks thanmost BU members are able to address today.While BU members are in a position tosupport a key area of concern (ie. access tofinancing), this support is required much later,once the company decides to expandinternationally.
Many early stage issues include attractingor developing sales, understanding tax andlegal implications, etc. and most of these arenot areas where members have solutions andthus require further exploration.
What was also encountered through thesurvey was the reality that ‘challenges’ arenot limited to SMEs and in fact, manymembers face challenges in supporting thissegment of business. For those memberssupporting SMEs, they identified thefollowing as their top challenges within their
organisations in supporting SMEs:� Marketing – getting SMEs to know what
support is available;� Access to information;� Simplified processes and administrative
burden, and assisting SMEs with theseprocedures; and
� Attracting banks to participate in SMEsupport schemes.The above list highlights that one of the
biggest challenges for members is to getSMEs to understand how and what they offerin order to support them. Another challengeis delivering solutions efficiently andeffectively through partners, such as banksand (other) government agencies.
One of the last questions members wereasked was to identify the top SME needs thatwere not being addressed:� Lack of awareness of existing support
available to them;� Access to new markets;� Help in prospecting in new markets
including introduction to key new buyersand supply chains; and,
� Access to capital to support growth.Based on the findings in the survey the
group determined that there was a need tofurther explore how the members could extend support to this importantsegment. To this end, at last fall’s BU AGM,the survey findings were presented. Theresults generated a lot of interest from the members to go one step further. Inresponse to this interest, the BU held, inMarch of this year, a Specialist Meeting whichwas attended by 40 participants to shareexisting solutions and discuss ideas to furthersupport SMEs.
A catalogue has been put together,available to all BU members, with acomprehensive overview of all solutions
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As regards to marketing, a number of ideas were raised,including setting up representation across countries, theuse of social media and professional telemarketing.Marketing should not only target the exportersthemselves, but also their local banks. Often thesebanks do not know about the support ECAs can offer, as this expertise is usually concentrated at the headoffices of banks.
currently in place by all participants.The Specialists’ Meetings highlighted that
some members have identified interestingvalue added solutions for SMEs which includea wide range of insurance, financing andguarantee solutions with many schemestweaked to address the unique demands ofthis segment through simplified structures,processes and increased risk appetite.
The specialists group concluded that forany meaningful support to SMEs the issue offinancing SME business needs to beaddressed. For those members not offering
financing themselves – and that is the largerpart of the ECAs – banks remain necessary toprovide working capital and export finance.But it is exactly these banks that over the lastfew years have become more reserved inproviding that financing.
This is partly due to new bankingregulation (such as Basel III and ‘Know YourCustomer’ requirements). Another importantreason, however, is the relatively hightransaction costs banks are facing for thefinancing of small transactions. Various ideaswere raised to increase the banks’involvement, such as 100% cover or placing‘ECA ambassadors’ within banks.
However, the cost issue is one that is notjust with banks. It is also something thataffects ECAs as the transaction costs of SMEbusiness are relatively high. Underwriting a $1 million transaction, for example, cansometimes be more of a challenge than a$100 million transaction, as SME exporterstend to have small corporate buyers, and ittypically requires more time to obtain buyerinformation from small buyers. This is whyECAs continue their efforts to simplify theunderwriting process.
It was further concluded that online toolsare useful for streamlining and easing theadministrative burden for SMEs. This could beapplied to the application process, statusreports and policy administration. It wasrecognised, however, that face-to-facecontact is also important, certainly for lessexperienced SMEs.
As regards to marketing, a number ofideas were raised, including setting uprepresentation across countries, the use ofsocial media and professional telemarketing.Marketing should not only target theexporters themselves, but also their localbanks. Often these banks do not know aboutthe support ECAs can offer, as this expertiseis usually concentrated at the head offices ofbanks.
That said, when the specialists groupdiscussed the areas that members identifiedas the unaddressed needs of SMEs, it becameclear that addressing these issues mayrequire a broader mandate of individualmember organisations and recognition thatmany of these needs do not fit the traditionalbusiness solutions. If members are to supportareas such as market access and prospecting,members will need to take a fresh look atcurrent offerings and explore more creativeways to leverage each other in supportingSMEs. ■
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SME related challenges as ranked by Berne Union members*
*80% of Berne Union members responded to the SME survey which consisted of pre-defined choices.
SME unaddressed needs as ranked by Berne Unionmembers*
*80% of Berne Union members responded to the SME survey which consisted of pre-defined choices.
With six of the world’s top 10 shipyardslocated in the country, Korea stands at theforefront of the global shipbuilding market. In2013 alone, Korea won 16.58 million cgt(compensated gross tons) shipbuildingorders, which accounts for 33% of the globaltotal at 50.12 million cgt. This makes theshipbuilding industry the 5th largest exportdriver of Korea, following semiconductors,petrochemicals, steel, and automobiles. At$37.1 billion, the industry was responsible for6.6% of the country’s total exports of $559.7 billion.
In 2013, the global shipbuilding industryfaired significantly well compared to theprevious year. Globally, ship orders jumped96.9%, painting a seemingly rosy picture forthe shipbuilding and shipping industries,which had been sluggish since 2008.Nonetheless, shipbuilding orders and vesselprices were still lagging behind the 2007levels. Moreover, it is difficult to say that acomplete turnaround can be seen in theshipping industry. As such, it was too early tosay that the shipbuilding industry was on itsway to complete recovery, despite the factthat orders have been mounting.
In the meantime, Korean shipyards havemaximised their vessels’ navigationperformance and come up with eco-friendlyships by improving fuel efficiency toovercome these difficulties. These effortshave paid off, with Korean shipyards stillremaining as attractive contractcounterparties of shipping companies
embattled in afiercely competitiveenvironment.
The shipbuildingindustry slump wasalso partly due to thedifficulty for shippingcompanies to secureship financing asEuropean banks,which had been the
leading ship finance providers, reduced theirlending as a result of the European debtcrisis and the implementation of Basel III thattightened capital requirements for banks. Forexample, Commerzbank of Germany, whichused to be the third largest ship financier in theworld before the crisis, stopped its shipfinancing altogether, whereas some Frenchbanks sold off huge portions of their shipfinance assets.
New practicesAs a result, a new practice is now adopted inthe ship financing field to mitigate fundingissues: the tacit clause of “the financialarrangements preceding the contact” ismobilised to ease financing where theshipowner arranges for financing in advancebefore actually entering into the shipbuildingcontract.
We at K-sure took the initiative to covership financing by maintaining a closerelationship with the shipping company, the
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The key role of K-sure in theresurgent shipbuilding industryBy Kim Young-hak, president of K-sure
Kim Young-hak
Korean shipbuilders’ volume of vessels orders and K-sure cover
2010 2011 2012 2013
Volume of orders to Korean shipyards U$33.9 bn U$48.1 bn U$30.5 bn U$41.1 bn
Demand on ship finance* U$23.7 bn U$33.7 bn U$21.4 bn U$28.8 bn
K-sure ship finance(contribution ratio to financing) U$1.6 bn U$2.2 bn U$2.1 bn U$3.9 bn
(7%) (7%) (10%) (14%)
Change year-on-year 32%↑ 37%↑ -2.2% 87%↑
* Assuming that 70% of the ship price as demand for ship finance
Korean shipyard, and the financing banks –from the beginning all the way down to theactual contract. Our efforts materialised inthe $3.9 billion figure in ship financecoverage for shipping companies in 2013.This largest cover since the start of theglobal financial crisis was the biggestcontributing factor for shipping companiesto secure financing, with the contributingratio at 14%.
As such, the foremost benefit of our coveris the credit enhancing function. Forexample, the MLT (medium- to long-term)export credit insurance (buyer credit)programme is one of our ship financeproduct lines that aims to encouragecommercial banks to extend MLT loans with a tenor of up to 12 years in which we facilitate shipping companies tosecure large funds as our cover protectsthese loans.
With our cover, we expect to boost thecommercial banks’ ship financing capacitywith an increasing demand of shipowners forlarge, high-end, fuel-efficient vessels such asLNG and offshore ships. To facilitatefinancing, we offer quality coverage for largeships with GIEK of Norway and other ECAs,along with leading ship finance banks suchas DNB, Crédit Agricole-CIB, BNP Paribas,ING, Citi, KfW, DVB, and Nordea for example.In 2013 for example, we covered one FPSO(floating production, storage and offloading)for Teekay Corporation of Canada, two semi-submersible rigs for Stena of Sweden, andthree drill ships for Seadrill of the UK, alljointly with GIEK of Norway.
Market innovationsLast year, we made an innovativeadvancement to attract more funding intothe shipbuilding industry: we introduced the‘capital market bond’ programme in whichthis alternative product enables shipownersto utilise abundant funds from capitalmarkets for ship financing via issuingcorporate bonds by inviting publicparticipation or private equity.
This new platform proposes a new and
alternative source of ship funding. Theprogramme was designed by benchmarkingbond programmes used for aircraft exports,and any bond issued under this programmeis covered 100% unconditionally andirrevocably. This 100% coverage was grantedto protect those investors of the bonds
covered under this programme and topromote the programme’s marketability. Inturn, we boost the shipowners’ ability toplace more shipbuilding orders by reducingtheir financing costs.
The shipbuilding and shipping industriesare basically cyclical due to the conservativenature of financing by commercial banks inwhich excessive investment is seen duringthe booming periods but under investment inlean times. Unlike commercial banks, we at K-sure, as a financial institution, feel a senseof responsibility over market stabilisation: tohelp boost financing during a crunch as the‘last resort’ and to alleviate an overheatedmarket during a boom.
Although both the shipbuilding andshipping industries are expected to recover into 2014, vessel orders and pricesare still lagging significantly behind thoseexpected. As such, we know that ourincreased cover is still needed for shippingcompanies and shipbuilders to be rolling asusual. Thus, we plan to support $5.7 billion in ship finance to fill the funding gap infinancial markets. ■
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With our cover, we expect to boost the commercialbanks’ ship financing capacity with an increasingdemand of shipowners for large, high-end, fuel-efficientvessels such as LNG and offshore ships.
Last year, we made an innovativeadvancement to attractmore funding into theshipbuilding industry: we introduced the ‘capital market bond’programme.
The financial crisis in 2008 led to a dramaticincrease of the Coface portfolio in the spacesector. Since 2008, Coface’s portfolio hasexpanded significantly in the space sector inconnection with increasing requirements forsatellites due partly to a period of renewal offleets, including constellations.
In this changing environment, Coface hashad to meet the increasing demand forfinancing to support the sector’s growth.Before 2008, the number of applications wasabout two to five per year. In 2009, theseapplications reached a total of 17.
The Coface portfolio covers a large rangeof operators: global and regional in FFS,constellations and a wide range of financialstructures from investment grade to projectfinance (SES, Hispasat , RSCC, GazpromSpace, Nilesat, Arabsat, Globalstar, Iridium,and O3b, for example).
Liquidity shortage has been a concern forboth the bigger national and smaller regionaloperators, but the withdrawal of the marketappetite has been particularly severe for newentrants to the market. Consequently, exportcredit agency (ECA) support has beensought by the sellers and the buyers as acounter cyclical remedy to maintain trade inthe space sector, in order to pool resources,and to increase the financing appetite of thecommercial banks. The track record in thissector has been good.
A specific and competitive sectorFrench manufacturers and launch servicesproviders operate on a worldwide basis,dealing with developed and developingcountries, with their satellites and launch
services being usedfor all the variousapplications.
French exportersprocure the full rangeof satellite (payloadsand spacecraft) andlaunch servicesolutions from all thetypes of operators.For the record, the
spacecraft is the vehicle, the transpondersare in the payloads – and the lease of thetransponders generates cash flow.
These following exporters, Airbus Defenceand Space (ex Astrium), Arianespace andThales Alenia Space, are the result ofEuropean cooperation in research,manufacturing and services. Europeancooperation in the space sector requiresEuropean cooperation between ECAs. In thisregard, Coface has used and improved thecooperation agreements with the UK andGerman agencies.
The space sector is attractive but a verycompetitive environment and significanttechnical and market risks have to beconsidered. Trends in the sector are positivewith a strong market, revenue growth andnew needs of capacity.
We must also highlight the consolidationin the sector, the competition between the operators and between the technologies,for example fibre and cable. The effect ofthese factors may be amplified by the timeframe to set up the project. Furthermore the orbital slots are limited and their usehighly controlled, this element increases
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ECAs and satellite financingCoface’s support in the space sector experienced dramatic growth in 2008 –linked to the financial crisis – and since then there has been a steady streamof business. Régine Schapiro, head of the energy, telecom and space unit atCoface examines these developments.
Régine Schapiro
Trends in the space sector are positive with a strong market, revenue growth and new needs ofcapacity.
competition and can be a factor of mergers.
There are a large range of buyers: global,regional or national operators, established ornew entrants in the market. They operatedifferent types of satellites: on geostationaryorbit or a lower one for a constellation.
The mission of the satellite influences thedesign, weight and the amount of theproject. The scale of applications is extensive,and as such the capacity to lease offered bythe operators in various fields: broadcast ofTV, telecom services, enterprise networks,broadband access – is correspondinglyvaried. The TV field requires a very largecapacity. There are various types ofbandwidths impacting the price of the leases.
Assessment of the riskWe have to face challenging issuessurrounding the assessment of risk and themitigation of risk with an adapted securitypackage. The sector is challenging by natureowing to technical and technological risks.We have to assess the different aspects ofthe risk and to mitigate them to improve thefinancing sustainability. We have also to poolsupport of ECAs accordingly to theEuropean character of the suppliers.
With a thorough study of the entireproject, the risk assessment has to be basedon the characteristics of the sector in orderto obtain the best pricing for the capacity ofthe satellite involved.
In addition to the analysis of financialdocuments, a combination of elements alsohas to be considered, mainly: regulatory risk(orbital slot, authorisation, licence etc),technical feasibility including groundequipment, technological viability, reliabilityand competiveness of the used technology,space insurance, financial risk, and themarketing study and strategy.
The security package has to be settledaccording to the sustainability of this widerange of risks in the specific context of the
project: among others, the lifetime of theexisting fleet, satellite of replacement or newone, existing footprints, and backlog.
The assignment of the proceeds of launchinsurance is a basic requirement to mitigatethe risk.
ConclusionIn this continuously evolving sector, constantadaptation will be required to meet theneeds of clients and to monitor the risks.Various parameters will have to beconsidered and a lot of extensive changescan be expected. In the space sector andmore generally in the telecommunicationsector, the diversification and progress oftechnologies combines with very fastdevelopment and potential redundancy ofequipment. It means one can always be onconstantly moving ground.
On the one hand, the sector of theoperators can evolve substantially: we maysee, for example, both mergers and theimpact of technological developments withincreased competition, although this will notprevent overall growth expectationsdecreasing over the next few years. And lastbut not least, international competition isalso going to grow between themanufacturers and the launch servicesproviders. In this context, we can anticipatethat the need of satellite financingssupported by ECAs will be steady or evenmore significant, as companies look for an edge. ■
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ECA support has been sought by the sellers and thebuyers as a counter cyclical remedy to maintain trade inthe space sector, in order to pool resources, and toincrease the financing appetite of the commercialbanks. The track record in this sector has been good.
European cooperation in the space sectorrequires Europeancooperation betweenECAs.
State-backed export credit agencies (ECAs),members of Berne Union’s medium- andlong-term committee, are quick inresponding to changing market needs. Overthe past 15 years, there are a number of goodexamples of ECAs meeting the requirementsof market developments – eg. looking at‘national interest’ (wider economic benefitsto the national economy) instead of, or inaddition to, ‘national content’ (‘made by’versus ‘made in’), cover for local currencyfinancing, cover for capital marketstransactions, exposure and portfolio swaps,use of credit derivatives and private re-insurance.
Recently, several ECAs’ product paletteshave been extended to include new exportcredit financing schemes such assecuritisation/funding guarantees and evenfunding from pension funds. Driven byexporters’ and their customers’ needs and byECA’s own portfolio concentrationchallenges, smaller ECAs have in many casesbeen pioneers in adopting these newinnovations.
ECA re-insurance was started between theNordic ECAs. Denmark’s EKF pioneeredpolitical risk exposure swaps and pensioninsurance company funding for export
credits, Sweden’sEKN and Finland’sFinnvera pioneeredusing private sectorre-insurance to leveloff riskconcentrations intheir state-backedexport guaranteeportfolios, and wereamong the first ECAs
to introduce ‘national interest’ as exporters ofsmaller countries cannot produce everythingin their native countries. Being able to sourceabroad is a matter of logistics andcompetitiveness and helps to increase highvalue-added research and development jobsat home.
Islamic finance slowly but surely enteredthe ECA radar more than 10 years ago – itmay not be the most voluminous financingscheme of ECAs but it can certainly becrucial from the buyer’s/borrower’sperspective.
Steady growth patternIslamic financing has been steadily growing.There already are several banks using Islamicfinancing in the UK, and the first such bank isbeing established in the eurozone inLuxembourg. Dubai is consideringestablishing a fully Sharia-compliant ECA. Asan Islamic financing centre Dubai is facingserious competition from Kuala Lumpur.Other financing centres such as Dublin,Luxembourg, Jakarta and Bahrain havealready developed, or are developing, theirIslamic financing capabilities to meet thedemand of the world’s 1.3 billion muslims.And, an increasing number of Western ECAshave closed Islamic buyer financingtransactions.
In 2008, Finnvera was one of the firstECAs to cover export credit according toIslamic finance principles. To address therequirement of a Sharia-compliant structure,
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ECAs and the challenge of Islamic financeBy Topi Vesteri, executive vice president, Finnvera, and chairman of theboard, Finnish Export Credit
Topi Vesteri
The financing bank can bea regular internationalbank providing exportcredits – the credit termsand conditions just needto fulfil Islamic financeprinciples.
murabaha financing was adopted to financeWärtsilä Finland Oy’s 50MW captive powerplant to Al Qatrana PSC in the Kingdom ofJordan.
More recently, in 2013 Finnvera and itssubsidiary Finnish Export Credit supportedand financed in less than three months a$325 million, 10-year Murabaha financing toleading telecoms provider Etihad EtisalatCompany (Mobily) in the Kingdom of SaudiArabia, to support Nokia Solutions andNetworks’ telecom equipment deliveries.Sweden’s EKN covered a similar dealsupporting exports of Ericsson’s networkexpansion equipment. The lending wasstructured on a corporate risk basis andarranged by Deutsche Bank and CréditAgricole CIB.
Less mystique, more normalityWhat has enabled these successful Islamicfinance transactions? While Islamic finance isunconventional in export credit agencycircles, there is little mystique behind it. Afterall, Islamic banking shares the same purposeas conventional banking: to make money forthe banks by lending out capital.
In Islamic banking, banks typically useMurabaha in asset financing. Murabaha issimply a financing tool whereby a financingbank purchases an asset from an equipmentsupplier against certain cost price, and then
sells it to the purchaser with immediatetransfer of title but deferred payment of asale price. Given that collection of interest, orriba, is prohibited, the sale price consists ofthe cost price plus a mark-up or profit. Thefinancing bank can be a regular internationalbank providing export credits – the creditterms and conditions just need to fulfilIslamic finance principles.
Furthermore, commodity-type Murabaha
financing can be used for local costs andECA premium. In this scheme, the financingbank and purchaser sign a deferredpayment-based commodity trade throughcommodity brokers. Instead of tangiblemachinery and equipment, the underlyingasset is a tradable commodity such as Shariacompliant metal.
Use of Sharia law and Islamic finance hascertain challenges in terms of understandingits implications and ensuring that the creditprofile meets the requirements of the OECDexport credit consensus. Restructuringexperiences of Islamic transactions arelimited, and collecting overdue interest issomething one does not wish to test ascollecting interest under Sharia law is notpermitted. If overdue charges are collected,they should be donated to charity. Therefore,borrowers under Islamic structures mustmeet higher credit standards than underconventional ECA structures.
The future of Islamic publicly supportedexport credit finance is intriguing, and ECAscan certainly play an important role in thisfield. ECA-covered Islamic structures canprovide longer tenors than what is availablein the local financing markets.
Our landmark deal back in 2008 inspiredus to set up a training workshop here inHelsinki for our Nordic and Germancolleagues who have also been at theforefront of adopting innovative financingstructures. In fact, Euler Hermes of Germanyand EKN of Sweden were also involved in theabove transactions to support theirrespective exporters. This illustrates theECAs’ capacity to adapt to marketspecificities. All it takes to cover an Islamicfinance transaction is a bit of flexibility,expertise in structured finance – and top tierborrowers. ■
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ECA-covered Islamicstructures can providelonger tenors than what is available in the local financingmarkets.
All it takes to cover anIslamic finance transactionis a bit of flexibility,expertise in structuredfinance – and top tierborrowers.
The Islamic Corporation for the Insurance ofInvestment and Export Credit (ICIEC), theinsurance arm of the AAA rated IslamicDevelopment Bank Group (IDB) based inJeddah, Saudi Arabia, has completed thisyear its 20 years of services in supportingtrade and investment in its 41 membercountries (MCs). ICIEC came into being in1994 after the Committee for Economic andCommercial Cooperation (COMCEC) of theOrganisation of Islamic Cooperation (OIC)’srecommendation to establish a multilateralexport and investment insurance institution.
ICIEC started operations in 1995, with theinitial objective of increasing the scope oftrade transactions among the MCs of the OIC,facilitating intra-investments among them,and providing reinsurance facilities to exportcredit agencies (ECAs) in MCs. However, overthe years, the corporation’s mandateunderwent significant changes by amendingits articles of agreement to enable it toexpand its services to insure exports fromICIEC’s member countries worldwide, andinsure investments from anywhere intomember countries.
Also, with more competition coming frommajor international credit insurance providers,other changes in the articles of agreement
were made so that ICIEC domestic andinternational sales came under one policy; andcover was allowed, on exceptional basis, forcapital equipment, strategic goods, andessential commodities from non-MCs in 2010.All these changes, necessitated by thecorporation’s experience, resulted in a rapidrise in insured business volume which reached$3.36 billion by the end of 2013.
The capital resources of ICIEC witnessedsimilar development. Initially, the authorisedcapital of the corporation was $140 million, ofwhich IDB subscribed to $70 million whichmakes 50%. In 2008, the authorised capitalwas raised to $240 million. The increase wasfully subscribed by IDB. In 2012, theauthorised capital of the corporation wasagain raised to $620 million in order to meetthe expanding demand for the services of thecorporation. Currently, ICIEC’s subscribedcapital is $355 million.
The membership of the corporation isopen to all members of the OIC. This rosefrom 15 member countries as of end of 1996to the current 41 countries. Of these, 17 areArab countries, 15 African, and 9 Asian/othercountries. ICIEC’s possible maximummember ship is 57 countries – themembership of the OIC.
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Sponsored editorial
ICIEC at 20: Two decades ofmaking business transactions lessrisky and more competitiveICIEC aiming high after two decades of services
Dr. Abdel-Rahman El-Tayeb Taha, the Chief Executive Officer of ICIEC.
“ICIEC, with the support ofits board of governors andboard of directors, hasevolved into a recognisedand respected credit andpolitical risk insurer, aftertwo decades of impressiveachievements.”
Increasing the product mixIn terms of product mix, ICIEC started itsoperations with only three products, theComprehensive Short Term Policy (CSTP),Bank Master Policy (BMP), and SupplementalMedium Term Policy (SMTP). In 1998, a fourthproduct for Foreign Investment Insurance (FII)was added to the list. The first product wasdesigned for the traditional whole-turnovershort term export credit operations while thesecond for Islamic trade finance transactions,the third for project finance relatedtransactions, and the fourth for investmentinflows into member countries. The lattercovers equity investments, financing facilities,and guarantees.
During 2000-2005, the corporation addedthe Documentary Credit Insurance Policy(DCIP), and the Specific Transaction Policy(STP). Both products would later become themainstays of the ICEIC’s business volumesand premium income. Specifically, the DCIPhas proved to be very popular among banksand financial institutions in member countriesand regional financial centers.
Since the beginning of the current decade,ICIEC launched four new products, includingthe Specific Transaction Policy, ContractFrustration Policy, the PartnershipReinsurance Policy, and the most innovativeSukuk insurance policy, Sovereign SukukPolicy. The innovative Sukuk insuranceproduct, which is the first of its kind in themarket. The policy is designed to insure therisk of non-payment. This eases access toSharia’ compliant financing from the capitalmarkets to finance developmental projects.
The product was launched in 2014.The corporation’s business was limited in
the first five years or so; that is before it startedto cover exports from member to non-membercountries. This period also marked the start of FII activity. From 2004 onwards, thecorporation’s business growth has been steady.
In 2007, the corporation exceeded $1 billionin business insured for the first time. A drop-off in business was seen in 2009, which was adirect result of the global financial crisis.However, volumes started increasing againfrom 2010 onwards, with annual businessinsured reaching above $3 billion during 2011-2013. Overall, the corporation has insured $18billion of business in the last 20 years, 78% ofwhich has been for short-term trade creditand the rest for medium-term structuredfinance and investment insurance.
With these achievements, ICIEC’s name hasbecome well known in the industry. In 2002,ICIEC joined the Prague Club (PC), and in2008 joined the Berne Union (BU), theleading international organisation for theexport credit and investment insuranceindustry. This enabled ICIEC to benefit fromthe experience of other union members andplace it among the world’s top export creditand investment insurers. Both the BerneUnion and Prague Club serve as excellentinformation and knowledge sharing platformsfor the technical aspects of the business.
Expanding levels of cooperationBeing a multilateral institution, it was naturalfor ICIEC to develop close working relationswith the World Bank’s Multilateral Investment
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Dr. Ahmed Mohamed Ali, IDB Group President & Chairman of ICIEC's Board of Directors (left) and Dr. Abdel-RahmanEl-Tayeb Taha, CEO, ICIEC (right).
Guarantee Agency (MIGA), and the other tworegional multilateral credit insuranceagencies; the Arab Investment Guarantee andExport Credit Insurance Corporation(Dhaman), and the African Trade InsuranceAgency (ATI).
Moreover, ICIEC is the co-founder of AMANUnion, together with Dhaman. The union isthe first organisation gathering investmentand export credit agencies in the Arab andIslamic world under one umbrella. It aims atenhancing cooperation among Arab andIslamic export credit institutions andencouraging the development of theinvestment and export credit insuranceindustry in its MCs. The union currently has 17 members from more than 15 countries,including ICIEC and Dhaman.
Indeed, ICIEC’s recognition in the marketwas confirmed in 2007 by Moody’s Aa3rating, the corporation succeeded inmaintaining this rating for seven consecutiveyears – a period during which the globalfinancial crisis battered leading firms ininternational credit and political riskinsurance.
In 2010, ICIEC inaugurated its firstrepresentative office in Dubai at theInternational Financial Centre (DIFC), with theobjective of being a fully-fledged provider ofICEIC’s Shariah-complaint export credit andpolitical risk insurance products to banks andcorporates operating in Dubai andneighbouring countries. The opening of thisoffice comes at a time when the activities ofthe corporation have been experiencingsustained growth, surpassing the estimates ofits previous five-year plan (2004-2009), inaddition to the growing demand for itsservices, particularly from GCC investorsinterested in investing in Africa and othermember countries.
ICIEC has succeeded in building thecritical core operating functions of a credit
and political risk insurance institutioncapable of sustaining its business in themarket, and in providing impactful servicesto its MCs and eligible clients all over the world.
Over a 20 year period ICIEC has been trueto its vision and mission as a world classmultilateral insurer, playing a major role in thefacilitation of trade and investments formember countries and a preferred partnerfor companies seeking access to newmarkets. It has been able to supportthousands of exporters venturing into newmarkets. It has also worked with individualand corporate investors as well as financiersof projects in member countries. In total,ICIEC has facilitated over $22 billion in tradetransactions and $4.3 billion in foreign directinvestments in member countries.
With the introduction of new and innovativeproducts like the Non-Honoring of SovereignFinancial Obligations (which is alreadypopular) and the Sukuk Insurance Policy,ICIEC’s client base is growing at a rapid pace.
In the next 20 years, ICIEC will beinternationally recognised as the strategicpartner of choice in facilitating tradetransactions, project finance and investmentsfor its member countries. ICIEC will continueto maintain its unique feature as the onlymultilateral insurer that provides Shariahcompliant insurance and reinsuranceproducts; and if similar institutions appear inthe industry landscape, ICIEC will certainly bethe leading one in the field of Shariah-compliant export credit and investmentinsurance, and its role in industry associationswill be further strengthened.
ICIEC’s current and potential customerscan always reach the corporation at theheadquarters in Jeddah, or at representativesin Dubai and Dakar. Alternatively, the ICIECteam are happy to serve you at your locationvia electronic mail or telephone. ■
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Contact us:
JeddahYasser Alaki: [email protected]. +96612-6467597Cell +966504664484Jamel eddine [email protected]. +96612-6467608Cell +966504664484
Dubai OfficeOwais [email protected]. +971-43779408Cell +971-567288091
Dakar OfficeMoustapha [email protected]. +221-338891144 Ext. 5131Cell +221 77 637 9814Website: www.iciec.com
Within the Middle East North Africa (MENA)region, it was only on the back of theinternational financial crisis in 2008 that astrong awareness was created for tradecredit insurance as a protection againstcompanies' failure to pay. Adding to thefinancial instability and the lack of liquidity inthe markets, the ‘Arab Spring’ has alsobrought another surge in demand for creditrisk protection, including political risks.
It is a fact that most of the Arab States’regimes do not have the status of fully-fledged democracies. This leaves a fertileground for protests and numerousconsecutive historic events that had adomino effect on the region.
Historically, trade credit insurancepenetration has been good in Europe andAsia but it is still under-developed in theMiddle East and the Levant regions(estimated at less than 5% of the insurablemarket, according to LCI).
For many years, countries such as Iraq,Libya, Sudan, Syria and Yemen have beendeemed to be off-cover for commercial risksdue to local situations and/or internationalsanctions from most of the majorinternational short-term credit insurance andreinsurance markets. However, with regard tomedium-term political risks and investmentrisks, these markets were mainly fallingwithin the scope of the national ormultilateral agencies that had vestedinterests or mandatory requirements toinsure risks in these countries.
At the same time,countries such asEgypt, Lebanon andJordan used to beperceived as beingless risky but with ahistory of economicor political problems.The majorinternational short-term credit insurance
and reinsurance markets were covering risksbut on a selective and highly conditionalbasis with relatively high risk premiums. It isagainst this type of background that buyersand sellers have had to maneuver with verylittle visibility and therefore limited scope forexpansion.
With these tough insurance conditionsaffecting the availability of trade creditinsurance and, considering that most of thetrade flows are within the region, localcompanies generally adopted creditmanagement systems that requiredpayments to be secured with moretraditional banking instruments such asletters of credit, postdated cheques andpromissory notes.
Tapping local marketsWithin the Middle East, two multilateralagencies were set up by governments topromote inter-regional trade and investment.Dhaman (1974) and the Islamic Corporationfor the Insurance of Investment and Export
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Trade credit insurance in theMENA regionKarim Nasrallah, managing director, LCI
Karim Nasrallah
The ECAs along with local private insurers and regionalmultilaterals have shown strong appetite for theregional risks because they are ultimately closer tothose risks and have a better understanding of thelanguage and culture in the MENA region.
Credit (ICIEC, 1994) were originallyestablished to cover exports respectivelybetween Arab country members andbetween Islamic country members. Todayhowever, their scope has widened to covernot only exports to non-member countriesbut, also some types of domestictransactions.
It is only recently that companies startedto realise that there were local and regionalprivate insurers and export credit agencies(ECAS) offering the services that catered forthese companies' needs – ie. open accountcredit terms.
During the surge of the Gulf economies inthe 1990s and early 2000s, three dominatingEuropean/international private credit insurers(Euler Hermes, Atradius and Coface)established offices in Dubai to service theregion. The Lebanese Credit Insurer (LCI)was also established in Lebanon in 2001 asthe only local and regional specialised privatetrade credit insurance company.
Furthermore, governmental export creditagencies (ECAs) were created and are activein countries such as Dubai, Egypt, Jordan,Oman, Qatar, Saudi Arabia and Sudan. Theywere established with a specific mission ofsupporting their national exporters but, inmany cases, this mission has also beenextended to include elements of domestictrade as well.
The ECAs along with local private insurersand regional multilaterals have shown strongappetite for the regional risks because theyare ultimately closer to those risks and havea better understanding of the language andthe culture in the MENA region. lt is for thesemajor reasons that these insurers havesucceeded where the major internationalcredit insurers have failed to gain significantmarket penetration in any of the MENAcountries.
Liquidity has become very scarce inmarkets such as Egypt and Jordan, causingdelays in payments and increasing requestsfor rescheduling of invoices and/orpromissory notes due. The usage of invoicediscounting (with credit insured invoices) ison the increase as an alternative means offinancing to traditional trade financeproducts. Factoring was hardly known in theMiddle East just a few years back but is nowwidely accepted, yet not widely offered.
Instability is not the only obstacle to thegrowth of new trade finance and protectiontools. The lack of transparency and thevirtual non-existence of financial information
on companies have dissuaded manyinternational institutions from taking orcovering credit risks. Market knowledge andproximity are therefore the name of thegame, and interesting rating models basedon non-financial criteria have beendeveloped in the area allowing risk coveragein a relatively accurate manner with a proventrack record.
There is a strong potential of developmentfor local banks and other providers of tradefinance services in the MENA region as thelegal environment is relatively acceptableand some markets remain untapped.
From a credit insurance perspective, tradecredit insurers, whether international or local,heavily rely on international reinsurers(mainly European but also operating in theUS). These reinsurers are in turn underpressure from western governments andfrom a regulatory perspective to reduce andeven stop coverage on certain markets. Asthe regional instability seems to still be in a‘work in progress’ mode, the coming futurewill be very interesting to watch anduncertainty will almost certainly still prevail.
The situation today is similar to whathappened in the early nineties where we sawthe collapse of the old systems in EasternEurope. Many countries have completelychanged, some others have been broken upinto smaller countries and some had veryminor problems.
With a history repeating itself scenario,the longer term will maybe bring prosperityin a region where non-oil trade is growingsteadily. ■
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Market knowledge andproximity are thereforethe name of the game, andinteresting rating modelsbased on non-financialcriteria have beendeveloped in the areaallowing risk coverage in a relatively accuratemanner with a proventrack record.
Africa 80 years ago was a much differentplace. In fact, when the Berne Union waslaunched, Africa was largely under colonialrule. A few decades later, with independencefirmly seized, most struggled to controlsevere poverty rates and warring factions. Aninstitution such as the African TradeInsurance Agency (ATI) was not even on theradar of African governments.
Today, the picture has transformed from adespairing continent to one that is hopeful. Inshort, Africa is now booming. This is a factthat is both visible – by the numerous cranesdotting the landscapes in most urban cities –and tangible, through regional growth ratesthat the IMF estimates will reach 6% this yearup from 5% in 2013, making it the secondfastest growing economy in the world, behindonly developing Asia.
The Economist notes that over the past 10years real income has increased by more than30%, in contrast to the previous 20 yearswhen it shrank by 10%. The rate of foreigndirect investment (FDI) inflows rounds outthe picture, jumping from $15 billion in 2002to $37 billion in 2006 and $46 billion in 2012(compared to a similar level in 2013).
These figures reflect a dividend of peacethat countries are embracing. This isevidenced by the rapid growth of democracy.When compared to the end of the Cold Warwhen only three African countries (out of 53at that time) had democracies – to thepresent, that number has risen to about 25,with 22 countries holding peaceful electionsin 2012.
Abundant opportunities within AfricaAgainst the backdrop of this incrediblegrowth story, there are some noteworthytrends that could serve as a guide to insurersinterested in taking advantage of theabundant opportunities within Africa.
To truly tell the story of African growth,
small scaleenterprises (SMEs)must necessarily be atthe heart. Theyrepresent thelifeblood of mostAfrican economiescontributing upwardsof 60% – 70% of theGDP in manycountries. Addressing
their challenges then becomes a key driverbehind unlocking business potential on thecontinent.
Banks serve as a complementary chapterin the SME story. In a 2012 McKinsey reporton Banking Practice of Micro-, Small andMedium-Sized Enterprises (MSMEs) inEmerging Markets, it notes that 60% of global banking revenue in the next decadewill come from emerging markets,representing a $350 billion opportunity.Current estimates put the SME funding gapat $80 billion across Africa, representing anatural opportunity for banks.
Local banks and international banks withlocal presence have responded with someinnovative options to tap into this under-served market. Tackling the issue of risk hasbeen a key component that many bankscould not absorb themselves. Most smallscale enterprises on the continent lackfinancial know-how.
Insurance plays a big role in this loop but itis often seen by the SME sector as an addedcost that they simply cannot shoulder.
The lending process for most SMEs isonerous with collateral requirements thatrestricts their cash flow and impedes theirbusiness cycle. As an African insurer, ATI hasa unique vantage point. We understand thechallenges and, in this instance, we were ableto help. We see education as an importantaspect of our work. In this case we work
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Africa rising: a look at theopportunities for business growthon the booming continent in thenext 80 yearsBy George Otieno, chief executive officer, the African Trade Insurance Agency
George Otieno
closely with associations and other platformsto educate companies about the value oftrade credit insurance.
While we continue to reach out toindividual companies, we felt we could havemore impact by partnering with banks, whichhad the ability to reach across whole sectors.This approach provided the impetus behindthe creation of a product that may very wellbe the first in the world. Banks and insurancecompanies are not likely bed fellows in mostdeveloped regions but in our African context,the partnership is proving to be a good fit.
To help banks overcome the risk hurdle, wewere able to structure a product that cancover their credit risk on a portfolio basis. Asa result, banks now represent well over 50%of our client base. Similarly, for internationalinsurers, this segment could potentiallyprovide an entry point into African markets.The demand is definitely there.
Investors overcome the challengesPerhaps because of its many challenges,Africa has proven itself to be one of the mostinnovative continents in the world. Nearly adecade ago, the telecommunications industryblurred the lines between it and the bankingsector. At that time, when banks wereignoring the millions of unbanked consumersat the bottom of the pyramid, Kenya’s mobileoperator, Safaricom, created a mobilebanking system that has been globallypraised for its innovation and replicated since.
Today, mobile phone subscriptions areestimated to have risen to 475 million from90 million in sub-Saharan Africa within sevenyears. The sharp rise in mobile phone useacross Africa has put a strain on operators tocreate reliable networks that span vast areas.This challenge, like so many others on thecontinent, has provided an opportunity.Companies like Goldman Sachs have enteredthe booming mobile phone marketcontributing to a $500 million capital raisingby a Nigerian company, which is thecontinent’s largest mobile infrastructurecompany.
As in the banking sector, insurancecapacity will be key to thetelecommunications sector’s continuedgrowth. In East and Southern Africa, ATI hasbeen supporting a Japanesetelecommunications equipment supplier tobring their goods to the continent. On one ofthese transactions, we partnered withBelgium’s Ducroire in a bid to help theindustry in its aggressive expansion plans.
With 20 million customers divided amongseven mobile operators, analysts estimatethat there are an additional 400 millionpotential customers, which clearly representsan untapped opportunity for many, includinginsurers.
The year 2011 marked a milestone for thecontinent. This is the year where expertsclaimed Africa reached the one billionpopulation mark, proving that size matters.While under half of African countries have yetto reach the middle income level (defined bythe World Bank as an income of at least$1,000 per person per year), by 2025 thebank anticipates that most African countrieswill have reached this level. In this context,age also matters, and with the youngestpopulation of any region in the world, and arapidly growing middle class, Africa is seen asa desirable destination for many products.
This factor is not lost on globalmanufacturers. With infrastructuredevelopment high on the agenda of mostgovernments and a financing gap of $90billion annually needed to modernise thecontinent’s roads and utilities, there is greatdemand for building products. The world’slargest steel manufacturer, which is one ofATI’s clients, spotted this demand and theyare now making inroads into a sizeable regionin Africa. The company, like many, startedcautiously by entering one market and oncethey established a reliable network ofpartners and had a firm grasp of theenvironment, they were able to branch outwithin two years to multiple countries.
Some of the world’s most recognisedbrands are choosing to establishmanufacturing bases in Africa. H&M, amultinational Swedish retail-clothing firm, isalready sourcing material from Ethiopia witha factory expected to soon follow there andin Kenya. While General Electric, theAmerican conglomerate, is building a $250million plant in Nigeria to make electricalequipment.
Manufacturers are not the onlyinternational companies to join the wave.Contractors delivering services such as roadand water engineers to suppliers of medicalequipment are also tapping into the availableopportunities.
This is another notable trend we havedetected. And once on the ground, thesecompanies often require some form of tradecredit insurance, and in some instances, acombination of political risk insurance. Thechallenge they tend to face is accessing cover
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at affordable rates when their national exportcredit agency (ECA) may not be able toprovide cover due to the political or uncertainbusiness climate.
We have been able to provide support tosome of these international firms. In theseinstances, our network of internationalinsurance partners coupled with our S&P‘A/Stable’ rating has helped to strengthen thelevel of trust that these clients have in us.Here we have been able to partner to bringgoods and services into our markets withinternational insurers such as the Italian-based ECA, SACE. This segment representsanother avenue of opportunity forinternational insurers whether individually orin partnership with other insurancecompanies, such as ATI.
The growing internal marketAs the world begins to seek out opportunitieson the continent at unprecedented rates andthe traditional trading partners in the Westtackle their own economic challenges, Africais itself beginning to turn inward. Thecontinent is beginning to make more of itsown goods and to sell to itself.
Regional integration has increased throughinitiatives from some key trading blocsincluding the East African Community (EAC),the Common Market of East and SouthernAfrica (COMESA), the Southern AfricanDevelopment Community (SADC) and theEconomic Community of Western AfricanStates (ECOWAS). Initiatives from these blocshave seen a drastic improvement to the flowof people and goods that includes tariff andquota-free trade. One of the most ambitiousinitiatives is the Cape-to-Cairo free tradezone, also known as the Tripartite Free TradeArea, encompassing 26 countries, 525 millionpeople and $1 trillion in output.
These new regulations are already yieldingresults. With the reduction of non-tariffbarriers and the introduction of one-stopborder posts in the East African region,goods are flowing more rapidly at reducedcosts and trade among these countriesincreased by 22% in 2012 growing from $4.5billion in 2011 to 5.5 billion in 2012.
While Africa on the whole has a long wayto go – intra-African trade makes up less than10% of the continent’s total commerce –governments are showing the political willnecessary to tear down the barriers tospurring regional trade and to attractingforeign companies. Here too capacity willprove a challenge to local insurers as they
scramble to keep pace with demand forproducts that are relatively new in Africanmarkets such as trade credit and political riskinsurance.
Africa is also looking inward to findsolutions to finance their infrastructurepriorities, which includes expanding andmodernising energy infrastructure. To raisefunds for these critical needs, the continentas a whole issued a record $10 billion in USdollar-denominated sovereign bonds in 2013,up from $1 billion a decade earlier.
In the energy sector, where the demandfor reliable energy sources by most countrieshas been given renewed urgency, ATI islending support through a recently formedpartnership with the European InvestmentBank that is expected to lead to the creationof an Africa-based entity that will issueguarantees to investors in the renewableenergy sector.
On the insurance front, we have alsosupported many energy sector transactionswith partners such as Norway’s GIEK, wherewe have been able to add 400MW ofelectricity to Tanzania’s national grid. Andwith the Saudi-based ICIEC, where togetherwe covered a rural electrification projectexpanding electricity to six districts inRwanda.
Energy will no doubt remain an importantsector and a source of opportunity forcompanies willing to take up the challenge.Currently close to 600 million people out of atotal population of 1 billion do not haveaccess to electricity in Africa. In an attemptto strengthen their economies and to protecttheir citizens against the harmful effects ofcarcinogenic energy options such askerosene and charcoal, African governmentsare stepping up to the plate with urgency totackle this issue.
Within insurance, we have partnered onmultiple transactions with insurers, where wehave added over half a billion dollars to theinsurance capacity in our member countriesproducing tangible results across manysectors. These partnerships are primeexamples of ATI’s raison d’être. We exist, inpart, to facilitate the entry of such capacity –both financial and insurance, into our Africanmember countries.
While ATI may have been around for only asmall part of the first 80 years of the BerneUnion’s existence, we look forward to forgingnew partnerships in a booming Africa withBerne Union its members and other cohorts,well into the next 80. ■
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The role of international trade and its impacton the global economy has been revisitedanew since the global economic crisis. Thisarticle examines the impact of internationaltrade in recent years and the specific rolethat export credit agencies (ECAs) haveplayed. Within this, it looks at theresponsibilities banks have, as well as the roleall stakeholders have in identifying andmitigating risks. Finally, it considers thespecific Indian environment, as well asexamining the rest of the world more broadly.
BackgroundInternational trade is believed to be thesaviour for the world at large in the aftermathof the financial crisis. Trade has the potentialto unify or harmonise the differences ofvarious nations. The positive impact of worldtrade can be facilitated and augmented byfinancing. In fact it will not be out of place toassume that as much as 90% of total tradetransactions involve a form of credit,insurance or guarantee. Businesses thatoperate internationally rely heavily on banksas transaction processors and lenders. Thelending risks can be mitigated by designingan export credit insurance programme whichnormally insures trade receivables.
All countries which have succeeded inexporting in recent times invariably have hada significant contribution from their exportcredit agencies (ECA). ECAs are moderatewhen compared to commercial banks whoextend export credit on short-term businesswith market determined interest rates, andthey are not as liberal as multilateralinstitutions who extend long-term creditsthrough grants or on low rates.
Typically, an ECA is a kind of hybridinstitution that has a promotional role whileremaining a profitable entity, albeitmarginally. An ECA may insure an exporter ora banker or even guarantee the bank that isextending the loan to the exporter. Variousfacilities that may be extended as a means ofsupport to banks are – pre-shipmentguarantees, post-shipment insurance, coverto bridge cash flow deficit, cover for buyers’credit and for lines of credit.
All ECAs inbusiness in the lastfifty years have seenmany good and badtimes. Their primeobjective continues tobe to take risk awayfrom exporters andbankers, as wasevident when thelatter became risk
averse after the financial crisis. ECAs alsohave to play a counter cyclical role especiallyin recovery stage, post a slowdown of aneconomy.
The role of the banksExporters procure raw materials and otherinputs, manufacture and then export. Thosedealing on open account terms with theimporters have to struggle for workingcapital with their liquidity getting entwinedwith the related outstanding receivables. Thegap between expenses incurred and therealisation of payments needs to be bridgedby short-term credit by banks. They may bein the form of pre-export financing,receivables financing or trade loans.
Similarly, cash flow deficit arises whenthere is an increased procurement of bulkmaterials and capital purchases for a projectwhile payments are being received from theproject authority only on certified work donepartially and the rest getting deferred. Thedeficit between estimated expendituresagainst revenues also needs to be financed bybanks. Securities commonly obtained in theabove instances are a charge on the currentassets, i.e. receivables and on the stock whichwill be goods and materials in case of pre-export financing. The credit insurance covercan be invoked to get the compensationmuch before any of the securities, includingthe collateral which can be encashed thusmaking the cover very handy.
Banks will have to ensure that their creditinsurance is tailored for covering theirfinancing facilities which can be complicated,extended across borders involving severalrisks like country, credit, legal and the like.
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Export credit agencies and banks By Geetha Muralidhar, executive director, ECGC
Geetha Muralidhar
Risk mitigationOut of the three pillars of Basel II, ie. creditrisk, operational risk and market risk, focus oncredit risk has become significant followingthe 2008 crisis and so are the ways ofmitigating them with products like creditinsurance cover. Credit risk relates to thepossibility that loans will not be repaid ordelays are experienced in repayments.
Credit risk is the kind of low probabilityand high impact risk, and banks’ pricing maynot be supportive of the level of risks as it ismainly driven by funding costs. This couldalso be because of a lack of adequate dataregarding their own lending experience indefaults and recoveries when it comes tointernational business.
Management of risk involves quantifying,monitoring, controlling, etc. Banks normallydo not have the time and resources to studyand review potential issues like delays,defaults and disputes. Balance sheet andprofit & loss statements can be inadequateand many a time profit results may not revealthe weakness in business. Credit insurancepractitioners will also peruse the cash flowstatement to determine the likelihood ofdebtors honouring future obligations. It isadvisable to offload the credit risk to theentity which is most capable to handle it, andthat will be the credit insurer. This will ensuresteering away from balance sheet riskanalysis to transaction-based, real-time riskassessment.
ECAs provide the assurances that localand multinational banks need. They are thekey to unlocking capital for large risk inherentprojects. The role of ECAs in the small andmedium-sized enterprise (SME) sector hasalso become more vital, as the banks alwayschase high profile corporates rather thanSMEs who are unable to provide adequatecollateral. ECA cover should be simple tooperate in this sector in order to providesustainable SME financing. Thus creditinsurers and banks complement each other insupporting exports, as banks transfer the riskof trade debt in a commercial creditextended to their exporter customers.
Indian scenario It is pertinent to observe that the partnershipbetween banks and ECA date back to the1960s in India. In Western countries thisdevelopment was initiated and intensifiedpost the global financial crisis as banksstarted contracting their balance sheets inorder to comply with prudential norms byholding back on credits including exportcredits. Export Credit Guarantee Corporationof India Limited (ECGC) has been a pioneer inoperating the export credit insurance forbanks for covering exporters’ default in thecontext of pre-shipment or pre-exportfinancing, and for post shipment financingwhich includes receivables purchase ordiscount with recourse to the exportercustomer. Pre-shipment credits are disbursedagainst stocks and post shipment creditsagainst bills (receivables) as the commonsecurities for the facilities extended to theexporters.
A seamless cover for the whole cycle – ie,pre-sales onwards up to post sales realisation,is offered to the banking system in India. Thecover could be issued on a whole turnoverbasis for the full portfolio or for individualaccounts. Surety cover insurance is availableto banks which issue various types ofguarantees for advance payment,performance, retention etc, to beneficiarieson behalf of exporter clients. Cover for cashflow deficit financing and overseas lendingare also made available to the financingbanks by ECGC while supporting mediumand long-term project exports.
ECGC insures almost 65% of the exportcredit disbursed in the country as all thegovernment-owned banks and many privatesector banks insure their complete exportcredit portfolio on a whole turnover basis.Not only has this vertical been an old,established and time-tested one, but also themajor contributor to the premium income ofthe organisation.
Rest of the world There are different national frameworks forexport credit financing. Various governmentsarrange to provide through their respectiveECAs, either guarantees or insurance (orboth) to ensure that their exporters obtainthe necessary finance to compete with theircounterparts from other countries. Some ofthem are: Euler Hermes cover for exportloans refinanced by KfW, SACE’s financialguarantees for funding to banks or for directfunding to borrowers, Coface’s refinancing
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The role played by ECAs since the 2008global financial crisis in buildingstronger partnerships with banks invarious ways is commendable.
guarantees or securitisation guaranteeswhich are callable on first demand, andAtradius’s export credit guarantee scheme.
Agencies like MEXIM, Ducroire, EGAP andEKF operate cover to banks in the form ofinsurance. Some others like NEXI, K-sure andSinosure offer both insurance and guaranteesand sometimes perhaps a combination ofboth. Post 2008, similar arrangements forexports on a short-term basis have also beenput in place.
Banks with liquidity issues arrange for arefinancing guarantee from an investor oreven the central bank of the country as in thecase of USA, based on the insurance coverextended by the ECA to cover the non-payment of the debtors to the bank. Asregards repo eligibility for pure ECA cover, USEx-Im’s cover can even be discounted withthe Federal Reserve. Coface also offersexport credit insurance to the lending bankswhich will be the pre-requisite for anunconditional guarantee to an investor on100% of the refinancing contract up to theamount of the loan.
The condition of indemnification isaddressed by transferring the rights to claimcompensation under the insurance to thebenefit of the refinancing institution. SMEsguaranteed by Coface will be supportedeither through supplier credit or throughbuyer credit by the banks. In Germany, bankscan sell ECA-covered loans to KfW and KfWbenefits out of the securitisation guaranteefor refinancing.
In one of the surveys conducted by theBerne Union, it was noted that more than 25ECAs were covering trade financeinstruments wherein the insured was thebank itself. It is particularly observed that thecover of ECAs has been aptly tailored to suitthe specific needs of banks in each country.Based on the comfort drawn from this cover,banks are exhorted to liberally support theexporters in respective countries.
Other issuesSome of the queries and apprehensionsamong the various industry players are asfollows:– Can credit insurance, being a risk mitigator,
help banks to get capital relief?– Can the ECA’s insurance policy be viewed
as an unconditional on demand guarantee?– Can the ECA cover be considered as a
state institution’s security?– Can loans with pure ECA cover be made
eligible as a buffer in the context ofliquidity cover ratio?ECA business is generally not classified as
a distinct asset class. Hence, all the aboveissues are constantly being debated andpursued by the industry with the regulatorsand supervising authorities. In fact, it isargued that ECA-covered loans must bebestowed with considerable relief in capitalprovisioning to pave the road to recovery ofthe world economy. If credit conversionfactor (CCF) changes from 100% to say 20%for export loans, five times more export creditcan be extended to enable consequentexpansion of business.
The downside to all these initiatives couldbe a potential for misuse of ECAs in thevolatile economies of today. This could festerwith weak institutional, regulatory orsupervisory structures in a country. In thecase of India, it is pertinent to note that ECGCcomes under the ambit of the insuranceregulator and is subject to all complianceswithout any exception.
ConclusionThe role played by ECAs since the 2008global financial crisis in building strongerpartnerships with banks in various ways iscommendable. Both institutions complementeach other in supporting international tradeand in exports of large infrastructure projects.It is of concern to note that sharp declines intrade credit have an adverse consequencedisrupting a country’s trade and growth,exacerbating a crisis. Scarcity of trade creditmay frustrate the potential stimulus to acountry’s exports.
To a specific question in a forum ofexporters recently as to whether there is arole for banks in export finance any longer,almost 80% of the audience voted in favourof banks. So, the industry remains a banking business and will continue to be sowith ECA support as there is a natural fitbetween banks and ECAs in a symbioticrelationship. ■
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Credit insurers and banks complement eachother in supportingexports, as banks transferthe risk of trade debt in a commercial creditextended to their exportercustomers.
Since the establishment of the Berne Union in1934 – with the aim of facilitating cross-border trade, by establishing common exportcredit principles – the role of export creditagencies (ECAs) has made a distinct shift.Indeed, no longer just a means of supportingexports to developing ‘riskier’ markets, exportcredit is now being used, within OECDmarkets, as a corporate financing tool.
ECAs in their primary function ofsupporting trade by taking on risk andpayment uncertainty, in return for a premium– have long-been considered a vitalcomponent of export flows into developingmarkets, in light of such markets’ inherentrisk. But the nature of their role is nowchanging – with ECA cover now being usedby a sizable and increasing number of OECD-based borrowers.
Indeed, export credit is now viewed notjust as a trade-facilitator, but as an importantaddition in corporate treasurers’ armoury offinancing tools. To understand the changes athand – and what they mean for ECAs, banksand borrowers alike – we must first look at theorigins of this trend; which can be found, aswith so many recent market developments, inthe global financial crisis of 2008.
The severity, scale and impact of thefinancial crisis have been well-documented,and it is no exaggeration to call it a ‘game-changer’. And in its wake, OECD-basedcorporates seeking financing – those lookingto export to other, previously ‘risk-free’,OECD countries – have been affected by twoclear factors. First, a substantial reduction inappetite from the private bank market; andsecond, a sharp rise in the volatility of thedebt capital market – impacting its reliability.These two elements have created a marketgap, which ECA financing – both reliable andavailable over longer time periods – has beenbrought in to fill.
This is not to say there were not occasionalinstances before the crisis of OECDborrowers using ECA facilities. Certainly, noreason existed to prevent OECD use ofexport credit as a financing tool. But suchoccurrences were rare, and nothing like thescale of the trend now – a trend sparked
purely by the changesin the financialenvironment, andcatalysed by the factthat ECAs are all themore important asOECD countriesacross the globe seekto ramp up exports todrive their economiesout of recession.
Export finance is here to stayThat said, the reasons that sparked this trendare not the same as the reasons it can nowbe viewed as a more permanent feature ofthe landscape. Indeed, market conditionshave improved, yet export credit remains ofinterest – even increasingly so – to OECD-based borrowers. Why?
The most immediate answer can be foundin the evolving regulatory environment – inparticular, the Basel III accord and its impacton the size of banks’ balance sheets, and thenature of their activities. As balance-sheetshave been squeezed to accommodate BaselIII’s capital requirements, this has lead toother forms of bank liquidity drying up –inducing borrowers who are looking to raisefinance to turn to their trade flows instead.Furthermore, as banks assess the viabilityand prioritisation of various business lines inlight of the new regulatory environment, it istrade finance that has emerged as key.
Indeed, many banks are determined toremain active in the trade finance spacebecause it is based on the ‘real economy’(thereby creating social and economic value),is a better asset class in terms of risk allocation,and – with ECA-supported lending in particular– is a very efficient use of capital and risk-weighted assets. So while the crisis temporarilyaffected banks’ appetite, bringing ECAs intothe spotlight, it is the permanent effects ofBasel III that mean ECAs will continue to beviewed as an important alternative source oflong-term credit support and funding.
Secondly, in the wake of the crisis, it hasbecome starkly apparent that emergingeconomies are not the only markets to incur
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Export credit for OECD-basedborrowers: a new era for ECAsSimon Sayer, head of structured trade and export finance, EMEA, DeutscheBank, examines a trend that is here to stay
Simon Sayer
risk. Developed markets – previously perceivedas safe havens, offering assured payment – areby no means immune. And while the financialenvironment has now improved, it is unlikelythe market will return to viewing OECDmarkets as effectively “risk-free”.
Finally, corporate treasurers arequestioning their funding strategies – seekinggreater diversification of funding sources toensure access to reliable and sustainablefinancing in times of calm and crisis alike.
Changes and challengesFor both ECAs and banks, the emergence –and persistence – of this OECD trend hasnecessitated a change in mindset. For ECAs –more used to offering their support tocorporates who might otherwise struggle toexport – the increasing demand for exportcredit from OECD-based borrowers forfinancing purposes has been a significantshift from their core purpose, and perhapsthe original thinking of the Berne Union. Thatsaid, ECAs recognise their duty to help keepthe wheels of trade turning, in whatever formthat may take; so any initial reluctance tomeet the growing demand from wealthierOECD-based borrowers – those corporatesthat demonstrably have other fundingoptions – has since faded.
Banks have also had to adapt – inparticular, with regard to how ECA finance ismarketed to clients. For example, at DeutscheBank, we now include the product as part ofour wider offering to investment-gradeOECD-based clients. Such changes bring aneducative aspect; relationship managers mustbe well-versed in the use and nuances of ECAfinancing for corporates. And, more widely,the established mindset that such productsare only suitable for emerging markets mustbe addressed.
Last, but by no means least, technicalchallenges regarding pricing have yet to beovercome. Under the terms of the OECD‘gentlemen’s agreement’ – an informal butwell-respected consensus – countries areseparated into eight distinct risk categories,with OECD economies deemed to be‘category 0’. In this category – andcomprising the key concern, as ECAs becomemore involved in intra-OECD trade – ECAsmust not undercut the commercial market.This means that ECA finance pricing –combining fees, risk margins and premiums –cannot undercut the rate at which theborrower could secure financing in thecommercial market.
This immediately raises issues oftransparency around the entirety of thepricing process – in particular, how toestimate the price at which corporates couldraise funds elsewhere. A number of factorscan provide guidance in this respect – frombond issuance to the price of revolving creditfacilities and credit default swaps – but theprocess remains far from transparent.
Compounding this issue is the challenge ofmaintaining the agreed ‘level playing field’even as it comes under stress – and isdistorted by – the export drives of OECDgovernments. With so many key economieslooking to export their way out of recession –the USA in particular pushing throughambitious export plans – the ability tocollectively uphold the intentions of the inter-government ‘gentlemen’s agreement’ isharder than ever.
A promising futureWhile question marks remain, there is nodoubt that the use of export credit as afinancing tool for OECD-based corporates isset not only to stay, but to grow. Forborrowers, ECA finance is reliable, stable andsuitable for longer-dated lending, and hasproven its worth during the global financialcrisis, when numerous other sources ofliquidity dried up.
So demand will certainly be sustained. Andwhile some banks, in the wake of the globalfinancial crisis, have had to pull back fromdeveloping and developed markets alike,others that are well-positioned to supportthis trend – that is, with the global footprintnecessary to assist at both ends of intra-OECD trade – will be able to realise thegreater opportunities it brings.
For Deutsche Bank, for example,connecting clients across OECD markets onboth sides of an export finance contract is aperfect use of resources, as it meets two setsof client objectives in one trade; somethingwe’ve been able to achieve with increasedregularity post-crisis, and which has madethe tools of the export financier even morerelevant to the corporate treasurer.
Although the original founders of theBerne Union may be surprised to see thescale of ECA participation within developed(rather than emerging) markets today – andthe use of ECA finance as a corporatetreasurer tool – this development is ultimatelypositive, and undoubtedly supports theUnion’s original intention of keeping thewheels of trade turning.■
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Berne Union 2014
Berne Union 2014
4Directory
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ContentsAIG USA 103ASEI Indonesia 103ASHRA Israel 104ATI ✦ Multilateral 104ATRADIUS Netherlands 105CESCE Spain 105COFACE France 106COSEC Portugal 106CREDENDO GROUP Belgium 107ECGC India 107ECIC SA ✦ South Africa 108ECICS Singapore 108EDC Canada 109EFIC Australia 109EGAP ✦ Czech Republic 110EH GERMANY (State) Germany 110EH GERMANY (Private) Germany 111EKF Denmark 111EKN Sweden 112EXIM HUNGARY ✦ Hungary 112EXIM J Jamaica 113EXIMBANKA SR ✦ Slovak Republic 113FCIA USA 114FINNVERA Finland 114GIEK Norway 115HISCOX Bermuda 115HKEC Hong Kong 116ICIEC ✦ Multilateral 116KSURE Korea 117KUKE ✦ Poland 117MEXIM Malaysia 118MIGA Multilateral 118NEXI Japan 119ODL Luxembourg 119OeKB Austria 120OPIC USA 120PwC Germany 121SACE Italy 121SBCE Brazil 122SERV Switzerland 122SID ✦ Slovenia 123SINOSURE China 123SLECIC Sri Lanka 124SOVEREIGN RISK Bermuda 124TEBC Chinese Taipei 125THAI EXIMBANK ✦ Thailand 125TURK EXIM Turkey 126UK EXPORT FINANCE UK 126US EXIMBANK USA 127ZURICH USA 127
✦ Members of The Prague Club
Members of the Prague ClubAOFI Serbia 128BAEZ Bulgaria 128BECI Botswana 129DHAMAN Multilateral 129ECGA O Oman 130ECGE E Egypt 130ECIE United Arab Emirates 131ECIO Greece 131EGFI Iran 132EIAA Armenia 132EXIAR Russia 133EXIM R Romania 133EXIMGARANT Belarus 134HBOR Croatia 134IGA Bosnia and Herzegovina 135JLGC Jordan 135KAZEXPORTGARANT Kazakhstan 136KREDEX Estonia 136LCI Lebanon 137LGA Latvia 137MBDP Macedonia 138NAIFE Sudan 138NZECO New Zealand 139SEP Saudi Arabia 139TASDEER Qatar 140UKREXIMBANK Ukraine 140UZBEKINVEST Uzbekistan 141
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AIG has underwritten political risk insurance since 1978 and tradecredit insurance since 1982. AIG issuing companies are rated A+.
General informationAIG75 Water StNew York, NY 10038United States+1 212 770 7000www.aig.com
HistoryFounded: 1978Ownership: American International Group
Senior managementJohn Hegeman, Senior [email protected]
Edward Brittenham, Senior Vice-President
Neil Ross, Senior [email protected]
Ray Antes, [email protected]
Harry Palumbo, [email protected]
Paul Kunzer, Vice-President
Carolyne Spackman, Vice- President
William Clark, [email protected]
Contact person(s)Carolyne Spackman, [email protected]
Major facilities✓ Trade credit insurance: Coverage against non-payment of
short-term trade receivables, both export and domestic.Tailored policies are available to meet the needs of largecorporation, middle-market firms, and banks.
✓ Investment insurance: Confiscation, expropriation,nationalisation, currency inconvertibility and political violencefor both equity investors and financial institutions.
✓ Political risk insurance: Contract frustration, wrongful calling ofguarantees and a wide range of customised covers forimporters and exporters.
AIGGlobal Trade & Political Risk Insurance
USA
ASEI is a state-owned company, established in November 1985 withthe main purposes to promote national non-oil and gas export, toprotect Indonesian exporters against political and commercial risksrelevant to international trade, and to facilitate trade from andwithin Indonesia which would help the development and growth ofthe nation’s economy.
To support the demands of the Indonesian market, ASEI providesvarious types of insurance products which include export anddomestic credit insurance, counter bank credit guarantees, importinsurance to Indonesian exporters/importers, domestic sellers/buyers and banks. ASEI is also deeply involved in the bondingsector as it is licensed to issue advance payment bonds, bid bonds,performance bonds, maintenance bonds and custom bonds. Theservice of network of ASEI comprises 19 branches and 6 marketingoffices established in all of the major industrial cities acrossIndonesia.
General informationASEIMenara Kadin Indonesia Building 21st and 22nd floor Jln H. R. Rasuna Said Blok X-5 Kav. 2-3Jakarta, 12950Indonesia+62 21 5790 [email protected]@asei.co.id
HistoryFounded: 1985Ownership: 100% state-owned
Senior managementZaafril Razief Amir, CEO/President Director, [email protected]
Marthin F. Simarmata, Finance Director
Indra Noor, Operations Director
Contact person(s)Miguel Kosasih, Reinsurance, Claims and Recovery Manager,Export Credit Insurance Division, [email protected]
Febrida Dwi Putriani, Marketing Manager, Export Credit InsuranceDivision, [email protected]
Agung Budi Setiawan, Marketing Manager, Export CreditInsurance Division, [email protected]
Major facilities✓ Export & Domestic Credit Insurance (post-shipment &
pre-shipment financing)✓ Counter Bank Credit Guarantees✓ Surety Bonds✓ General Insurance
ASEIPT. Asuransi Ekspor Indonesia (Persero)
INDONESIA
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ASHRA (formerly IFTRIC) is a governmental corporation,established in October 1957 to promote Israeli exports and toprotect the exporters against political and commercial risks relatedto international activities. ASHRA covers MLT credit risks andprovides investment insurance. As the official export credit insurer,ASHRA covers non-marketable risks. The company’s policies arebacked by the full faith and credit of the Israeli government.
General informationASHRA65 Menachem Begin Rd, POB 20208Tel-Aviv, 61201Israel+972 3 [email protected]
HistoryFounded: 1957Ownership: 100% state-owned
Senior managementDavid Klein, Acting CEO, [email protected], +972 3 563 1715
Adi Gross, Chief Underwriting Officer, [email protected]+972 3 563 1772
Contact person(s)Adi Gross, Chief Underwriting Officer, [email protected]+972 3 563 1772
David Klein, Acting CEO, [email protected]+972 3 563 1715
Maria Kofman, Head of Underwriting and Insurance Division,[email protected], + 972 3 563 1783
Major facilities✓ Export credit insurance: medium and long-term (over one
year) export credit insurance against political and commercialrisks. Major insurance facilities: supplier’s and buyer’s creditcoverage; credit lines; forfaiting and letters of credit insurance;bonds insurance.
✓ Investment insurance cover offered: conversion/transfer risks;war and civil war risks; expropriation/confiscation risks; breachof contract by the host government.
ASHRAThe Israel Foreign Trade Risks InsuranceCorporation Ltd
ISRAEL
ATI was founded in 2001 by African states to cover the trade andinvestment risks of companies doing business in Africa. ATIprovides Political Risk, Surety Bonds, Trade Credit Insurance andPolitical Violence and Terrorism & Sabotage cover. As of 2013, ATIhas supported over US$13 billion in trade and investments acrossAfrica in sectors such as agribusiness, energy, exports, housing,infrastructure manufacturing, mining and telecommunications.ATI is the #1 ranked insurer in Africa with the 2013 renewal of itsLong Term ‘A/Stable’ rating for Financial Strength andCounterparty Credit by Standard & Poor’s.
General informationATIKenya Re Towers, 5th FloorUpperhill off Ragati Road P.O. Box 10620Nairobi, GPO 00100Kenya+254 20 272 [email protected]
HistoryFounded: 2001Ownership: ATI is currently owned by the following Africanmember countries and public/private sector organisations: Benin,Burundi, Democratic Republic of Congo, Kenya, Madagascar,Malawi, Rwanda, Tanzania, Uganda, Zambia, African DevelopmentBank, African Reinsurance Corporation, Atradius Group, SACE,The Common Market of Eastern and Southern Africa (COMESA),The Eastern and Southern African Trade and Development Bank(PTA Bank), The PTA Re Insurance Company (ZepRe)
Senior managementJef Vincent, Chief Underwriting Officer, [email protected] Ramamonjiarisoa, Chief Financial Officer,[email protected]
Cyprien Sakubu, Chief Investor Relations Manager,[email protected]
Contact person(s)George O. Otieno, CEO, [email protected]
Sheila Ongas, Communications [email protected]
Sherry Kennedy, Sr. Communications [email protected]
Major facilities✓ We offer two main insurance products that cover political and
trade credit risks. Foreign direct investment risks fall under ourpolitical risk insurance. We also offer reinsurance coverage toinsurance companies operating in or supporting business intoor out of our African member states. Political trade credit risksthat are covered by our insurance policies include:expropriation, arbitral award default, transfer restriction, mobileassets, war, civil disturbance or civil commotion, unfair callingof bonds, embargo, comprehensive non-payment, terrorism,sabotage, political violence.
✦ Member of The Prague Club
ATI ✦The African Trade Insurance Agency
MULTILATERAL
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ATRADIUS provides trade credit insurance, surety and collectionsservices through 160 offices worldwide, and has a presence in 45countries. Its products help protect companies from payment risksassociated with selling produces and services on credit.
General informationAtradius Credit Insurance N.V.David Ricardostraat 1Amsterdam, 1066 JSNetherlands+31 20 553 [email protected]
HistoryFounded: 1925Ownership: Grupo CyC 64.23%; Grupo Catalana Occidente 35.77%
Senior managementIsidoro Unda, Chairman and Chief Executive Officer; Chief Financial Officer
David Capdevila, Chief Market Officer
Andreas Tesch, Chief Market Officer
Chris van Lint, Chief Risk Officer
Contact person(s)Christine Gerryn, Executive Director,[email protected], +31 20 553 2260
Major facilities✓ (Export) credit insurance: These services are designed to
protect companies against the risk of non-payment bydomestic and foreign customers. We also act as ECA for theDutch government (ATRADIUS Dutch State Business).
✓ Global policy: This can be adapted for the specific structureand requirements of multinationals – umbrella cover withcommon terms for the group but with individual, localisedpolicies for country subsidiaries.
✓ Bonding: Offered in France, Italy, Spain and the Nordiccountries. Bonding products can protect companies againstthe failure of a supplier to meet agreed to performancestandards.
✓ Debt collections: ATRADIUS has a global network of debtcollection professionals, with offices throughout Europe andNorth America.
✓ Reinsurance: The credit insurance and bonding business ofprimary insurers in many markets across the world issupported by the underwriting and reinsurance of premiumsthrough Atradius Reinsurance Ltd.
ATRADIUSAtradius N.V.
NETHERLANDS
CESCE was founded in 1970 to primarily operate in the field ofexport credit insurance for the account of the state, as aninstrument to foster Spanish exports. After deregulation in 1990,CESCE started to actively compete for its own account on the openexport credit and domestic credit insurance markets. The companyis currently present in Spain, Portugal and Latin America(Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela).CESCE specializes in the comprehensive management ofcommercial risk and integrates INFORMA D&B, S.A. (the financialand commercial information provider) and CTI, S.A. (the providerof IT services).
General informationCESCEC/ Velázquez, 74Madrid, 28001Spain+34 91 423 48 [email protected]@cesce.es
HistoryFounded: 1970Ownership: CESCE is a limited company. 50,25% of its shares areheld by the Spanish state, while the remainder is in the hands ofSpain’s main banking and insurance groups, among themSantander, BBVA, Banco Sabadell and Banco Popular.
Senior managementBeatriz Reguero, Chief Operating Officer, State Account [email protected]
Luis-Antonio Ibanez, Chief Operating Officer, Private [email protected]
Contact person(s)Carmen Muñoz, Country Risk and Debt ManagementDepartment, [email protected]
Major facilities✓ Export Credit Insurance: Commercial and political cover for
export markets and commercial cover for domestic markets;pre and post-shipment risks for both short-term andmedium/long-term transactions.
✓ Investment Insurance: Conversion/transfer, war and civil war,breach of undertakings by host government, expropriation/confiscation. Bonds and guarantees: unfair calling, fair callingof bonds, cover to banks, bonds/guarantees issued.
CESCECESCE Credit Insurance
SPAIN
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Founded in 1946, Coface is a private company, subsidiary of Natixis.Coface, an expert in commercial risks at the service of companies,supports the development of businesses in their own territory andinternationally. It offers credit insurance solutions that aim toprotect them against the risk of financial default of their customers.Coface supports its clients upstream in evaluating and preventingrisks, so that they can make the best decisions at the mostopportune moment. To do this, Coface offers them full, detailedanalysis of country, sectoral and credit risk. Coface relies on itspowerful international network to offer credit insurance in 97countries.
Since 1946, Coface has been managing state guarantees on behalfof and with the guarantee of the French state, in the aim ofpromoting and supporting French exports on the medium and longterm and foreign investments. Coface offers a wide range ofinsurance products to cover risks that cannot be covered in theprivate sector, thereby benefitting companies carrying out marketsurveys, marketing products or services or investment abroad.
General informationCOFACE12, cours MicheletLa Défense 10 PuteauxParis La Défense Cedex, 92800France+33 1 49 02 20 [email protected]@coface.com
HistoryFounded: 1946Ownership: Natixis
Senior managementJean-Marc Pillu
Contact person(s)Anna Robert, [email protected]
Major facilities✓ Credit insurance
COFACECoface
FRANCE
Companhia de Seguro de Créditos, SA (COSEC) began operatingin 1969 as a limited company with the state as a major shareholder.From November 1992, COSEC has been a private company and itsshares are held by one of the largest banks in the Portuguesefinancial sector, and the world leader company of the creditinsurance market. Besides providing export credit insurance,domestic credit insurance and bond insurance on its own account,COSEC also covers,on behalf of the state, export credit insurance(supplier’s and buyer’s credit), bonds and Portuguese investmentinsurance.
General informationCOSECAv. da República, 58Lisbon, 1069-057Portugal+351 21 791 [email protected]@cosec.pt
HistoryFounded: 1969Ownership: The BPI Group 50% and Euler Hermes Group 50%
Senior managementJose Miguel Gomes da Costa, President and Chief ExecutiveOfficer, [email protected]
Berta Dias da Cunha, Executive Member of the [email protected]
Thierry Etheve, Executive Member of the [email protected]
Contact person(s)Maria José Melo, Director, International Dept.,[email protected], +351 21 791 3826
Major facilities✓ Export credit insurance: Export credit insurance short-term
cover: commercial and political risks, pre-shipment and creditcover.
✓ Medium/long-term cover: Supplier and buyer credit facilities,lines of credit and project finance cover.
✓ Investment Insurance: Cover offered: expropriation/confiscation cover, conversion/transfer cover, war and civil warcover, breach of contract by the host government cover.
✓ Bonds and guarantees: Cover offered: bid bond performancebond, retention bond, advance payment bond, customs andtax authorities bonds, bonds/guarantees issued.
COSECCosec – Companhia De Seguro De Créditos, SA
PORTUGAL
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Credendo GroupCredendo Group (formerly known as ONDD Group) is the newidentity of a European trade insurance group present throughout thecontinent and active in all segments of trade credit insurance,providing a range of products that cover risks worldwide. The groupincludes Delcredere, Ducroire, Credimundi (the new name of theentity insuring short-term business), KUPEG, INGO-ONDD, Garantand Trade Credit. In 2012 the Credendo Group covered 40 billioneuros in international trade and issued 380 million euros in premiums.
Delcredere, DucroireDelcredere, Ducroire is the official Belgian export credit agency.Backed by the state, its mission is to promote international traderelations, providing companies and banks trade credit insuranceagainst medium-term and long-term political and commercial risksworldwide. This business mainly relates to capital goods,contracted works, industrial projects and services. Delcredere,Ducroire’s solidity is underlined by its AA rating from Standard &Poor’s and cover capacity of 27 billion euros. As part of theCredendo Group, Delcredere, Ducroire shares the groupphilosophy: to be smarter about risk and closer to clients.
CredimundiCredimundi (formerly known as Ducroire, Delcredere SA.NV) has amission to provide companies within the European Union highlycustomised cover against political and commercial risks related toshort-term trade credit and current trade transactions, principallyin open account terms. It also issues legal and contractual bonds.Apart from its main office in Brussels, Credimundi is present withbranch offices in London, Paris, Wiesbaden and Milan. As part ofthe Credendo Group, Credimundi shares the group philosophy: tobe smarter about risk and closer to clients.
General informationCredendo Grouprue Montoyerstraat 3Brussels, 1000, Belgium+32 2 788 88 [email protected]
HistoryFounded: 1921Ownership: 100% state-owned
Senior managementDirk Terweduwe, CEO
Frank Vanwingh, Deputy CEO
Contact person(s)Nabil Jijakli, Secretary General, [email protected]
Major facilities✓ Insurance products:
– Supplier, buyer credits and project finance insurance– Unfair calling of bonds to be issued under the insured
contracts– Cover can be provided in all leading OECD currencies.
Occasionally, non-OECD currencies are eligible for cover– Investment insurance
✓ Other products:– Guarantees– Forfaiting
✓ Risks covered:– Pre-shipment risks– Non-payment risks
✓ Causes of loss covered:– Political (and similar) risks– Risks on private or public buyers/banks
✓ Amounts covered:– Principal and interest amounts, including interests on arrears
during waiting period. Delcredere, Ducroire has a flexibleattitude towards foreign content.
CREDENDO GROUPCrendendo Group
BELGIUM
Export Credit Guarantee Corporation of India Limited (ECGC), wasincorporated in the year 1957 under the Companies Act, 1956, tofacilitate and strengthen India’s exports by insuring the credit riskfaced by Indian exporters/banks on lending to exporters. Thecompany is 100% owned by Government of India. The company ismanaged by a board of directors comprising nominees of theGovernment of India, Reserve Bank of India, commercial banks,insurance companies and eminent persons from the exportingcommunity.
The Paid up capital of the company is currently Rs.11 billion(approximately USD 200 million) vs. the authorized capital of Rs.50billion (approximately USD 850 million).
General informationECGCExpress Towers10th Floor, Nariman PointMumbai, 400021MaharashtraIndia+91 22 6659 0500/6659 [email protected]@ecgc.in
HistoryFounded: 1957Ownership: Company with 100% shareholding of the Governmentof India
Senior managementNarayanaswamy Shankar, Chairman and Managing Director,[email protected], +91 22 66590514/515/516
Geetha Muralidhar, Executive Director,[email protected], +91 22 66590519/520
Sandeep Mukherjee, General Manager,[email protected], +91 22 66138401
Manoj Kumar, General [email protected], +91 22 66590721
Rohit Pandya, General [email protected], +91 22 66590526
V Dharmarajan, General [email protected], +91 22 66590717
R Padmavathy, General [email protected], +91 22 66590713
M Senthilnathan, General [email protected], +91 22 66590725
Ashok Phadtare, General [email protected], +91 22 66590523
Contact person(s)Rohit Pandya, General [email protected], +91 22 66590526
Anand Singh, Assistant General [email protected], +91 22 66138426
Ranvir Kishore, Assistant [email protected], +91 22 66138431/25
Major facilities✓ Export credit insurance to exporters✓ Export credit insurance to banks✓ Overseas investment insurance
ECGCExport Credit Guarantee Corporation of India Ltd
INDIA
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ECIC SA was established in 2001 in terms of the Export Credit andForeign Investments Insurance Act, 1957, as amended. It is aregistered insurer and a public company with limited liability. Thegovernment of South Africa, through the Department of Trade andIndustry is the sole shareholder. ECIC SA has been mandated bygovernment to enter into contracts of insurance with, or for thebenefit of persons carrying on business in South Africa in thecourse of trade with countries outside South Africa, primarily formedium/ long-term export credit and investment insurance.
General informationECIC SABlock C7, Eco Origins Office Park349 Witch Hazel AveHighveld Ext 79, CenturionPretoria, 0157South Africa+27 12 471 3800www.ecic.co.za
HistoryFounded: 2001Ownership: ECIC is fully owned by the South African Government
Senior managementMotshewandi J LesejaneNon-executive Chairman of the ECIC SA Board
Mandisi Nkuhlu, Acting Chief Officer
Lindelani Mphapuli, General Counsel
Sedzani Mudau, Chief Financial Officer
Lesego Mosupye, Chief Risk Officer
Contact person(s)Chris Thirion, Head, Planning & Portfolio [email protected]
Major facilities✓ Export credit insurance: Underwrites loans (buyer and supplier
credit as well as project finance facilities) over themedium/longterm, against commercial and political events ofdefault, breach of contract, currency inconvertibility andtransfer risk etc.
✓ Investment insurance: Cover offered to investors (equity,shareholder loans as well as commercial loans) againstexpropriation, confiscation, nationalisation, war, armedhostilities, civil war, rebellion, revolution or similar disturbances,currency inconvertibility and transfer risk.
✓ Performance bond insurance: Cover performance bonds issuedon behalf of exporters participating in exports of capital goodsand/or services.
✦ Member of The Prague Club
ECIC SA ✦Export Credit Insurance Corporation of South Africa SOC Ltd
SOUTH AFRICA
ECICS Limited, a wholly-owned subsidiary of IFS Capital Limited(IFS), provides a wide range of risk management solutions throughits offer of domestic and exports credit insurance policies, bondsand guarantees business in Singapore. As a pioneer in this area withover 30 years of risk management experience, ECICS is well-equipped to assist Singapore companies and branches of foreigncompanies.
General informationECICS7 Temasek Boulevard, #10-03 Suntec Tower One038987Singapore+65 6337 [email protected]@ecics.com.sg
HistoryFounded: 1975Ownership: IFS Capital Limited – 100%
Senior managementLua Too Swee, [email protected], +65 – 63030189
Terence Teo, Head, Business Development,[email protected], +65 – 63030198
Richard Ong, Head, [email protected], +65 – 63030183
Ruth Wee, Head, Risk [email protected], +65 – 63030172
Contact person(s)Hoefai Wong, Risk [email protected], +65 – 63030173
Alan Low, Risk [email protected], +65 – 63030175
Major facilities✓ Credit insurance✓ Comprehensive short-term policies (export/domestic)✓ Bonds & guarantees
– Performance bond– Foreign worker bond– Advance payment bond– Qualifying certificate bond– Bid and tender guarantee – deferred– Payment bond– Maintenance bond– Account payment bond– Customs bond– Tenancy/rental bond
ECICSECICS Limited
SINGAPORE
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EDC is Canada’s export credit agency, established to support anddevelop, directly and indirectly, Canada’s export trade, as well asCanadian capacity to engage in that trade and to respond tointernational business opportunities. EDC is financially self-sustaining and operates on commercial principles. In addition tobeing a direct lender and insurer, EDC acts as a catalyst to leverageprivate capital and establishes partnerships both domestically andabroad.
General informationExport Development Canada (EDC)150 Slater St., OttawaOntario, K1A 1K3Canada+1 613 598 [email protected]
HistoryFounded: 1944Ownership: EDC is fully owned by the Government of Canada
Senior managementKevin Warn-Schindel, Chairman of the Board
Benoit Daignault, President and Chief Executive Officer
Contact person(s)[email protected]
Major facilities✓ Insurance: Credit insurance for export transactions, including
policies issued to financial institutions to cover foreign bankpayment obligations and purchased receivables. Contractinsurance for capital goods, service contracts and projects:Political risk insurance for equity investments, assets and debt,as well as comprehensive insurance policies issued to financialinstitutions for payment default on sovereign or quasi-sovereign debt obligations.
✓ Financing: Flexible financing solutions including buyer credits,supplier credits, bank guarantees, equity products andfinancing to support foreign direct investment.
✓ Bonding: Guarantee and insurance products to supportperformance bonding and surety bonds as well as foreignexchange facilities.
EDCExport Development Canada
CANADA
EFIC provides finance and insurance solutions to help Australiancompanies exporting and/or investing offshore to overcomefinancial barriers. We offer ways to unlock export finance and/orfacilitate overseas investments where their banks and/or insurersare unable to provide all the support they need.
General informationEFICLevel 10, 22 Pitt StreetSydney, NSW 2000Australia+612 8273 [email protected]@efic.gov.au
HistoryFounded: 1957Ownership: Wholly owned and guaranteed by theCommonwealth of Australia
Senior managementAndrew Mohl, Chairman of the Board, [email protected]
Andrew Hunter, Managing [email protected], +61 2 8273 5250
Peter Field, Exc Director, Business Origination & Portfolio Mgt,[email protected], +61 2 8273 5459
John Pacey, Chief Credit [email protected], +61 2 8273 5275
Stuart Neilson, Chief Financial [email protected], +61 2 8273 5423
Andrew Watson, Executive Director, [email protected], +61 2 8273 5457
Contact person(s)Chang Foo, Head of Product Management & Risk [email protected], +61 2 8273 5431
Major facilities✓ Export finance and insurance: Direct loans; unconditional
guarantees and indemnities to financial institutions includingspecialist foreign exchange companies; medium-term paymentinsurance covering commercial and political risks; pre-shipment finance; lines of credit.
✓ Project financing: Limited-recourse lending/guarantee insupport of Australian exports to, or Australian sponsoredinvestments in overseas projects.
✓ Political risk insurance: Cover to investors, financiers (loan andcommodity hedge providers) and contractors – CITB, wardamage and PV, expropriation/confiscation, forcedabandonment, deprivation, selective discrimination andarbitration award default.
✓ Bonds, sureties and guarantees: Cover against unfair calling ofbonds; issuer of contract or surety bonds, including for the USmarket.
EFICThe Export Finance and Insurance Corporation
AUSTRALIA
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Export Guarantee and Insurance Corporation is a joint-stockcompany. The offered export credit insurance with state support isin full compliance with the arrangement on officially supportedexport credits, EU law and with BU understandings.
EGAP still holds a 34% share in a subsidiary – Commercial CreditInsurance Company EGAP (KUPEG) – offering short-term creditinsurance on commercial terms without any state support. A 66%share is held by Credimundi (formerly Ducroire – DelcredereSA.NV) (Belgium).
General informationEGAPVodickova 34/701Prague, 11121Czech Republic+420 [email protected]
HistoryFounded: 1992Ownership: EGAP is fully owned by the state. Shareholder’s rightsare exercised by Ministry of Finance (40% of votes), Ministry ofIndustry and Trade (36%), Ministry of Agriculture (12%) andMinistry of Foreign Affairs (12%).
Senior managementProchazka Jan, CEO, [email protected], +420 222 842 000
Somol Miroslav, Deputy CEO; International Relations andCompliance Section, [email protected], +420 222 842 100
Contact person(s)Hikelova Hana, Director & Spokesperson; PR and Communication [email protected], +420 222 842 015
Major facilities✓ Insurance with state support against commercial and political
risks✓ Export credit insurance (buyer and supplier credits)✓ Insurance of supplier credits financed by a bank✓ Insurance of export contract-related bonds (advance payment
bonds, bid bonds and performance bonds) against unfair andfair calling
✓ Manufacturing risks insurance✓ Pre-export financing insurance✓ Insurance of a confirmed letter of credit✓ Investment insurance✓ Insurance of a credit for financing of investments✓ Insurance of market prospection
✦ Member of The Prague Club
EGAP ✦Export Guarantee and Insurance Corporation
CZECH REPUBLIC
Euler Hermes Aktiengesellschaft (EH GERMANY – State), as a newcompany officially registered in early February 2014, has taken overall state account activities of Euler Hermes Deutschland AG. Thenew company is treated as a partial legal successor of Euler HermesDeutschland AG.
Since 1949 EH GERMANY (State) and PricewaterhouseCoopers AGhave been entrusted by the German Federal Ministry of Economicsand Energy with administering the Official Export GuaranteeScheme, for which purpose the two companies entered into aconsortium under the lead management of EH GERMANY (State).
The company handles short-term and medium/long-term exportcredit guarantees, whole-turnover policies and pre-shipment riskcover.
General informationEH GERMANY (State)Euler Hermes AktiengesellschaftGasstrasse 2722761 HamburgGermany+49 40 8834 9000+49 40 8834 9141www.agaportal.de/en/[email protected]
HistoryFounded: 1917Ownership: 100% Euler Hermes S.A., Paris
Senior managementRalf Meurer, Chairman of the Board of Management
Dr Hans Janus, Member of the Board of Management responsiblefor the Federal Export Credit Guarantees
Contact person(s)Hannelore B. Bergs, BU Matters, Issues in General
Uwe Stumpenhusen, BU Matters, IT and Reporting
Major facilities✓ Export Credit Insurance: – Political and commercial risks cover for short-term and
medium-/long-term transactions; – Special facilities available
✓ Bonds and Guarantees:– Cover against unfair and fair calling
✓ Debt Collection
EH GERMANY (State)Euler Hermes Aktiengesellschaft
GERMANY
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EKF is the official Danish export credit agency. It is an independententity under the Danish Ministry of Business and Growth. EKF offersinsurance cover for companies – national or foreign – that take riskson exports and investments containing a Danish economic interest.Goods, capital goods, turn-key projects, services and investmentsare covered by the guarantees. EKF offers both political andcommercial risk cover.
General informationEksport Kredit Fonden (EKF)Lautrupsgade 11Copenhagen, 2100Denmark+45 35 46 26 [email protected]
HistoryFounded: 1922Ownership: 100% state-owned agency with the Danish Ministry ofBusiness and Growth as the guardian authority
Senior managementAnette Eberhard, CEO, [email protected]
Jan Vassard, Deputy CEO, [email protected]
Søren Møller, Deputy CEO, [email protected]
Morten Sørensen, Senior Director, Large Corporates, [email protected]
Kim Richter, Senior Director, SME & Cleantech, [email protected]
Contact person(s)Mariane Søndergaard-Jensen, DirectorInternational Relations, [email protected]
Major facilities✓ Export credit insurance: Political and commercial risk cover via
supplier and buyer credit facilities, lines of credit and shoppinglines.
✓ Project finance: Special project finance facility.✓ SME guarantees: Offering a buyer abroad long-term credit on
a specific export order.✓ Export loans: Loans to foreign buyers through a bank.✓ Investment guarantees: Insurance facility for emerging
markets.✓ Bond and guarantees: Cover against unfair calling.✓ Working capital guarantees: Securing credit from the bank to
pay for materials, wages and suppliers.
EKFEksport Kredit Fonden
DENMARK
The company is market leader in Germany and Member of the EulerHermes Group, Paris, the world market leader in credit insurance.EH GERMANY (Private) is owned by Allianz Group as ultimateshareholder and has subsidiaries in Austria and Switzerland. Thecompany offers risk transfer solutions for their clients to supporttheir business development in domestic and export markets. Theproducts of EH GERMANY (Private) secure the financial stability ofthe customers.
General informationEH GERMANY (Private)Euler Hermes Deutschland AGFriedensallee 25422763 HamburgGermany+49 40 8834 [email protected]
HistoryFounded: 1917Ownership: 100% Euler Hermes S.A., Paris
Senior managementRalf Meurer, Chairman of the Board of Management
Ulrich Nöthel, Member of the Board of Management responsiblefor Credit Insurance, Bonding and Fidelity Insurance
Thomas Krings, Member of the Board of Management responsiblefor Risk Underwriting and Claims
Contact person(s)Uwe Kniehs, Head of Communications
Major facilities✓ Credit Insurance✓ Bonding/Surety Business✓ Fidelity Insurance✓ Risk Management✓ Debt Collection
EH GERMANY (Private)Euler Hermes Deutschland AG
GERMANY
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The Hungarian Export-Import Bank Plc. (Eximbank) – together withthe Hungarian Export Credit Insurance Plc. (MEHIB) – wasestablished through the de-merger of Export Guarantee InsuranceLtd. in accordance with Act XLII of 1994, with the basic objectiveof facilitating the sale of Hungarian goods and services in foreignmarkets. Since 23 May 2012, Eximbank and MEHIB operate withinan integrated framework and carry out their duties with a sharedorganisation and corporate identity, under the name of EXIM.
Both companies are solely owned by the State of Hungary, andsince 23 May 2012 the owner’s rights have been exercised on behalfof the State of Hungary by the Minister for the National Economy.Eximbank’s share capital is HUF 10.1 billion, and the Hungarian Stateundertakes a payment guarantee in respect of all its borrowings.MEHIB’s share capital is HUF 4.25 billion.
General informationEXIM HUNGARYNagymezö utca 46-48Budapest, H-1065Hungary+361 374 [email protected]@exim.hu
HistoryFounded: 1994Ownership: Hungarian State directly 100%
Senior managementRoland Nátrán, [email protected], +36 1 374 9100
Viktor Nagy, Deputy CEO, Business [email protected], +36 1 374 9100
László Lengyel, Director, International Relations and [email protected], +36 1 374 9100
Contact person(s)László Várnai, International Policy [email protected], +36 1 374 9100
Zsuzsanna Bugár, International Relations [email protected], +36 1 374 9100
Major facilities✓ Short-term insurance: policy with cover for commercial and
political risks including pre-shipment credit period. Cover forpurchased debts.
✓ Medium and long-term insurance: political and commercialrisks; pre-shipment and credit period; bond insurance, suppliercredit, buyer credit; lease transactions, tied aid insurance.
✓ Investment Insurance: Cover also for investments abroadagainst political risks.
✦ Member of The Prague Club
EXIM HUNGARY ✦Hungarian Export-Import Bank Plc.Hungarian Export Credit Insurance Plc.
HUNGARY
EKN supports Swedish exports and the internationalisation ofSwedish business. We do this by offering exporting companies andbanks guarantees for payment and financing.
General informationExportkreditnämnden (EKN)Box 3064Stockholm, SE-103 61Sweden+46 8 788 00 [email protected]
HistoryFounded: 1933Ownership: 100% governmental agency
Senior managementKarin Apelman, Director [email protected], +46 8 788 00 00
Helén Seemann, Director, Large [email protected] , +46 8 788 01 05
Carl-Johan Karlsson, Director, Small and Medium sizedEnterprises, [email protected], +46 8 788 01 46
Stefan Karlsson, Director, Risk Advisory & CSR,[email protected], +46 788 00 02
Patrick Nimander, Director, [email protected], +46 8 788 01 35
Contact person(s)Karl-Oskar Olming, Head of CSR & International [email protected], +46 8 788 00 05
Major facilities✓ Export credit insurance:
– Cover for commercial and political risks.– Short-term pre-shipment and credit cover.– Medium/long-term pre-shipment cover and supplier and
buyer credit facilities.✓ Project finance:
– Project finance transactions underwritten within EKN’s normalguarantee facility.
✓ Bonds and guarantees:– Cover for exporter against unfair calling.– Counter guarantee for issuer of bond against exporter risk.– Guarantee for confirmed LC.
✓ Investment insurance:– Conversion and transfer cover, war and civil war cover,
expropriation/confiscation cover.✓ Other products:
– Bill of exchange guarantee– Working capital guarantee for SMEs
EKNExportkreditnämnden
SWEDEN
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Export-Import Bank of the Slovak Republic is the official exportcredit agency of Slovakia established by the Act No. 80/1997 Coll.as amended. Its main goal is to increase the competitiveness ofSlovak exporters at the international market via providing a widerange of export credit and investment insurance, insurance andother related financial services.
General informationEXIMBANKA SR (Export-Import Bank of the Slovak Republic)Grösslingova 1Bratislava, 813 50Slovak Republic+4212 59398 [email protected]
HistoryFounded: 1997Ownership: 100% sovereign
Senior managementIgor LichnovskýChairman of the Bank Board and [email protected]
Pavel Mockovčiak, Member of the Bank Board and Deputy CEOfor Banking [email protected]
Milan Horváth, Member of the Bank Board and Deputy CEO forInsurance [email protected]
Rudolf Sihlovec, Member of the Bank Board and Deputy CEO forFinance and Economic [email protected]
Contact person(s)Silvia Gavorníková, Director of International [email protected], +421 2 59398 408
Major facilities✓ Insurance products:
– ST cover against commercial and political risks: export anddomestic receivables.
– Insurance of export guarantees, production risk, confirmedirrevocable LCs.
– Insurance of MLT export credits – suppliers’, buyers’ credit.Insurance of foreign investments.
– Insurance of pre-export financing.✓ Banking products:
– Direct loans– Bills of exchange and promissory notes-based loans– Discounting of exporters’ short-term accounts receivables– Refinancing loans– Guarantees and bonds
✦ Member of The Prague Club
EXIMBANKA SR ✦Export-Import Bank of the Slovak Republic
SLOVAK REPUBLIC
EXIM J is an independent public sector trade financing institution,which provides trade credit insurance, ST foreign currencyfinancing through foreign lines of credit and a range of ST and MTlocal currency financing programmes to the productive sector, withemphasis on the exporting sector.
General informationEXIM J (National Export Import Bank of Jamaica Limited)11 Oxford RoadKingston 5Jamaica+1 876 960 [email protected]
HistoryFounded: 1986Ownership: 100% government of Jamaica
Senior managementThe Hon. William Clarke, ChairmanLisa Bell, Managing Director
Contact person(s)Shernett Manning, Chief Officer, Operations and [email protected]
Audrey Morris, Risk Management and Compliance [email protected]
Major facilities✓ Trade credit insurance: The bank provides the Jamaican
productive sector with ST insurance protection against non-payment by foreign and local buyers. The trade creditinsurance policy covers both commercial and political risks, toa maximum of 85% and 90% respectively.
✓ Export financing: The bank offers ST working capital financingto the exporting sector through pre and post-shipmentfacilities. MT loan facilities are also offered to the tourismsector, a major earner of foreign exchange, for facilitiesupgrading, and to the exporting sector for retooling andupgrading.
✓ Import financing: Foreign currency loans are granted tofacilitate the procurement of imported raw material, equipmentand machinery for the productive sector.
EXIM JNational Export Import Bank of Jamaica Limited
JAMAICA
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Specialised financing company Finnvera has two roles in theFinnish economy: it is the official Finnish export credit guaranteeagency (ECA) offering a full range of export credit guaranteeproducts to promote exports and internationalisation ofenterprises, and a domestic risk financier promoting the activitiesof small and medium-sized companies. Finnvera’s subsidiary FECoffers interest rate equalisation at CIRR rates, and can fund exportcredits arranged by commercial banks. All services are availablethrough Finnvera’s Export Financing Unit.
General informationFinnveraPO Box 1010Eteläesplanadi 8Helsinki, 00101Finland+354 204 [email protected]
HistoryFounded: 1963Ownership: 100% state-owned
Senior managementPauli Heikkilä, Chief Executive Officer
Topi Vesteri, Executive Vice-President, Export Financing
Pekka Karkovirta, Vice-President, International Relations,[email protected]
Tuukka Andersén, Vice-President, Head of Underwriting,[email protected]
Raija Rissanen, Vice-President, Research, [email protected]
Contact person(s)Pekka Karkovirta, Vice-President, International Relations,[email protected]
Major facilities✓ Export credit insurance:
– Cover for credit and pre-credit risks against commercial andpolitical risks
– Short-term credit insurance– Medium and long term insurance for supplier and buyer credit
transactions including project finance✓ Investment insurance: Cover provided against political risks✓ Bonds and guarantees: Counter security for banks on behalf of
exporter (fair calling of the bond) and risk insurance forexporter (unfair calling of the bond or calling of the bond dueto political reasons)
✓ Interest rate equalisation and financing of export credits viaFinnish Export Credit Ltd (FEC)
FINNVERAFinnvera Plc
FINLAND
FCIA Management Company, Inc. (FCIA) and its associatedorganisation, the Foreign Credit Insurance Association, haveprovided trade credit and political risk insurance since 1961. FCIA, awhollyowned subsidiary of Great American Insurance Company(GAIC) since 1991, underwrites and services Great American’s broadline of trade credit and political risk insurance products, offeringboth cancellable and non-cancellable limit policy options. GAIC isthe insurer on policies underwritten by FCIA and is rated A+ by S&P.
General informationFCIA125 Park Avenue, 14th floorNew York, NY 10017United States+1 212 885 [email protected]
HistoryFounded: 1961 (Foreign Credit Insurance Association)Ownership: Great American Insurance Company
Senior managementLindley M Franklin, President & CEO
Philip J Lally, Executive Vice-President, [email protected]
Carol G McEvoy, Senior Vice-President – General Counsel
Kenneth J Cavanagh, Senior Vice-President
Contact person(s)Lindley M Franklin, President & CEO
Nasrin D Nourizadeh, Vice-President – Business [email protected]
Major facilities✓ Trade Credit Insurance for Companies: Insurance against non-
payment of accounts receivable. Coverage for multiple buyersor single buyers, export and/or domestic sales, pre-shipmentand post-shipment risks, short term and medium term tenors.
✓ Trade Financing Insurance for Financial Institutions: Coveragefor confirmation of LCs issued by foreign banks,import/export/pre-export financings, purchased receivablesand trade payables financings.
✓ Political Risk Insurance: Coverage for contract frustration,wrongful calling of advance payment and other bonds andinvestor losses on foreign assets caused by confiscation,expropriation, nationalisation, political violence and other perilscustomised to meet transaction requirements. Policy periodsup to seven years.
FCIAFCIA Management Company, Inc
USA
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Hiscox, headquartered in Bermuda is a specialist insurer,underwriting a particular range of personal and commercial risks.Our focus gives us two significant and distinctive advantages. First,we can often insure risks other companies find too complex orunusual to cover; second, we can tailor policies very closely to theindividual customer’s requirements. This combination of selectivityand exceptional expertise has, over the course of a century, drivenus from a single underwriter based at Lloyd’s into a FTSE 250company with offices in 11 countries and customers around theworld.
General informationHISCOX1 Great St HelensLondon, EC3A 6HXUnited Kingdom+44 (0)20 7448 6617www.hiscox.com
HistoryFounded: 1901Ownership: Public Limited Company
Senior managementRobert Childs, Chairman
Bronek Masojada, Chief Executive
Stuart Bridges, Group Finance Director
Richard Watson, Chief Underwriting Officer
Russell Merrett, Managing Director, Active UnderwriterSyndicate 33
Contact person(s)Victoria Padfield, Political Risk Underwriter,[email protected]
Major facilitiesWe offer insurance protection for trade finance, commodityfinance, export finance and other structured credit transactions.Cover can be tailor made to add pre-shipment perils and theunfair calling of on demand bonds. We also cover investmentinsurance and political violence including war and terrorism.
HISCOXHiscox
BERMUDA
GIEK promotes exports of Norwegian goods and services, andNorwegian investments abroad. GIEK issues guarantees andinsurances on behalf of the Norwegian government.
General informationGIEKMailing PO Box 1763 Vika, 0122 Oslo
Visiting Dronning Mauds gate 15Oslo, 0122Norway+47 22 87 62 [email protected]@giek.no
HistoryFounded: 1929Ownership: GIEK is an independent governmental enterprise.
Senior managementWenche Nistad, CEO, [email protected]
Øyvind Ajer, Director Underwriting, Deputy CEO, [email protected]
Johna E. Mowinckel, Director, Market Analysis and InternationalRelations, [email protected],
Ulla Wangestad, Legal Director, [email protected]
Elizabeth Lee Marinelli, Director, Credit and Risk Management,[email protected]
Cay Bakkehaug, CFO, [email protected]
Contact person(s)[email protected]+47 22876200
Major facilities✓ Cover for credit and pre-credit risks✓ Investment insurance✓ Counter guarantees for bonds✓ Working capital scheme for ships and devices at sea✓ Short-term credit insurance is carried out by our subsidiary:
GIEK Kredittforsikring AStel: +47 46 87 20 00visiting Rådhusgata 250158 Oslo Norwayfax: +47 22 83 73 [email protected]
GIEKGarantiinstituttet for eksportkreditt
NORWAY
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ICIEC, Aa3 rated is a member of the IDB Group. Established inAugust 1994 as an international institution with full juridicalpersonality, ICIEC’s objective is to increase the scope of tradetransactions from OIC member countries, and to facilitate foreigndirect investment into these countries by providing export creditand investment insurance/ reinsurance facilities to its customers inmember countries.
General informationICIECPO Box 15722Jeddah, 21454Saudi Arabia+966 2 644 [email protected]
HistoryFounded: 1994Ownership: The authorised capital of ICIEC is US$620mn,subscribed by the Islamic Development Bank (IDB) and 40member countries of the Organisation of the Islamic Conference(OIC).
Senior managementDr Ahmed Mohamed Ali, Chairman of the Board
Dr Abdel-Rahman El -Tayeb Taha, Chief Executive Officer
Khemais El-Gazzah, Chief Operating Officer , [email protected]
Muhammad Azam Arif, Director, Accounts and Finance
Adil A. Babiker, Director Legal Affairs
Contact person(s)Eng. Yasser Alaki, Acting Director, Business Development Dept.,[email protected]
Mourad Mizouri, Acting Head of Customer Relations Division,[email protected]
Jamel Eddine Naga, Head of Promotion & International RelationsUnit, [email protected]
Major facilitiesICIEC provides the following facilities in accordance with theprinciples of shariah:✓ Export credit insurance: ICIEC offers services to exporters and
banks in ICIEC member countries for both short-term andmedium-term (up to seven years) covering commercial andpolitical risks.
✓ Foreign investment insurance: ICIEC offers cover to investorsand financiers of the projects from anywhere in the world toinvest into ICIEC member countries.
✓ Reinsurance services: ICIEC offers reinsurance services toECAs and commercial insurance companies in ICIEC membercountries and can also participate with international ECAs.
✦ Member of The Prague Club
ICIEC ✦The Islamic Corporation for the Insurance ofInvestment and Export Credit
MULTILATERAL
The Hong Kong Export Credit Insurance Corporation (HKEC) wascreated by statute in 1966 to protect Hong Kong exporters againstnon-payment risks arising from commercial and political events. Itscontingent liability under contracts of insurance is guaranteed bythe Government of the Hong Kong Special Administrative Region,with the statutory maximum liability currently standing atHK$40bn.
HKEC provides a wide range of insurance facilities covering exportof goods and services on credit periods up to 180 days. HKEC alsoprovides tailor-made facilities to cater for the varying needs ofdifferent export sectors. For export of capital goods, HKEC mayoffer medium and long-term cover for credit periods up to fiveyears or beyond.
General informationHKEC2/F, Tower 1, South Seas Centre75 Mody Road, Tsimshatsui EastKowloonHong Kong+852 2723 [email protected]
HistoryFounded: 1966Ownership: A statutory corporation under the Government of theHong Kong Special Administrative Region
Senior managementRalph Lai, Commissioner, [email protected]
Cynthia Chin, General Manager
Walter Tse, Deputy General Manager
Amy Wai, Deputy General Manager
Iyria Fan, Deputy General Manager
Contact person(s)Amy Wai, Deputy General Manager
Major facilities✓ Export credit insurance (supplier credit)✓ Short-term (up to one year) / Medium and long-term (over
one year) cover: commercial and political risks; pre-shipmentand post-shipment cover.
HKECHong Kong Export Credit InsuranceCorporation
HONG KONG
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Export Credit Insurance Corporation Joint Stock Company (KUKES.A.) is the official export credit agency of the Republic of Poland,which, on the basis of the Act on export insurance guaranteed bythe State Treasury, administers officially supported exportinsurance scheme. KUKE S.A.’s mission is to support exporters andinstitutions financing supplies of Polish goods and services, byproviding insurance and guarantees that allow Polish exporters towin foreign markets and to provide efficient and tailor-madeservice for them. KUKE S.A. also provides standard cover for short-term export and domestic receivables on the company’s ownaccount.
General informationKUKE39 Sienna StreetWarsaw, 00-121Poland+48 22 35 68 [email protected]
HistoryFounded: 1991Ownership: The State Treasury represented by the Minister ofFinance – 87.85%, State Economy Bank – 12.15%
Senior managementDariusz Poniewierka, President, [email protected]
Jan Czerepok, Vice-President
Aleksandra Hanzel, Vice-President
Contact person(s)Agnieszka Zoltowska, Chief Expert, [email protected]
Major facilities✓ Export credit insurance✓ Short-term cover: marketable and non-marketable risk✓ Medium and long-term cover: supplier credit and buyer credit
facilities✓ Investment insurance✓ Bonds and guarantees✓ Domestic credit insurance
KUKE ✦Export Credit Insurance Joint Stock Company
POLAND
Korea Trade Insurance Corporation (K-sure) was established in July1992 as the official export credit agency of Korea pursuant to theExport Insurance Act of 1968 with the mission to support exports,thereby contribute to the national economy. Under the supervisoryauthority of the Ministry of Knowledge Economy, K-sure protectsKorean business in their export and overseas investment activitiesthrough its export credit insurance, overseas investment insurance,credit guarantees and various other programmes and services.
General informationKSURE14, Jongno, Jongno-guSeoul, 110-729Korea+82 2 399 6800/6801www.ksure.or.kr
HistoryFounded: 1992Ownership: 100% state-owned
Senior managementKim Young-hak, Chairman & President
Son Tae-ho, Auditor
Kwon Moon-hong, Vice President
Contact person(s)Baek Seung-taek, Head of International [email protected]
Park Sung-hyun, Manager, [email protected]
Major facilities✓ Export credit insurance: Short-term (up to two-years) cover,
Medium and long-term (over two years)✓ Working capital guarantee✓ Investment insurance: Cover offered: transfer; war
expropriation breach of contract.✓ Bonds and guarantees: Bid Bond; AP Bond; P Bond etc.
KSUREKorea Trade Insurance Corporation
KOREA
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MIGA, a member of the World Bank Group, was established topromote foreign direct investment into emerging economies toimprove people’s lives and reduce poverty. MIGA encouragesinvestment by providing investors and lenders protection againstnon-commercial risks through its political risk insurance.
MIGA has issued over US$27bn in guarantee coverage in more than100 developing member countries. MIGA can cover equityinvestments, shareholder loans, shareholder loan guaranties, andnon-shareholder loans. Investment projects must be financially andeconomically viable and meet MIGA’s social and environmentalperformance standards.
General informationMIGAWorld Bank Group, 1818 H StreetWashington D.C., 20433United States+1 202 458 [email protected]
HistoryFounded: 1988Ownership: MIGA is owned by 179 member countries.
Senior managementIzumi Kobayashi, Executive Vice President
Michel Wormser, Vice-President and Chief Operating Officer
Ana-Mita Betancourt, Director and General Counsel, Legal Affairsand Claims
Kevin Lu, Regional Director, Asia Pacific
Edith Quintrell, Director of Operations, [email protected]
Lakshmi Shyam-Sunder, Director of Finance and RiskManagement
Ravi Vish, Director and Chief Economist, Economics and Policy
Marcus Williams, Chief, Strategy, Communications & Partnerships
Contact person(s)Marc Roex, Head Reinsurance, [email protected]
Major facilitiesThrough its investment guarantees, MIGA offers protection forcross-border investments against the following non-commercialrisks:✓ transfer restriction; expropriation; ✓ war and civil disturbance; breach of contract; and ✓ non-honoring of sovereign financial obligations.
MIGAMultilateral Investment Guarantee Agency
MULTILATERAL
Eximbank of Malaysia provides insurance, guarantee and financingfacilities to Malaysian exporters and investors as well as foreignbuyers of Malaysian products and services. Eximbank of Malaysiahas various financing programmes providing short- to long-termcredit to help promote Malaysian exports.
General informationMEXIMExport-Import Bank of Malaysia Berhad Aras 1, Exim Bank JalanSultan Ismail P.O.Box 13028Kuala Lumpur, 50250Malaysia+603 [email protected]
HistoryFounded: 1977 (MECIB)Ownership: 100% owned by the Ministry of Finance
Senior managementDatuk Mohd Hashim b Hassan, Chairman, [email protected]
Dato' Adissadikin Ali, MD/CEO, [email protected]
Mr Wan Zalizan Wan Jusof, Chief Operating Officer,[email protected]
Ms Norzilah Mohammed, Chief Risk Officer,[email protected]
Mr Chairil Mohd Tamil, Chief Business Officer,[email protected]
Mr Aminuddin Bashah, Chief Credit [email protected]
Ms Norlela Sulaiman, Chief Financial Officer,[email protected]
Contact person(s)Mr Hairul Nizam, Vice President, [email protected]
Ms Zabedah Giw, Assist Vice President, [email protected]
Ms Lee Kim Tuan, Senior Manager, [email protected]
Major facilities✓ Export credit insurance:
– Short-term (up to one-year) cover: Commercial and politicalrisks; pre-shipment cover; credit and domestic cover.
– Medium/long-term (over one year): Supplier and buyer creditfacilities; line of credit.
✓ Project finance: Special project finance facility.✓ Investment insurance: Cover: conversion/transfer cover; war
and civil disturbance; expropriation/confiscation; breach ofcontract by host government.
✓ Bonds and guarantees: Cover: conversion/transfer cover; warand civil disturbance; expropriation/confiscation; breach ofcontract by host government.
MEXIMExport-Import Bank of Malaysia Berhad
MALAYSIA
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The ODL, Luxembourg’s one-stop shop for exporters, is designedto support Luxembourg exporters while trading internationally,mainly by providing credit insurance schemes for exports, importsand investments abroad.
Since the co-operation agreement of April 29, 2002 between theODL and the Luxembourg Government, establishing the COPEL(Comité pour la promotion des exportations luxembourgeoises),the ODL supports Luxembourg exports by means of a partialcontribution in the promotion, exhibition and export trainingexpenses.
Furthermore, the ODL performs its assignment of supportingLuxembourg exports in participating in external trade instrumentssuch as « Luxembourg for Business ».
General informationODLMailing Address: 7, rue Alcide de Gasperi7L-2981Luxembourg
Visiting Address: 7, rue Alcide de GasperiL-1615Luxembourg+35 2 42 39 39 [email protected]
HistoryFounded: 1961Ownership: The ODL is an autonomous public institution
Senior managementEtienne Reuter, [email protected], +35 224782605
Contact person(s)Simone Joachim, Secretary [email protected], +35 2423939342
Major facilities✓ Export credit insurance (short, medium and long-term)✓ Foreign investment insurance
Other activities:✓ Promotion of Luxembourg exports by financial supports
through the COPEL (Committee for the promotion ofLuxembourg exports) on behalf of the Ministry for ForeignTrade.
ODLLuxembourg Export Credit Agency
LUXEMBOURG
Nippon Export and Investment Insurance (NEXI) is an incorporatedadministrative agency formed on April 1, 2001 under the Trade andInvestment Insurance Act.
NEXI was launched as a successor to the trade and investmentinsurance administered by the Japanese government, although asthe authority the government (Ministry of Economy, Trade andIndustry) retains ultimate responsibility.
NEXI commits itself to contributing to the economy and society ofJapan through efficient and effective insurance businessoperations. NEXI does this by responding precisely to customers’needs with a quick perception of market changes and byunderwriting the risks inherent in international transactions thatcannot be adequately protected by conventional insurance.
General informationNippon Export Investment Insurance (NEXI)Chiyoda First Building, East Wing 3rd Floor3-8-1, Nishi- KandaChiyoda-kuTokyo, 101-8359Japan+813 3512 [email protected]
HistoryFounded: 2001Ownership: 100% state-owned
Senior managementKazuhiko Bando, Chairman and CEO, [email protected]
Keiji Wada, Vice Chairman, [email protected]
Fuminori Inagaki, Vice Chairman, [email protected]
Contact person(s)Manami Hori, Assistant Director, Strategic Planning [email protected]
Major facilities✓ Export credit insurance: Insurance for export, intermediary
trade, and technical cooperation, Insurance for export oflicences, Insurance for loans (buyer’s credit)
✓ Insurance for project finance: Special project financingfacilities.
✓ Investment insurance and untied loan insurance: Cover offered:conversion/transfer cover; war and civil war cover;expropriation/confiscation cover; force majeure events cover;breach of contract cover.
✓ Bonds and guarantees: Cover against unfair calling.
NEXINippon Export and Investment Insurance
JAPAN
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OPIC accomplishes its mission by assisting US investors throughfour principal activities designed to promote overseas investmentand reduce the associated risks: insuring investments against abroad range of political risks; financing business through loans andloan guarantees; financing private investment funds; andadvocating the interests of the American business community.
General informationOverseas Private Investment Corporation (OPIC)1100 New York Avenue, NWWashington, DC 20527-0001United States+1 202 336 8400www.opic.gov
HistoryFounded: 1971Ownership: 100% state-owned. The Corporation is governed by a15-member Board of Directors, of whom eight are appointed fromthe private sector and seven from the Federal government.
Senior managementElizabeth L. Littlefield, President & [email protected], +1 202-336-8400
John E. Morton, Chief of [email protected], +1 202-336-8400
Paula Tufro, Deputy Chief of [email protected], +1 202-336-8400
Barbara K. Day, Acting Vice President & General [email protected], +1 202-336-8400
Allan Villabroza, Vice President and Chief Financial [email protected], +1 202-336-8400
James C. Polan, Vice President, SME [email protected], +1 202-336-8400
William R. Pearce, Acting Vice President, Investment [email protected], +1 202-336-8400
John F. Moran, Vice President, [email protected], +1 202-336-8400
Margaret L. Kuhlow, Vice President, Investment [email protected], +1 202-336-8400
Judith D. Pryor, Vice President, External [email protected], +1 202-336-8400
Contact person(s)Diane Ferrier, [email protected], +1 202-336-8596
John F. Moran, Vice President, [email protected], +1 202-336-8674
Steven L. Johnston, Managing Director, Political & Sovereign [email protected], +1 202-336-8778
Cindy Shepard, Assistant General Counsel, [email protected], +1 202-336-8435
JoAnn Young, Office [email protected], +1 202-336-8577
Major facilities✓ Insurance: Cover offered: inconvertibility, political violence (war,
revolution, insurrection, civil strife, terrorism and sabotage),including business income loss; expropriation/confiscationcover (including non-payment of arbitral award), denial ofjustice, breach of contract and non-honoring of a sovereignguaranty.
✓ Bonds and guarantees: Cover against unfair calling anddisputes
OPICOverseas Private Investment Corporation
USA
OeKB is a joint stock company providing export-related servicesand carrying out capital market activities. In the field of exportcredit and investment insurance, OeKB operates on thegovernment’s account as agent of the Republic of Austria, coveringnon-marketable risks only.
The refinancing facilities offered to financial institutions areoperated on OeKB’s own account. ST credit insurance (up to 24months) is carried out by the private credit insurers OeKBVersicherung AG and PRISMA Versicherungs-AG (both 51%subsidiaries of OeKB). OeKB also holds a majority stake inÖsterreichischer Exportfonds GmbH and 100% of OesterreichischeEntwicklungsbank AG (OeEB) which acts as the officialdevelopment bank of Austria, mandated by the AustrianGovernment.
General informationOeKBAm Hof 4Vienna, A-1011Austria+43 1 531 27 [email protected]
HistoryFounded: 1946Ownership: Commercial banks
Senior managementRudolf ScholtenMember of the Board of Executive [email protected]
Angelika Sommer-HemetsbergerMember of the Board of Executive [email protected]
Sylvia Doritsch-Isepp, Director, Head of International Relationsand Services [email protected]
Ferdinand Schipfer, Director, Head of Project [email protected]
Contact person(s)Sylvia Doritsch-Isepp, Director, Head of International Relationsand Services [email protected]
Major facilities✓ Export credit insurance for capital goods: Multiple or single
transactions; supplier and buyer credits; commercial andpolitical risks; pre-shipment and credit risks.
✓ Project finance: Special project finance facility.✓ Investment insurance: Cover offered against risk of
expropriation/confiscation; war and civil war as well as non-conversion/non-transfer.
✓ Bonds and guarantees: Cover against unfair calling.
OeKBOesterreichische KontrollbankAktiengesesllschaft
AUSTRIA
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Founded in 1977, SACE holds more than 30 years of experience inthe field of export credits. In 2004, it was converted into a privatejoint-stock company, wholly-owned by the Italian Ministry ofEconomy and Finance (MEF). In 2012, CDP became SACE’s soleshareholder.
SACE’s main mission is to promote Italian exports and investments,as well as to contribute to the internationalisation of the Italianeconomy and projects of strategic importance for the country.Today, SACE offers a complete range of insurance and financialproducts in over 180 countries. It is part of an insurance andfinancial group active in export credit, credit insurance, investmentprotection, financial guarantees, sureties and factoring.
General informationSACEPiazza Poli 37/42Rome, 00187Italy+39 06 67 [email protected]
HistoryFounded: 1977Ownership: Cassa Depositi e Prestiti (CDP)
Senior managementAlessandro Castellano, Chief Executive Officer
Raoul Ascari, Chief Operating Officer
Roberto Taricco, Chief Financial Officer
Contact person(s)Michal Ron, Head of International Relations and Network
Major facilities✓ Export credit insurance: Pre-shipment and credit cover for
political and commercial risks to protect companies againstthe risk of non-payment of foreign counterparties.
✓ Project finance: Structured and project finance facilities.Political risk insurance and investment protection: Coveragainst losses due to political risk for overseas investments ofItalian investors as well as their overseas’ subsidiaries.
✓ Surety: Surety cover as a counter guarantee to issuing banks(e.g. bid bonds, performance bonds and advance paymentbonds etc.) or through direct issuance.
✓ Financial guarantee: Financial guarantee products support theinternationalisation of Italian companies and banks (e.g. directinvestment abroad, M&A, working capital, cross-border “bankto bank” financing and SMEs portfolio) as well as transactionsof strategic relevance to the Italian economy.
SACESace
ITALY
Since 1959, PricewaterhouseCoopers AG Wirtschaftsprüfungs -gesellschaft, together with Euler Hermes Aktiengesellschaft, hasbeen entrusted by the German Federal Ministry for EconomicAffairs and Energy with administering the federal government’sOverseas Investment Insurance Scheme. For this purpose the twocompanies entered into a consortium under the lead managementof PwC. PwC is one of the leading auditing and consultancycompanies in Germany and an independent member of theinternational PwC network.
General informationPricewaterhouse Coopers AG (PwC)New-York-Ring 13Hamburg, 22297Germany+49 40 8834 [email protected]
HistoryFounded: 1922Ownership: Senior Management (Partners), 100%
Senior managementProf. Dr. Norbert Winkeljohann, Chairman
Dr. Andreas Klasen, Partner
Contact person(s)Dr. Andreas Klasen, [email protected]+49 40 8834-9500
Nicole Haubold, Senior [email protected]+49 40 8834-9462
Major facilities✓ Investment insurance: conversion/transfer cover, war/civil war
cover, expropriation/confiscation cover and breach of hostcountry commitments
PwCPricewaterhouseCoopers AG
GERMANY
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SERV extends insurance coverage to Switzerland’s exporters fromall industries and to financial institutions. In addition to consumerand capital goods exports, it also insures various services, such asconstruction and engineering projects and licence and know-howagreements. As an institution of the Swiss Confederation underpublic law, SERV’s activities focus exclusively on areas of the creditinsurance market that are not served by private insurers or only toa limited degree. SERV’s main objective is to create and preserveSwiss jobs and to help Switzerland’s export industry to competesuccessfully around the world.
General informationSERVZeltweg 63Zurich, 8032Switzerland+41 58 551 [email protected]
HistoryFounded: 2007Ownership: Institution of the Swiss Confederation under publiclaw
Senior managementHerbert Wight, Director, [email protected]
Claudio Franzetti, Head of Finance & Risk Management / DeputyDirector, [email protected]
Contact person(s)Christoph Bossart, Head of International Relations & Projects,[email protected], +41 58 551 5547
Verena Uztinger, Senior Relationship Manager,[email protected], +41 58 551 5515
Major facilities✓ Export credit insurance – supplier or buyer credit cover✓ Letter of credit confirmation insurance✓ Pre-shipment risk insurance✓ Working capital insurance✓ Contract bond insurance and counter-guarantee✓ Refinancing guarantee✓ Project finance cover
SERVSwiss Export Risk Insurance
SWITZERLAND
SBCE offers a modern instrument aimed at supporting Brazil in theinternational market. We provide constant analysis of importers,worldwide collection, indemnification and loan guarantees. In MLTtransactions, the policies are characterised by maturities thatexceed two years and, in general, are related to projects involvingcapital goods, services and other specific contracts. BrazilianFederal resources cover these transactions, through the FGE –Fundo de Garantia à Exportação (Export Guarantee Fund). SBCEacts on behalf of the state, responding for all the technical analysisand management of policies.
General informationSBCEAv. Rio Branco, nº1, 9º BRio de Janeiro, CEP: 20090-003Brazil+55 21 2510 [email protected]
HistoryFounded: 1997Ownership: Coface, Banco do Brasil, BNDES.
Senior managementVitor Sawczuk, Head of Business [email protected]
Rodrigo Albanesi, Head of Risk Management and Pricing,[email protected]
Jeanine Sá, Head of Legal [email protected]
Contact person(s)Pedro Carriço, International [email protected]
Major facilities✓ Export credit insurance:
– MLT cover: commercial and political risks– Percentage of cover for commercial risks: up to 95%. In the
case of commercial risk transactions which hold a bankguarantee issued by acceptable financial institution, thepercentage of cover may rise to up to 100%. Percentage ofcover for political risks: up to 100%.
– Supplier and buyer credit cover– Structured and project finance
SBCEBrazilian Export Credit Insurance Agency
BRAZIL
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China Export & Credit Insurance Corporation (SINOSURE) is astate-funded policy-oriented insurance company with independentstatus of legal person, established for promoting China’s foreigntrade and economic co-operation. SINOSURE’s service networkcomprises 24 business offices nationwide and an overseasrepresentative office in London, UK.
General informationSinosureNorth WingFortune Times BuildingNo 11 FenghuiyuanXicheng District,Beijing, 100033China+86 10 6658 [email protected]
HistoryFounded: 2001Ownership: State-owned
Senior managementWang Yi, Chairman
Luo Xi, President, [email protected]
Chen Zuofu, Chairman of Board of Supervisors
Liu Yongxin, Vice President
Nie Qingshan, Vice President
Zhang Weidong, Vice President
Zha Weimin, Assistant President
Yin Yanhui, Assistant President
Xie Zhibin, Assistant President
Contact person(s)Sun Yifeng, Division Manager, Berne Union DivisionInternational Department, [email protected]
Zhu Lei, Berne Union Division, International [email protected]
Li Yifan, Berne Union Division, International [email protected]
Wan Haoyun, Berne Union Division, International [email protected]
Major facilities✓ Export credit insurance✓ Investment insurance✓ Domestic trade credit insurance✓ Bond and guarantee✓ Debt collection service✓ Credit rating service
SINOSUREChina Export & Credit Insurance Corporation
CHINA
SID Bank is the legal successor of Slovene Export Corporation andoperates as an export and development bank and as a nationalexport credit agency (ECA) performing insurance against non-marketable risks. By assisting clients in all phases of businesstransactions, supporting development projects, ensuring safety ininternationalisation of operations and providing all modern financialservices in one place, SID Bank encourages Slovene companies toexploit the opportunities of opening up in the internationaleconomic environment.
SID Bank subsidiaries are SID – First Credit Insurance Company Inc.,Ljubljana, offering short-term credit insurance against marketablerisks, Pro Kolekt, a debt collection agency, and Prvi Faktor providingfactoring services.
General informationSIDUlica Josipine Turnograjske 6Ljubljana, SI-1000Slovenia+386 1 200 [email protected]
HistoryFounded: 1992Ownership: 100% state-owned
Senior managementSibil Svilan, President of the Management Board & CEO
Jožef Bradeško, Member of the Management Board
Contact person(s)Vida Zabukovec, Company [email protected]
Major facilities✓ Export credit insurance: ST/MLT commercial and non-
commercial non-marketable risks, pre/post-shipment cover✓ Investment insurance: Conversion/transfer risk,
expropriation/confiscation risk, war/civil unrests, breach ofcontract, denial of justice, catastrophic risk, commercial risk
✓ Cover of bonds✓ Financing: Supplier/buyer credits and credit lines; financing
exports, SMEs, environmental protection, research, sustainabledevelopment projects, etc.
✦ Member of The Prague Club
SID ✦SID Inc, Ljubljana
SLOVENIA
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Sovereign Risk Insurance Ltd is one of the world’s leading providersof medium/long-term political risk insurance and sovereign creditinsurance for commercial banks, investment banks, capital marketsand equity investors. Sovereign is also very active in supportingECAs and multilateral agencies with coinsurance and reinsurance.
General informationSovereign Risk Insurance Ltd17 Woodbourne AvenueHamilton, HM 08Bermuda+1 441 [email protected]
HistoryFounded: 1997Ownership: ACE Bermuda Insurance Ltd (AA- S&P; Aa3 Moody’s;AA Fitch), a wholly-owned subsidiary of ACE Limited (AA- S&P;AA Fitch)
Senior managementPrice Lowenstein, President & [email protected]
Christina Westholm-Schroder, Vice-President & Chief Underwriter,[email protected]
Barker Keith, Vice-President & Corporate [email protected]
Natalie Luthi, Vice-President & Senior [email protected]
Nila Davda, Vice-President & Senior [email protected]
Sophie Demeyer, Vice-President & Senior [email protected]
Justin Willmott, Vice-President [email protected]
Allison Petty, Asst V.P. & [email protected]
Contact person(s)Christina Westholm-Schroder, Chief Underwriter,[email protected]+1 441 298-8055
Major facilities✓ Investment Insurance: Currency inconvertibility, non-transfer
and expropriation of funds, political violence, expropriatoryactions (direct and creeping), breach of contract, wrongfulcalling of on-demand guarantees, license/concessioncancellation, embargo and other customized political risks.Maximum line per project: US$80mn; maximum tenor: 15 years.
✓ Sovereign and Sub-Sovereign Non-Payment: Non-payment bysovereign and sub-sovereign borrowers, and non-honoring ofsovereign and sub-sovereign guarantees. Maximum line perproject: US$80mn; maximum tenor: 15 years.
SOVEREIGN RISKSovereign Risk Insurance Limited
BERMUDA
The Sri Lanka Export Credit Insurance Corporation (SLECIC) wasestablished by Act No 15 of 1978 and commenced operations onFebruary 8, 1979. The main objective of SLECIC is to providesupport services of export credit insurance and guarantees for thedevelopment of exports from Sri Lanka. SLECIC’s comprehensiveexport credit solutions help exporters to compete in more than 100countries including high-risk and emerging markets.
General informationSLECICLevel 4, DHPL BuildingExport Guarantee House, No 42Nawam MawathaColombo 2Sri Lanka+94 11 5378161 65 or +94 11 4883561 [email protected]@slecic.lk
HistoryFounded: 1978Ownership: Government-backed export credit agency
Senior managementMr Priyantha Mendis Devaradura, Chairman & Managing Director
Contact person(s)Dilruk Ranasinghe, General Manager
Major facilities✓ Export credit insurance (seller’s risk): Short-term (up to 180
days) cover against commercial and political risks. Wholeturnover and specific insurance policies. Tailor-made insurancepolicies where cover available for export of services, entrepottrade and consignment stocks as well.
✓ Export credit guarantees: Whole turnover credit guarantees(WTG) that underwrite the entire short-term export financeportfolios of commercial banks. Individual export productioncredit guarantees and pre and post-shipment creditguarantees to enable exporters to obtain working capital frombanks. Credit guarantees to banks that enable migrant workersto obtain pre-departure loans from banks (APARA).
✓ Export performance guarantees: Counter-guarantees to bankson account of exporters covering bid bonds, performancebonds etc. Demand guarantees to the International Chamberof Commerce of Sri Lanka (ICC) covering the ATA CarnetSystem. Demand counter-guarantees to banks on account offreight forwarders covering their commitments to airlines.
✓ Other services: Providing financial status reports tocommercial banks (Bizinfo).Debt collection service.
SLECICSri Lank Export Credit Insurance Corporation
SRI LANKA
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Export-Import Bank of Thailand (THAI EXIMBANK) is a financialinstitution wholly-owned by the Royal Thai Government under thesupervision of the Ministry of Finance. The bank’s main objective isto serve the financial needs of Thai exporters, Thai investmentsoverseas, and other businesses earning or saving foreign exchange.THAI EXIMBANK provides financial services customary tocommercial bank practices, except for accepting deposits from thegeneral public.
General informationTHAI EXIMBANK1193 Exim Building, Phaholyothin RdPhayathaiBangkok, 10400Thailand+662 271 3700, +662 278 0047, +662 617 [email protected]
HistoryFounded: 1993Ownership: Royal Thai Government 100%
Senior managementKanit Sukonthaman, President
Contact person(s)Jarupat Panitying, First Vice-President, Export Credit InsuranceDepartment, [email protected]
Worawara Bunnag, Vice-President, Export Credit InsuranceDepartment
Chattip Virasa, Assistant Vice-President, Export Credit InsuranceDepartment
Major facilities✓ Financial services similar to those offered by commercial
banks:– Revolving credits for exports– Negotiation of export bills– Term loan for business expansion
✓ Other specialised financial facilities to support Thai exportersor investors investing abroad:– Export credit insurance– Short-term (less than 180 days)– Medium and long-term (up to five years)– Investment insurance– Merchant marine financing
✦ Member of The Prague Club
THAI EXIMBANK ✦Export-Import Bank of Thailand
THAILAND
TEBC is the official export credit agency of Chinese Taipei. Thebank’s mission is to promote economic development and enhanceinternational co-operation. TEBC’s operations are, amongst others,to assist local firms in expanding external trade, and to engage inoverseas investments. It does not compete with commercial banksin providing financial services. TEBC offers financial solutions tofacilitate the export of capital goods and services, overseasinvestments, etc. These financial solutions include export creditinsurance and overseas investment insurance since 1979. Theseinsurance services are used to protect exporters againstcommercial and political risks. TEBC has also offered loans orguarantees on short-term, medium and long-term basis.
General informationTEBCHead Office, 8th FloorNo 3, Nanhai RoadChinese TaipeiChina+886 2 2321 [email protected]
HistoryFounded: 1979Ownership: 100% government-owned
Senior managementYen Chrystal Shih, Chair of the Board of Directors
Robert RF Chu, President
Shui-Yung Lin, Executive Vice-President
Jack Huang, Executive Vice-President
Johnson C.C. Liao, SVP and General ManagerExport Credit Insurance Department
Contact person(s)Tzuu-Wang Hu, VP and Deputy General ManagerExport Credit Insurance Department
Major facilities✓ Export credit insurance: Short-term (up to one-year)/medium
and long-term cover: Commercial and political risks.✓ Investment insurance: Conversion/transfer cover; war and civil
war cover; expropriation/confiscation cover.✓ Export finance: As direct lender; short-term, medium and long-
term export finance.✓ Guarantees: Bid bonds; performance bonds; bonds/guarantees
issued.
TEBCTaipei Export-Import Bank of China
CHINESE TAIPEI
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UK Export Finance is the UK’s export credit agency. As agovernment department (formally named the Export CreditsGuarantee Department) that operates under an act of parliament,it complements the private market by providing governmentassistance to exporters and investors, principally in the form ofinsurance policies and guarantees on bank loans.
General informationUK Export Finance1 Horse Guards RoadLondon, SW1A 2HQUnited Kingdom+44 20 7512 7000www.gov.uk/government/organisations/[email protected]
HistoryFounded: 1919Ownership: UK government
Senior managementDavid Godfrey, Chief [email protected]
Contact person(s)Simon Foister, Senior International Policy Advisor,[email protected]
Frank Gough, International and Strategy Manager,[email protected]
Major facilities✓ Buyer credit facility✓ Supplier credit financing facility✓ Lines of credit✓ Project financing✓ Export insurance policy✓ Bond insurance policy✓ Overseas investment insurance✓ Letter of credit guarantee scheme✓ Bond support scheme✓ Export working capital scheme✓ Foreign exchange credit support scheme.
UKEFUK Export Finance
UNITED KINGDOM
Turk Eximbank was founded in 1987 by the restructuring of theState Investment Bank (SIB). Today, Turk Eximbank is the onlyofficial export credit agency of Turkey, leading the country’s exportdrive. The Board members and the CEO are appointed by thegovernment. The political risk losses that Turk Eximbank may incurunder its credit, guarantee and insurance programmes arecompensated by the government.
Commercial risks are covered for Turk Eximbank’s own account andboth commercial and political risks are partially reinsuredconcerning short-term credit insurance business.
General informationTURK EXIMBANKSaray Mah. Üntel Sok. No:19Ümraniye / İSTANBUL, 34768Turkey+90 (216) 666 55 00www.eximbank.gov.tr
HistoryFounded: 1987Ownership: 100% owned by the Treasury of the Republic ofTurkey
Senior managementHayrettin Kaplan, General [email protected]
Contact person(s)Enis Gültekin, Deputy General [email protected]
Major facilities✓ Export Credit Insurance: Short-term (up to one year) cover:
commercial and political risks; pre and post shipment cover.✓ Medium and long-term (over one year) cover: commercial and
political risks; pre and post shipment cover.✓ Domestic Credit Insurance: Short-term (up to one year):
commercial risks, post shipment cover.✓ Project Loans: Project loans extended to various countries for
capital goods exports and turn-key contracts of Turkishcompanies. Domestic Investment Loans for export-orientedprojects
✓ Export Finance: As direct lender; pre-shipment finance;working capital facility, various special-purpose facilities andforeign exchange earning services.
✓ Bonds and Guarantees: Bonds/guarantees issued. Unfair callingof bond insurance cover is available.
TURK EXIMExport Credit Bank of Turkey
TURKEY
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Zurich Credit & Political Risk is a global political risk and creditinsurance business based in Washington DC, with offices in NewYork, Miami, London, Singapore, Beijing, Hong Kong, Tokyo, Sydney,Paris, Barcelona, Frankfurt, and Zurich. Zurich collaborates with awide range of organisations, including export credit agencies,international banks and private insurers, to structure deals in allbusiness sectors. To date, Zurich has written policies covering risksin more than 150 countries.
General informationZurich1201 F Street, NWWashington, DC 20004United States+1 202 628 2216www.zurichna.com/politicalrisk
HistoryFounded: 1997Ownership: Zurich Financial Services Group
Senior managementDaniel Riordan, CEO Zurich Global Corporate in North America,[email protected], 212 553 3313
James Thomas, Senior Vice President & Acting ManagingDirector, [email protected], 202 585 3123
Nuria Gorog, Senior Vice President & Regional ManagerContinental [email protected], 33 1 43 1874 33
Contact person(s)James Thomas, Senior Vice President & Acting ManagingDirector, [email protected], 202 585 3123
Ed Moeller, Vice [email protected], 202 585 3125
Daniel Riordan, CEO Zurich Global Corporate in North America,[email protected], 212 553 3313
Major facilities✓ Political Risk Insurance: Coverage against: expropriation;
political violence; currency inconvertibility; non-honoring ofsovereign and sub-sovereign debt obligations; arbitrationaward default; wrongful calling; non-repossession; and otherperils customised to fit transaction requirements. Policy termsup to 15 years; capacity up to US$150mn per transaction;indemnities from 90-100%.
✓ Credit Insurance: Cover offered: comprehensive paymentdefault, whether occurring due to political risk events orcommercial reasons. Policy terms up to seven years; capacityup to US$75mn per transaction. Zurich’s Excess of Loss CreditInsurance product covers payment default related to short-term receivables.
ZURICH Zurich Surety, Credit & Political Risk
USA
The official ECA of the United States supports US jobs by financingthe export of US goods and services. The bank does not competewith the private sector but assumes commercial and political risksthat the private sector is unable or unwilling to accept. US Ex-ImBank also helps to level the playing field for US exporters byproviding export credits that are comparable to financing offeredby foreign governments. Historically, 80% or more of US Ex-ImBank’s authorisations have been for small businesses.
General informationExport-Import Bank of the United States811 Vermont Avenue, NWWashington, 20571United States+1 202 565 3946 / [email protected]
HistoryFounded: 1934Ownership: 100% federal government-owned independentagency
Senior managementFred Hochberg, President and Chairman
Contact person(s)Jim Cruse, Senior Vice President, Policy and Planning,[email protected]
Major facilities✓ Export credit insurance: Policies protect against political and
commercial risks of nonpayment. Single and multi-buyer short-term policies (90-100% cover) and single-buyer medium-termpolicies are available (100% cover).
✓ Export finance: Provides fixed-rate loans to private and publicsector creditworthy international buyers of US goods andservices.
✓ Export loan guarantees: Provides medium and long-term loanguarantees that cover 100% of principal and interest of acommercial loan against political and commercial risks of non-payment.
✓ Export working capital loan guarantees: Provides exporterswith the liquidity to produce US goods and services intendedfor export, helping them compete more effectivelyinternationally.
✓ Project finance: Offers project finance for projects that rely onproject revenues for repayment. Project finance offersmaximum flexibility for project sponsors and helps USexporters compete globally.
US EXIMBANKExport-Import Bank of the United States
USA
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AOFI was established by the government of the Republic of Serbiaas a joint stock company in 2005. AOFI’s main objective isstimulating and promotion of exports, development of economicrelations of the Republic of Serbia with foreign business entitiesand the reduction of risks resulting from the disposal of productsand services abroad.
General informationAOFI30, Nikola Pašic StreetUžice, 31000Serbia+381 11 22 05 [email protected]
HistoryFounded: 2005Ownership: state ownership – 100%
Senior managementMr Dejan VukotićCEO and Chief of Executive [email protected]
Mr Danilo ĆirkovićExecutive manager and member of Executive [email protected]
Mr Nikola TegeltijaExecutive Manager and member of Executive [email protected]
Contact person(s)Mrs Marija Kulundžić IvanjiDirector of Credit Insurance, [email protected]
Major facilities✓ Export credit insurance✓ Loans and guarantees✓ Factoring
AOFISerbian Export Credit and Insurance Agency
SERBIA
BAEZ was established as a joint stock company and now the soleshareholder, with 100% capital share, is the Republic of Bulgaria,represented by the Minister of Economy, energy and Tourism. BAEZperforms activity on its own account and on the account of thestate. The mission of BAEZ is to protect Bulgarian exporters fromfinancial losses and to support the realisation of their productionon international markets by export insurance mechanisms. BAEZhas also developed schemes that facilitate access of companies tocredit and financing.
General informationBulgarian Export Insurance Agency55, Alexander Stamboliiski Blvd.Sofia, 1301Bulgaria+359 2 923 69 11/+359 2 923 69 [email protected]
HistoryFounded: 1998Ownership: Full state ownership
Senior managementBistra IlkovaChairman of the Board of Directors
Dotcho KaradotchevMember of the Board of Directors and Executive Director
Nikolay MishkalovMember of the Board of Directors
Contact person(s)Dotcho KaradotchevExecutive [email protected]
Major facilities✓ Export credit insurance: Insurance against short-term
commercial risk (marketable and non-marketable); insuranceagainst short-term political risk; domestic credit insurance.
✓ Export financing: Pre and post-shipment financing. Investmentinsurance; insurance of letters of credit; insurance of bankguarantees.
✓ Insurance of credit and financing: Covering the risk of delayedpayment on behalf of the debtor or insolvency/over-indebtedness or bankruptcy of the debtor.
BAEZBulgarian Export Insurance Agency
BULGARIA
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BECI has since its inception in 1996, continued to affirm its positionin the market by growing its product base from offering only exportcredit insurance, to later introducing domestic credit insurance,debt collection, construction related guarantees, and engineeringinsurance to complement the bonds and guarantees. The politicalrisks are reinsured by the Government of Botswana whilstcommercial risks are reinsured in the private reinsurance market.BECI continues to explore new business opportunities.
General informationBECIPrivate Bag BO 279GaboroneBotswana00 267 [email protected]
HistoryFounded: 1996Ownership: Botswana Development Corporation Limited
Senior managementPauline SebinaGeneral Manager
Bonani DubeMarketing Manager
Rocky RamalefoUnderwriting Manager
Harold KuvengaFinance & Admin Manager
Contact person(s)Pauline Sebina, General [email protected]+267 3188015
Major facilities✓Export and domestic credit insurance✓Construction-related guarantees✓Engineering insurance✓Debt Collection
BECIExport Credit Insurance & Guarantee Company(Botswana) (Pty) Ltd
BOTSWANA
Rated AA Stable by Standard & Poor’s, DHAMAN is a multilateralcredit and political risk insurer owned by 21 Arab countries. It hasbeen playing a significant role in promoting Arab domestic andforeign trade as well as investment flows into Arab countries for 40years, during which it has built solid relationships with creditinsurers, reinsurers and brokers worldwide.
General informationThe Arab Investment & Export Credit Guarantee Corp –DHAMANPO Box 23568Safat, 13096Kuwait+965 24 959 555www.dhaman.org
HistoryFounded: 1974Ownership: All Arab countries
Senior managementFahad R. Al IbrahimDirector [email protected]+965 24 959 501
Contact person(s)Mohamed Chouari, DirectorOperations [email protected]+965 24 959 503
Mohamed Chatti, HeadBusiness [email protected]+965 24 959 548
Major facilities✓ Investment insurance: DHAMAN protects Arab and non-Arab
investors investing in Arab countries against losses arisingfrom political risks: expropriation and nationalisation, currencyinconvertibility and transfer restrictions, war and civildisturbances and breach of contract. Both new and existinginvestments are eligible.
✓ Trade credit insurance: Dhaman provides cover against politicaland commercial risks (bankruptcy and protracted default) for:– Arab countries’ domestic trade,– Arab exports worldwide,– Arab countries’ imports of capital goods and strategic
commodities from non-Arab countries.✓ Financial institutions: Dhaman provides financial institutions
with adequate insurance contracts which include:– The Documentary Credit Insurance Policy (DCIP) which
protects the confirming bank against the default of the issuingbank.
– The Leasing Insurance Policy (LIP) which protects the Lessoragainst the default of the Lessee.
– The Factoring Insurance Policy (FIP) which protects theFactor against the default of the obligors.
DHAMANThe Arab Investment & Export CreditGuarantee Corporation
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Export Credit Guarantee Agency of Oman SAOC (ECGA O) wasestablished in 1991 as the national export credit agency of Oman,with the primary goal of promoting Oman non-oil exports. ECGA Oplays an instrumental role by extending its services towardsenhancing export activities of Omani non-oil goods and thuscontributing to the national economy.
General informationECGA OPO 2031Muscat, PC 111Oman+968 [email protected]
HistoryFounded: 1991Ownership: Fully owned by the Goverment of Oman
Senior managementNasir Al-Ismaily, [email protected]+968 24346650
Ahmed Al- AbdaliHead of [email protected]+968 24346633
Imaad Al-HarthyHead of Claims & [email protected]+968 24346622
Contact person(s)Nasir Al-Ismaily, [email protected]+968 24346650
Ahmed Al- AbdaliHead of [email protected]+968 24346633
Major facilities✓ Export credit insurance: Provides short-term cover against
commercial and political risks.✓ Domestic credit insurance: Provides short-term cover against
commercial risks.✓ Pre-shipment credit guarantee: Issues pre-shipment credit
guarantee to enable the exporters to obtain working capitalcredit facilities from commercial banks.
✓ Post-shipment credit facilities: Assists exporters to avail post-shipment credit facilities through commercial banks.
✓ Guarantees on confirmation of letter of credit (DCLC)
ECGA OExport Credit Guarantee Agency of Oman SAOC
OMAN
ECGE is the government export credit agency of Egypt offering itsclients global credit solutions including credit insurance, factoring,information reports and debt recovery.
General informationECGE E5 El Nast RoadNasr City4th FloorCairoEgypt+202 2263 6740 / 6745 / [email protected]
HistoryFounded: 1993Ownership: Export Development Bank of Egypt 70%, NationalInvestment Bank 21%
Senior managementOla GadallahChairman and Managing [email protected]
Contact person(s)Alaa GoudaGeneral [email protected]
Major facilities✓ Export and domestic credit insurance✓ Whole turnover policy✓ Single shipment policy✓ Unconfirmed letters of credit policy✓ Services policy✓ Export, import and domestic factoring✓ Insurance, finance and collection of export and domestic trade
receivables on recourse and non-recourse basis
ECGE EExport Credit Guarantee Company of Egypt
EGYPT
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The Export Credit Insurance Company of the Emirates (ECIE) is anexport credit agency that was established as part of H.H. SheikhMohammed Bin Rashid Al Maktoum’s vision, in his capacity as Vice-President and Prime Minister of the UAE, and Ruler of Dubai; tohelp UAE-based companies make use of opportunities to growtheir exports safely, and facilitate sustainable economicdevelopment and prosperity.
ECIE’s trade credit insurance policies cover a UAE-based selleragainst the risk of non-payment by its customers. ECIE’s businessactivities are governed by the UAE Insurance Authority, and itsrelations with companies and banks are conducted on acommercial basis. ECIE is a member of the Berne Union PragueClub, the Organisation of the Credit Alliance and the Aman Union– an association of Arab and Islamic trade credit insurers.
General informationECIEClock Tower SquareBusiness Village, Block A3th Floor P.O. Box 121616,Dubai, UAE+971 [email protected]
HistoryFounded: 2008Ownership: 100% Government of Dubai
Senior managementEng. Saed Al Awadi, Managing Director & CEO
Ms. Mariam Al Afridi, Director
Contact person(s)Mr Mohammad Feras Al Hamwi, Sales Manager
Major facilities✓ Conventional and Shariah-compliant export trade credit
policies✓ Short-term marketable and non-marketable credit risk cover✓ Medium to long-term credit risk cover✓ Excess of loss cover✓ Foreign investment insurance cover✓ Specific transaction cover in case of locally produced/value-
added goods✓ Credit risk cover for banks and financial institutions✓ Debt collections & recoveries, corporate credit quality labels &
ratings
ECIEExport Credit Insurance Company of the Emirates
UNITED ARAB EMIRATES
ECIO was established in 1988 by Law 1796/1988 and it is anautonomous Public Entity in Private Law. It is governed by a nine-member Board of Directors which is appointed by the supervisingMinister of Development, Competitiveness, Infrastructure,Transportation and Networks. Its reserve capital amounts toa140mn.
General informationECIO57, Panepistimiou StreetAthens, 105 64Greece+30 210 331 0017www.ecio.gr
HistoryFounded: 1988Ownership: 100% State Ownership
Senior managementMr. Themistoklis [email protected]
Mr. Aggelos KotsiopoulosGeneral [email protected]
Contact person(s)Dr. Exarchos DimitropoulosSpecial Advisor to the General [email protected]
Mrs. Katia SarantakiHead of Claims and Recoveries [email protected]
Major facilities✓ Insurance for ST Export Credits against commercial and
political risks✓ Insurance for MLT Export Credits against commercial and
political risks✓ Investment Insurance for Greek investments undertaken
abroad, against political risks
ECIOExport Credit Insurance Organisation
GREECE
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EGFI, established in 1973, is the Iranian state-owned export creditinsurance company affiliated to I.R. of Iran’s Ministry of Industry,Mine & Trade whose responsibility is to help export promotionthrough providing Iranian exporters with:l Overseas insurance policies to cover the major political &
commercial risks involved in their export operations;l Credit guarantees to help them meet their financial
requirements.
General informationExport Guarantee Fund of Iran (EGFI)No. 5, 16th St.Bucharest Ave.Argentina Sq.Tehran, 1514837114Iran+98 21 8873 9267/8854 [email protected]
HistoryFounded: 1973/1994Ownership: Wholly state-owned
Senior managementTaher Shah Hamed, Chairman & [email protected]
Rahim Piri, [email protected]
Hamid Ashtari, [email protected]
Esmaeil Dehban, [email protected]
Contact person(s)Arash Shahraini, Risk & Int'l Cooperation [email protected]+982188739267/88546989/88733370
Major facilities1. Policies:✓ Whole turnover policy✓ Technical & engineering services policy✓ Specific policy✓ Investment policy✓ Export contract frustration policy✓ Discounting of export bills insurance policy✓ Sight LCs insurance policy
2. Guarantees:✓ Manufacturer’s credit guarantee✓ Local currency credit guarantee✓ Foreign exchange credit guarantee✓ Buyer’s credit guarantee✓ Cover for bank’s bonds (domestic)
3. Bonds & cover for bank’s bonds
EGFIExport Guarantee Fund of Iran
IRAN
EIAA is 100% state-owned export credit agency of Armenia. EIAAmission is to pro-mote Armenian export. The board of directorsconsists of senior executives of the Armenian government.
General informationEIAA26/1 V. Sargsyan str., Erebuni Plaza, Office 405YerevanArmenia+374 10 [email protected]
HistoryFounded: at the end of 2013.
Senior managementTatevik Muradyan, Executive [email protected]+374 10 58 29 29
Contact person(s)Tatevik Muradyan, Executive [email protected]+374 10 58 29 29
Major facilities✓ Short-term export credit insurance and related services all in
process of development.
EIAAExport Insurance Agency of Armenia
ARMENIA
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Banca de Export Import a României EximBank S.A. has beenestablished in 1992 as a joint stock company with the Romanianstate as major shareholder.
EximBank has been entrusted with the public mandate to supportRomanian exporters, as well as projects in the areas important forthe long-term sustainable development of the Romanian economy,such as: infrastructure, public utilities, regional development,research & development, employment & training of personnel, orenvironmental protection. EximBank has also a strategic focus onRomanian SME support.
In August 2010 Compania de Asigurari-Reasigurari Exim Romania(Care – Romania) S.A., a joint stock company with EximBankRomania as major shareholder, was set up for short-term exportcredit insurance against marketable risk. EximBank Romaniacooperates with a wide range of export credit agencies, local andinternational banks and related organisations to strengthen theoperating potential and competitiveness of Romanian companieson domestic and international markets.
General informationEXIM R15, Splaiul IndependenteiBucharest 5Romania+40 21 405 33 33/+40 21 405 31 [email protected]@eximbank.ro
HistoryOwnership: 95.374% – the Romanian state 4.626% – five regionalinvestment funds
Senior managementIonut Costea, President & CEO
Luminita Manolache, Vice-President
Paul Ichim, Vice-President
Contact person(s)Corina Vulpes, Director, Head of International Financial RelationsDepartment
Major facilities✓ Financing of strategic economic sectors✓ Bonds and guarantees✓ Export credit insurance
– Short-term pre-shipment and credit cover against non-marketable risks
– Medium and long-term export credit insurance (supplier andbuyer credits) against commercial and political risks
✓ Insurance of Romanian capital investments abroad
EXIM REximbank of Romania
ROMANIA
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EXIAR is the national export credit agency of Russia. EXIAR’smandate is to support Russian export and investment abroad.EXIAR covers short, medium and long-term risks. The chartercapital makes up R30bn (ca. US$1bn). The Board of Directorsconsists of senior executives of the Russian government andindependent directors. The Agency’s activities are backed by theRussian Federation in line with the budget legislation.
General informationEXIAR3, 1st Zachatievsky Lane, Bldg. 1Moscow, 119034Russian Federation+7 495 783 [email protected]@exiar.ru
HistoryFounded: 2011Ownership: Sole shareholder – Vnesheconombank (VEB)100% State-owned
Senior managementPetr Fradkov, CEO, Chairman of the Management [email protected]+7 495 783-11-88
Alexey Tyupanov, Managing Director, Board Member, Head, Business [email protected]+7 495 783-97-38
Contact person(s)Ekaterina Karasina, Managing Director, External [email protected]+7 495 783-11-88
Arthur Lyaschenko, Senior Expert, External [email protected]+7 495 783-11-88
Major facilities✓ Export credit insurance✓ Investment insurance
EXIARExport Insurance Agency of Russia
RUSSIA
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Croatian Bank for Reconstruction and Development (HBOR) is thenational development and export bank, and export credit insurerwith the task of supporting sustainable economic growth pursuantto the overall strategic goals of the Republic of Croatia.
Via different financing programmes, HBOR supports SMEs,infrastructure projects, tourism, industry, agriculture, environmentalprotection, energy efficiency and renewable energy resources aswell as export. HBOR also gives loans for incentives to SME start-ups and loans to improve liquidity, loans for innovations and newtechnology projects.
HBOR provides insurance and reinsurance of export against non-marketable risks. By establishing the Croatian Credit Insurance JSC(HKO) for commercial credit insurance, HBOR Group wasincorporated.
HBOR is a member of different associations, clubs and otherinstitutions that share a similar background and similar interestscommitted to global development. The Bank also co-operates withthe export credit agencies, international banks and supranationalinstitutions to meet the needs of Croatian entrepreneurs.
General informationHBORStrossmayerov trg 9Zagreb, 10000Croatia+385 1 4591 539/ +385 1 4591 [email protected]@hbor.hr
HistoryFounded: 1992Ownership: 100% State-owned
Senior managementAnton Kovacev, President of the Managing Board+385 1 45 91 706
Mladen Kober, Member of the Managing [email protected]+385 1 45 91 909
Branimir Berkovic, Senior Executive [email protected]+385 1 45 91 586
Andrea Mergedus, Managing Director+385 1 45 91 545
Contact person(s)Andrea Mergedus, Managing Director+385 1 45 91 545
Major facilities✓ Financing of the economy✓ Export finance: pre- and post-shipment export finance,
supplier/buyer credit, credit lines✓ Export credit insurance: pre-export financing insurance, pre-
shipment insurance, guarantee insurance, ST insurance &reinsurance, MLT insurance (supplier & buyer credit insurance)
✓ Guarantees
HBORCroatian Bank for Reconstruction andDevelopment
CROATIA
EXIMGARANT is the official export credit agency of the Republicof Belarus, the only officially-supported insurance companyspecialising in credit and investment insurance in Belarus.
EXIMGARANT was founded in 2001 within the governmentalprogramme aimed at development of export operations in thecountry. The main aim of EXIMGARANT is to support exportactivities of national exporters in order to increase theircompetitiveness in the markets abroad by providing export creditand investment insurance to export companies, investors, banks,leasing companies and finance institutions.
General informationEXIMGARANT OF BELARUS2 Melnikaite StreetMinsk, 220004Belarus+375 17 203 68 [email protected]
HistoryFounded: 2001Ownership: 100% government-owned
Senior managementGennady MitskevichGeneral [email protected]+37517 209 40 28
Mikhail OlshanskyFirst Deputy General [email protected]
Oleg AniskevichDeputy General [email protected]
Oleg PavlovskyDeputy General [email protected]
Contact person(s)Oleg RutkowskiHead of International business development [email protected]+37517 203 14 11
Major facilities✓ Export credit insurance against commercial and political risks
(ST & MLT cover)✓ Pre-shipment insurance✓ Investment insurance✓ Supplier/Buyer credit insurance✓ Guarantee, LC insurance✓ Lease transactions insurance✓ Factoring
EXIMGARANTEximgarant of Belarus
BELARUS
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The Jordan Loan Guarantee Corporation (JLGC) was establishedas a public shareholding company in accordance with JordanianCompanies’ Law and registered in the registry of the publicshareholding companies under number 242 on March 26, 1994. Itsestablishment was formally declared in the Founders Assemblymeeting held on April 17, 1994. The corporation was givenpermission to start operating as of May 7, 1994.
The establishment of JLGC came in response to the decisionundertaken by the Cabinet session of 24/8/1993, which approvedthe establishment of a public shareholding company forguaranteeing loans to small and medium-sized organisations.
In 1997, JLGC took on the functions of the Export Credit GuaranteeDepartment and the Counselling Services Unit. JLGC’s capital wassubsequently increased to JD10mn (US$1mn).
General informationJLGC24 Prince Shaker Bin Zaid StreetAl Shmeisani P.O.Box 830703Amman, 11183Jordan+962 6 [email protected]
HistoryFounded: 1994Ownership: Limited public shareholding company
Senior managementDr. Mohamed Al Jafari, Director [email protected]
Mohannad Rashdan, Assistance Director General for Technical &Operational Group
Zaid Al Kayed, Head of the Export Credit [email protected]
Contact person(s)Dr. Mohamed Al Jafari, Director [email protected]
Zaid Al Kayed , Head of the Export Credit Department,[email protected]
Major facilities✓ Loan guarantees✓ Export credit guarantees
JLGCJordan Loan Guarantee Corporation
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IGA is the ECA of Bosnia and Herzegovina, established inSeptember 1996 by the decree of the government of Bosnia andHerzegovina. The start-up activity was non-commercial riskinsurance of foreign enterprises and financial institutions havingtrade exposure in Bosnia and Herzegovina. In 1999, IGA expandedits activities, assuming the role of the state ECA.
General informationIGAHamdije Cˇemerlic´a 39aSarajevo, 71000Bosnia and Herzegovina+387 33 720 140 or +387 33 720 [email protected]
HistoryFounded: 1996Ownership: Full state ownership
Senior managementLamija Kozaric-Rahman, General Director
Ljiljana Bevanda, Deputy General Director
Mirko Dejanovic, Deputy General Director
Contact person(s)Lamija Kozaric-Rahman, General [email protected]
Aldijana Sabanovic, Credit Insurance [email protected]
Major facilities✓ ST and MT financing for domestic export companies✓ Working capital loan guarantees, to local banks providing
financing to export companies✓ Performance, bid and advance payment bonds facility for
domestic companies performing works abroad✓ Factoring facility for domestic exporting companies✓ Export credit insurance✓ Domestic credit insurance✓ Import credit reinsurance facility for foreign ECAs and
insurance companies✓ Credit information facility on domestic companies✓ Political risk insurance for foreign traders with domestic
companies and sovereign
IGAExport Credit Agency Bosnia & Herzegovina
BOSNIA AND HERZEGOVINA
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KredEx Credit Insurance Ltd is a self-sustaining insurance companyin the jurisdiction of the Estonian state, whose goal is to supportthe development of Estonian exports. The company providesvarious insurance solutions, which serve to manage the export risksof enterprises KredEx Credit Insurance Ltd acts on the principlesand self-sustaining diversified portfolio.
General informationKREDEXHobujaama 4Tallinn, 10151Estonia+372 667 [email protected]@kredex.ee
HistoryFounded: 2009Ownership: Ministry of Economic Affairs & Communications 2/3;Credit and Export Guarantee Fund KredEx 1/3
Senior managementMeelis TamblaHead of the [email protected]+372 667 4138
Contact person(s)Mariko RukholmMember of the [email protected]+372 6674 139
Major facilities✓ ST credit insurance✓ MLT credit insurance✓ Pre-shipment insurance✓ Investment insurance
KREDEXKredEx Credit Insurance Ltd
ESTONIA
Export Credit Insurance Corporation (KazExportGarant) performsits activities as an export credit agency of the Republic ofKazakhstan in order to stimulate non-oil export and investmentsabroad by providing insurance against commercial and politicalrisks. Since 2010 KazExportGarant provides post-export tradefinancing for exporters in non-oil sector. Insurance financialstrength rating assigned by Moody’s Investors Service is Baa2,outlook – “Stable”.
General informationKazExportGarant80 Zenkov StrAlmaty, 050010Kazakhstan+7 727 250 00 [email protected]
HistoryFounded: 2003Ownership: Joint stock company, 100% government-owned
Senior managementYerken SadykovChairman of the [email protected]
Contact person(s)Ruslan BekturganovSenior Manager of Marketing and PR [email protected]
Major facilities✓ Export credit insurance: pre-shipment risks, supplier credit
insurance, buyer credit insurance. LC insurance, investmentinsurance. Reinsurance, bank guarantee insurance. Exporttrade finance: post-shipment export finance through partnerbanks
KAZEXPORTGARANTKazExportGarant Export Credit InsuranceCorporation
KAZAKHSTAN
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SIA Latvijas Garantiju aģentūra [Latvian Guarantee Agency Ltd](LGA) is a limited liability company, which provides support toLatvian businesses for implementing business ideas. LGA helpsentrepreneurs to attract new finance by establishing risk capitalfunds that provide seed, start-up and expansion capital as well asdirectly issuing credit and export guarantees, and providingmezzanine loans.
General informationLGAZigfrida Annas Meierovica bulvaris 14Riga, LV-1050Latvia+371 6721 [email protected]
HistoryFounded: 1998Ownership: LGA is 100% state-owned Limited liability company;the holder of state shares is the Ministry of Economics
Senior managementKlavs Vasks, Chairman of the board
Andris Gadmanis, Member of the board
Inese Matvejeva, Member of the board
Ivars Golsts, Director
Contact person(s)Ivars Golsts, [email protected]+371 6735 9373
LGALatvian Guarantee Agency
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The Lebanese Credit Insurer s.a.l. (LCI) is the first independentspecialised credit insurance company in Lebanon and the MiddleEast. LCI is active through its partners in Saudi Arabia, UAE, Kuwait,Qatar, Jordan, Bahrain, Egypt, Oman, Syria, Cyprus and Croatia.
General informationLCISodeco Square, Block B15th FloorBeirutLebanon+961 615 [email protected]
HistoryFounded: 2001Ownership: Atradius Participations Holding B.V (49%), RegionalInsurance Companies (21%) and Private Investors (30%)
Senior managementKarim Nasrallah, General [email protected]
Ralph Dahan, Business Development Manager,[email protected]
Contact person(s)Diana Loutfy, Project & [email protected]
Major facilities✓ LCI focuses on domestic and export trade credit insurance
(trade receivables insurance). Policies cover manufacturers,trading companies and providers of services, against the risk ofnon-payment of their local and foreign customers. Tradereceivables management tools are also offered such as CreditInformation, Debt Collection services, and Risk ManagementSolutiong through its 100% owned subsidiary LCI Services s.a.l.
LCIThe Lebanese Credit Insurer
LEBANON
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The agency was founded under special ordinance in August 2005,passed by the transitional National Assembly. The headquarters isin Khartoum and can establish branches in any Sudanese state orabroad. The agency maintains separate accounts for policyholders’funds and shareholders’ funds.
The main objectives of the agency:– To encourage and develop Sudanese exports– Support the exports sector
To achieve those objectives, the agency practises the followingactivities:
– Insurance and reinsurance of Sudan’s exports proceeds– To compensate insured exporters against risks as stipulated
on different policies– To provide finance and guarantees that enhances the
competitive position and increase the volume of exports andtheir proceeds.
– To participate in promotion of financing for Sudan’s exportsin international markets
– Conduct marketing researches and studies– Provide and extend credit to exporters
General informationNAIFE1 Mustafa Abu Ella StreetSaving & Social Development Bank Tower6th FloorKhartoumSudan+24 9183 747 [email protected]
HistoryFounded: 2005Ownership: Ministry of Finance & National Economy, Central Bankof Sudan, commercial banks and insurance companies
Senior managementMustafa Yousef Holi, General Manager
Elhadi A.M. Saeed, Manager Export Insurance Department
A/Moniem A/Elateef Saad, Promotion and Planning Manager
Hamid Elrasheed Ahmed, Finance and Investment and FinancialManager
Contact person(s)Elhadi A.M. SaeedManager Export Insurance [email protected]
Major facilities✓ Export Credit Insurance✓ Credit Faculties✓ Promotion and Planning Activities✓ Co-coordinator for Export Activities, with Various Concerned
Unit
NAIFENational Agency for Insurance and Finance ofExport (NAIFE)-Sudan
SUDAN
Macedonian Bank for Development Promotion, via commercialbanks, provides financial support for start-ups and developingSMEs. The lending programme consists of a variety of ST and MLTcredit lines offering favourable credit terms and technicalassistance tailored according to the entrepreneurs’ specific needs.The bank performs the role of an official export credit agency ofthe Republic of Macedonia providing export support for companiesthrough pre-shipment finance loans and export credit insurance.
General informationMBDP26, Veljko Vlahovik str, PO Box 379Skopje, 1000Macedonia+389 2 3115 844www.mbdp.com.mk
HistoryFounded: November 1998Ownership: A shareholding 100% government-owned
Senior managementDragan Martinovski, Chief Executive [email protected]
Qenan Idrizi, Chief Operative Officer
Contact person(s)Darko StefanovskiManager of Credit Export [email protected]
Jasmina Kolekeska, Senior underwriter
Major facilities✓ Investment loans✓ ST export credit insurance,✓ Pre-shipment finance loans✓ Factoring
MBDPMacedonian Bank for Development Promotion
MACEDONIA
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The SEP was established under the auspices of the Saudi Fund forDevelopment (SFD) in 1999 to act as the national ECA of SaudiArabia, which provides different facilities to support Saudi non-crude oil goods and services, which contain 25% or above of theSaudi value-added component.
General informationSEPPO Box 50483Riyadh, 11523Saudi Arabia+966 1 465 [email protected]
HistoryFounded: 1974Ownership: Government of Saudi Arabia
Senior managementEng. Yousef AL-Bassam, Vice-Chairman and Managing Director,Saudi Fund For Development
Contact person(s)Ahmed Al-GhannamDirector General of Saudi Export [email protected]+966 1 2794466
Sultan Al-MarshadActing Director of Credit Insurance & [email protected]+966 1 279 4149
Major facilities✓ Credit Insurance and export guarantees:
– Whole turnover export credit insurance policies– Single transaction policies– Documentary credit insurance policies (DCIP)– Documentary credit confirmation insurance contract (DCCIC)– Working capital guarantee cover (WCGC)
✓ Direct lending to major export transactions:– Buyer credit– Supplier credit– Lines of credit– Murabaha (profit sharing)
SEPSaudi Export Programme
SAUDI ARABIA
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The NZECO operates as a business unit within the New ZealandTreasury. Its mission is to help New Zealand exporters manage riskand capitalise on trade opportunities around the globe byproviding guarantee and insurance solutions that complementthose in the private sector. The Secretary to the Treasury has beendelegated the power from the Minister of Finance to provide theseguarantee and insurance products pursuant to the Public FinanceAct 1989.
General informationNZECO1 The Terrace, PO Box 3724Wellington, 6140New Zealand+64 9183 747 [email protected]
HistoryFounded: 2001Ownership: Wholly owned and guaranteed by the New ZealandGovernment
Senior managementChris Chapman, [email protected]+64 4 917 6004
Kim Tate, Head of [email protected]+64 4 917 6018
Peter Rowe, Head of Business [email protected]+64 4 917 6080
Contact person(s)Rebecca Holleman, Business [email protected]+64 4 917 6060
Major facilities✓ Export credit insurance:
– Covers commercial and political risks on export transactions– Short-term trade credit cover (including co-insurance with
private sector) where the private sector lacks the capacity orwillingness
– Medium/long-term (over one-year credit period) cover forsupplier and buyer credit facilities
– Insurance of confirmed letters of credit– Cover for project finance transactions
✓ Bonds, sureties and guarantees:– Guarantee products to support bid bonds, advance payment
bonds, performance bonds, retention payment bonds and USand Canadian surety bonds
✓ Other products:– Bill of exchange guarantee– Loan guarantee
NZECOThe New Zealand Export Credit Office
NEW ZEALAND
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The only Ukrainian bank acting on behalf of the government as afinancial agent with respect to foreign loans guaranteed by Ukraine.Ukreximbank`s mission is to create favourable conditions foreconomic development of Ukraine by supporting nationalmanufacturers, especially in the export-oriented sectors. Havingdiversified its operations over the last decade, Ukreximbankcurrently provides a wide range of banking services, with a strongfocus on export-import banking. Ukreximbank services aconsiderable part of foreign economic activity of Ukrainianenterprises, which represent key branches of the national economy.
Ukreximbank has the widest network of correspondents andpartners among Ukrainian banks, including over 800 commercialbanks that provide over 100 clean credit lines, 35 export creditagencies that recognise Ukreximbank as a direct borrower andguarantor, and a number of international financial institutions anddevelopment banks, such as IBRD, EBRD, KfW and others, thatpartner Ukreximbank under special programmes.
General informationUKREXIMBANK127, Gorkogo StKyiv-150, 03150Ukraine+380 44 247-8085www.eximb.com/[email protected]
HistoryFounded: 1992Ownership: 100% state-owned
Senior managementVitalii Bilous, Chairman of the Board
Viktoriia Kononykhina, First Deputy Chairman of the Board
Sergii Myskiv, Deputy Chairman of the Board,[email protected]
Oleksandr Shchur, Member of the Board
Contact person(s)Olena Kozoriz, Head of Financial Institutions & Trade Finance
Sviatoslav Kuzmych, Head of International Borrowings
Major facilities✓ Agency services for the government of Ukraine✓ Financing of the real economy and support of SME
development: project financing, special purpose programmeswith IFIs
✓ Export-import banking: MLT structured finance, ST tradefinance, documentary credits and guarantees, FX and moneymarket, international settlements
✓ Retail and investment banking
UKREXIMBANKJoint Stock Company State Export-ImportBank of Ukraine
UKRAINE
TASDEER was launched in 2011, having the following objectives:l To develop, support, and globally promote exports from Qatar.l To act as a public ECA offering export credit Insurance (risk
covers) and export financing solutions and services to mitigatenational exporters risks.
All Qatari exporters, regardless of their size, ownership, exportcontract volume, sector or turnover are eligible for TASDEERsupport.
General informationTasdeer/QDBQatar Development BankP.O.Box 22789Grand Hamad (Banks) StreetDohaQatar+974 44 30 [email protected]
HistoryFounded: 2011Ownership: Government of Qatar
Senior managementMansoor I. Al MahmoudCEO, Qatar Development Bank
Hassan K. Al MansooriTASDEER Executive Director
Contact person(s)Aladdin ZardECA [email protected]
Major facilities✓ Receivables financing (factoring, bill discounting)✓ Pre-shipment and contracts financing✓ Pre and post-shipment credit insurance✓ Takaful shariah-compliant credit insurance
TASDEERQatar Export Development Agency
QATAR
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Uzbekinvest was established in 1994 by the government of theRepublic of Uzbekistan as a national insurance company. In 1997Uzbekinvest was reorganised into the national export-importinsurance company. Uzbekinvest is acting as the national exportcredit agency of Uzbekistan to promote export operations byproviding export credit insurance to Uzbek exporters andcommercial banks.
UIIC (London, UK) is designed to protect the business and assetsof companies investing or doing business in Uzbekistan. Coverageis provided for investment and trade transactions against certainpolitical risks and events in Uzbekistan taken towards investors andlenders.
General informationUZBEKINVEST2, A. Kodiriy StreetTashkent, 100017Uzbekistan+998 71 235 78 [email protected]
HistoryFounded: 1994Ownership: 100% state-owned (Ministry of Finance of theRepublic of Uzbekistan – 17%, National Bank for ForeignEconomic Activities of Uzbekistan -83%)
Senior managementFakhritdin Saidakhmedov, Director General, [email protected]+998 71 2357801
Shavkat Inamov, CEO, [email protected]+44 207 954 8397
Jamshid Rizaev, Deputy Director General, [email protected]+998 71 1200360
Kamil Khasanov, General Manager, Export Risks and InvestmentsInsurance [email protected]+998 71 1200359
Contact person(s)Umida Musalieva, ManagerExport Risks and Investments Insurance [email protected]+998 71 1200359
Major facilities✓ ST export credit insurance✓ Documentary credit/guarantee insurance✓ Advance payment insurance✓ Domestic credit insurance✓ Investment insurance✓ Political risks insurance: CEN, war, contract repudiation, non-
honouring of bank LC, wrongful calling of guarantee (providedby UIIC only)
UZBEKINVESTUzbekinvest National Export-Import Insurance Company
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Value statementWe are committed to operate in a professionalmanner that is financially responsible, respectful ofthe environment and which demonstrates high ethicalvalues – all in the best interests of the long-termsuccess of our industry.
Guiding principles1. We conduct our business in a manner that
contributes to the stability and expansion ofglobal trade and investment on a sound basis,that is in accordance with applicable laws andrelevant international agreements.
2. We carefully review and manage the risks weundertake.
3. We promote export credit and investmentinsurance terms that reflect sound businesspractices.
4. We aim to generate adequate revenues tosustain long-term operations reflective of therisks we undertake.
5. We manage claims and recoveries in aprofessional manner, while at all timesrecognising the insureds’ and obligors’ rights.
6. We are sensitive about environmental issues andtake such issues into account in the conduct ofour business.
7. We support international efforts to combatcorruption and money laundering.
8. We promote best practices through exchange ofinformation on our activities, policies andprocedures, and through the development ofrelevant agreements and standards, where theseare deemed necessary to govern the provision ofexport credit and investment insurance.
9. We are committed to furthering transparencyamongst members and in the reporting of ouroverall business activities, reflective ofinternational practices and respectful of theconfidentiality of third party information.
10. We encourage cooperation and partnering withcommercial, bilateral, multilateral, and otherorganisations involved in export trade andinvestment business.
Berne Union 2014
580th Anniversary
1960s
Historic Timeline1934: Berne Union founded by three private
credit insurers from France, Italy, Spain, and the UK’s public sector representative.
UK Export Finance, ECGD at the time, is the only founding member that is still in existence under
its original form
1947: Berne Union welcomes its first non-European member, Export Development Canada (EDC)
Berne Union Secretariat established in Paris, France
Membership continues to expand
1930s
1940s
1950s
1934: First meeting held in Berne, Switzerland (which is where the name Berne Union comes from)
Janu
ary
4 1
934
Ass
emb
lee
Con
stit
utiv
e
1957: Berne Union welcomes first Asian member, Export Credit Guarantee Corporation of India (ECGC)
1957: EPIC (now EFIC) Australia joins the Berne Union
1957: The Berne Union hires its first Secretary General, Mr. Wladyslaw Houwalt
1958: Berne Union welcomes its first African member CGIC South Africa
Flo
renc
e -
1954
Excerpt: “the present statutes
approved by the General Assembly of 7th May 1954
will come into force as from that date.
Each member will receive a copy”
1973: First Latin American member joins (CASC, Argentina)
Ber
ne U
nio
n st
atut
es, 1
954
1970: The Berne Union’s mandate expands to include members who insure foreign investments; creation of the investment
insurance committee (IIC)
1970s
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1980s
1990s
2000s
2010s
1989: Collapse of the Berlin wall which led to the creation of Eastern European export credit agencies
2008 – 2009 global financial crisis
Berne Union and Prague Club total 76 members, representing over 60 countries worldwide
IIC d
ocu
men
t Est
ori
l 197
1
Berne Union members start to report business data
1984: Berne Union celebrates its 50th anniversary; Annual General Meeting (AGM)
in Montreux, Switzerland
1992: Berne Union elects first Asian President, Mr. K. S. Foo (ECICS, Singapore)
1993: Foundation of the Prague Club with support from EBRD (The Prague Club aims to support new and maturing export credit agencies and insurers setting up and developing export credit and investment insurance schemes)
1994: First multi-lateral agency joins, Multilateral Investment Guarantee Agency
(MIGA)
1994: Berne Union elects first female President (Soledad Abad, CESCE)1999: The export credit members formed two
committees focusing on short term (ST) and medium-long term (MLT), ECA only, export
credit business
1999: First Prague Club member joins the Berne Union, Export Credit Insurance
Corporation Joint Stock Company (KUKE), Poland
Excerpt: “we shall have to answer three fundamental questions: a) what will be the future role of the Union? b) what is the “industry” the Union wants to represent? c) would a different organisational structure help the Union to perform in a more optimal way?”
2001: American International Group (AIG) joins Berne Union (first “modern day” private member)
2009: Berne Union celebrates its 75th anniversary; Annual General Meeting (AGM) in Seoul, Korea
2004: Berne Union Value Statement created
2006: Berne Union Guiding Principles created
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2013: Prague Club celebrates 20th anniversary in Prague
2014: Berne Union celebrates its 80th anniversary
1974: The Berne Union has 32 members from 24 countries
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Notes
International Union of Credit & Investment Insurers1st Floor · 27-29 Cursitor Street · London · EC4A 1LT · United Kingdom
Tel: +44 (0)20 7841 1110 · Fax: +44 (0)20 7430 0375www.berneunion.org