2014

The

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supporting trade and investment since 1934 Berne Union 2014 CONTACTS

Contacts

Published by TXF Ltd on behalf of the Berne Union. TXF ©TXF Ltd 2014 & the Berne Union. All rights reserved. Editor-in-chief The contents of this publication are protected by copyright. Jonathan Bell No part of this publication may be reproduced, stored, or Managing director transmitted in any form or by any medium without the Dan Sheriff permission of the publisher and the Berne Union. Commercial director The content herein, including advertisements, does not Dominik Kloiber represent the view or opinions of TXF Ltd or the Berne Union and must neither be regarded as constituting advice Product development director Max Carter on any matter whatsoever, nor be interpreted as such. Chief technology officer About TXF James Petras TXF: Trade and Export Finance is a media and technology Head of communications group set up to service the corporates, traders, financiers Katy Rose and deal-makers that encompass the trade, commodity, Content manager export and project finance communities. TXF has a Hesham Zakai contemporary and innovative approach to delivering these markets with specialist news, high profile networking events, online and offline training and data intelligence services. TXF News is subscription-free, reliable and interactive: www.txfnews.com

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Published by International Union of Credit & TXF: Trade & Export Finance Investment Insurers Canterbury Court Including Berne Union Prague Club Kennington Park 1st Floor 1-3 Brixton Road 27-29 Cursitor Street London SW9 6DE London United Kingdom EC4A 1LT United Kingdom Tel: +44 (0) 20 3735 5180 Email: [email protected] Tel: +44 (0)20 7841 1110 Fax: +44 (0)20 7430 0375 www.txfnews.com 1 www.tagmydeals.com www.berneunion.org Berne Union 2014

Contents

1 Introduction

Foreword 9 Jonathan Bell, editor-in-chief, TXF Interview with Berne Union president Dan Riordan 10

2 Data and Statistics

Berne Union totals 16 Short-term export credit insurance Medium- and long-term export credit insurance Investment insurance

Analysing Berne Union data trends 22 Fabrice Morel, deputy secretary general, Berne Union

3 Expert Analysis

OVERVIEW A history of the Berne Union 28 Dr Hans Janus, member of the board of management, Euler Hermes AG Economic overview 32 Peter Hall, VP and chief economist, EDC Global risk overview 36 Alyson Warhurst, CEO, Maplecroft Short-term export credit capacity 42 Ralph 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 56 Jim 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 64 Kazuhiko Bando, chairman and CEO, Nexi The role of export credit in project financing 66 David Godfrey, chief executive, UKEF Political risk in the mining sector 69 2 Jim Thomas, senior VP and interim MD, Zurich Credit & Political Risk Berne Union 2014 CONTENTS

3 Expert Analysis continued

SUSTAINABILITY Sustainable export finance 72 Edna Schöne-Alaluf, head of Berlin liaison office, Euler Hermes AG ECAs and the renewables industry 75 Anette Eberhard, CEO, EKF

REGION AND SECTOR FOCUS Providing support for SMEs 78 Dan Mancuso, EDC, and Vinco David, Atradius The resurgence of shipping 81 Kim Young-hak, president, K-sure Satellite finance and ECAs 83 Régine Schapiro, head of energy, telecoms and space, Coface ECAs and the challenge of Islamic finance 85 Topi Vesteri, executive VP, Finnvera, and chairman FEC ICIEC at 20 87 The Islamic Corporation for the Insurance of Investment and Export Credit Export credit insurance in the Middle East 90 Karim Nasrallah, managing director, LCI Lebanon On the ground activity in Africa 92 George Otieno, CEO, ATI The benefits of providing export credit insurance for banks 95 Geetha Muralidhar, executive director, ECGC Export credit for OECD-based borrowers 98 Simon 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

3 Berne Union 2014 Berne Union 2014

1 Introduction Berne Union 2014

Berne Union 2014

Berne Union 2014 Short Term Committee

PRESIDENT CHAIR Daniel Riordan Ralph Lai CEO, Zurich Global Corporate in North Commissioner, HKEC Hong Kong America Ralph Lai has been the Commissioner of Dan Riordan joined Zurich North America in Hong Kong Export Credit Insurance 1997 to establish and manage the global Corporation (HKEC) since July 2009. Prior to Dan Riordan Political Risk and Trade Credit business. this, he held various senior regional positions Before his current post, Dan also led a with multinational financial institutions in combined international Surety, Credit, and trade finance and credit insurance. He was Political Risk group and served as President the Managing Director, Greater China Trade of Zurich’s Specialty Products unit. Prior to Finance for GE Capital before becoming the joining Zurich, Dan was a senior executive first head of HKEC from the private sector. managing Overseas Private Investment Under his management, the Corporation had Corporation’s (OPIC) portfolio of long-term record business growth with commitment investments in developing countries. Dan has and net assets at historic highs. Mr Lai holds been active in the Berne Union over the an MBA from Bath University, UK and is a course of his career, serving as Vice Chairman graduate of Chinese University of Hong Kong. Andreas Klasen and Chairman of the Investment Insurance Committee and as Vice President in 2011. Dan VICE CHAIR is a graduate of the State University of New Khemais El-Gazzah York at Oswego, and earned a masters’ ICIEC degree in international development from the School of International Service at American Medium/Long Term Committee University, Washington, D.C.

CHAIR VICE PRESIDENT Karin Apelman Andreas Klasen Director General, EKN Sweden Partner, PwC Germany Ralph Lai Karin Apelman joined EKN, the Swedish Dr Andreas Klasen leads PwC’s Economics & Government’s ECA, in 2002, as a member of Policy practice. He is also Managing Director the Board of Directors, and later served as of the official German export credit and second Vice Chairman 2006-2007. She was investment insurance programmes, the appointed Director General in 2007. Karin is a EH/PwC consortium responsible for member of the Swedish Radiation Safety management of the German ECA on behalf Authority’s financing delegation (SSM) since of the Federal Government. Before joining 2009, a member of the Board of Directors of PwC in 2008, Andreas was Head of Swedavia since 2010, and a member of the Guarantees and Export Finance with Airbus’ Advisory Council at The Legal, Financial and parent company EADS and advisor to the Administrative Services Agency European Commission and the German Karin Apelman (Kammarkollegiet) since January 2011. Karin Government on trade and industry policy. He was the Chief Financial Officer at LFV read law and finance at universities in Swedish Airports and Air Navigation Services Germany and the United Kingdom and holds 2001-2007. Before that she served in various a doctoral degree in finance from the executive capacities at SAAB Aircraft Leasing University of Northumbria at Newcastle. and Scandinavian Airlines (SAS). Karin received her MBA from Stockholm School of Economics in 1986.

VICE CHAIR 6 Jing Fenglei John Hegeman SINOSURE Berne Union 2014 INTRODUCTION

Investment Committee Management ranging from Credit Insurance and Factoring to Credit Information and Debt

CHAIR Collection, in the Levant and the Middle-East Khemais El-Gazzah John Hegeman regions. Since December 2013, Mr. Nasrallah Senior Vice President AIG Trade & Political has been the Chairman of Prague Club, part Risk, AIG United States of America of the Berne Union. The Prague Club is an association of new and maturing insurers of John Hegeman is the global head of AIG export credit and investment which supports Political Risk Insurance business. John has its members in developing their activities. been with AIG since 1985 and has many years experience in Credit and Political Risk Insurance. Before joining AIG John worked for Secretariat FCIA for 10 years where he was Senior Vice Jing Fenglei President and the chief underwriter. John Fabrice Morel worked in London from 1987-1994 managing Deputy Secretary General AIG’s Credit and Political Risk business in Europe. He is a graduate of Colgate Abbey Sturrock University where he studied Marine Biology Assistant Director and has a Masters Degree in Finance from Boston College. Songhee Cho Secondee, K-SURE VICE CHAIR Vinco David Vinco David ATRADIUS Management Committee Members Prague Club ASHRA ATRADIUS

CHAIRMAN COFACE COSEC Karim Nasrallah Managing Director, LCI, Lebanon EH GERMANY EGAP

Karim Nasrallah is the Founder and the MIGA NEXI Managing Director of The Lebanese SINOSURE SLECIC Karim Nasrallah Credit Insurer (LCI), Partner with Atradius. LCI is the first private independent Credit US EXIM ZURICH Insurance Company in Lebanon and the Middle East. Through his different ventures Mr. Nasrallah has been involved for more than 20 years in all aspects of Credit

2014 Meetings Fabrice Morel 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 7 December Specialist Meeting Tel Aviv, ASHRA Abbey Sturrock Reliable partner of the Czech export

During its 22-year existence, EGAP has insured the export of:

4,770 buses

4,220 trucks

1,550 tractors

991 trolleybuses

251 trams

86 turbines

Berne Union 2014

Foreword INTRODUCTION

Berne Union members continue to evolve to meet the demands and challenges of the export credit financing sector. By Jonathan Bell, editor-in-chief, TXF.

This is a particularly big year for the Berne explore new territories Union, which has now been supporting with better margins – exporters, borrowers, investors and the but only if the backing overall export financing sector for the past 80 is behind them. years. It is also a celebratory year, as few Innovation by organisations have such an excellent and agencies is, of course, consistent track-record of performance in taking many forms, global trade. In the case of the Berne Union, and not least is the members have consistently supported global drive to increase trade flows through the good times and the liquidity in the sector. Jonathan Bell bad, without fail. In certain cases this In recent years, the retrenchment from has led to the involvement of new investors, certain areas of trade finance by some of the and this is something which will undoubtedly commercial bank community has left many be a bigger feature over the next few years. gaps to be filled. And some of these gaps – And the increasing involvement of capital particularly the provision of finance for small- market mechanisms is providing some and medium-sized (SME) enterprises, have positive benchmark tools for players in select been damaging to many. However, the export markets and sectors. At the same time, direct credit agencies (ECAs), development lending solutions and mechanisms have been financing institutions (DFIs) and multilateral brought into play, and these measures have financial institutions (MFIs) rose admirably to often supported industrial sectors and the rescue through the global financial crisis projects – such as renewables and satellite of 2008-2009, and for the most part they financing – where financing may have been continue to perform to keep global trade hard to achieve. flows on track. In this regard, Berne Union With continued extensive and varied risks members have been, and continue to be, in many markets, and the seemingly never- particularly flexible, inventive and open to ending news of new conflicts, credit and dialogue with all parties. political risk insurance is, and will continue to The increased focus on the SME sector is play a crucial role in the export credit sector one which Berne Union members continue to and global trade at large. And with a explore, knowing that these companies form broadening vision, the Berne Union is the the ‘life blood’ of the exporting supply chain. prime organisation to house the discussions Members’ attention to the challenges these and provide the umbrella for all members to companies face through open discussion and work under. committee sessions will prove to be Bringing all members together in order to invaluable, today and in future years. share experiences, knowledge and It is an entirely different scene to that importantly new ideas, is the desired perceived of the sector in the late-1990s, for objective of the leadership, secretariat and example. Today, agencies are very much the members alike. The future looks healthy and driving force and innovators. As increased bright for the Berne Union in this respect. regulation has impacted on the commercial As this is the 80th anniversary year, it is a banking community, so the banks and time not only to reflect, but also to look corporates have sought the safe haven of forward, and this is very much achieved in the working in a particular market with agencies, articles written by the members and others of one form or another. The benefits of for this Yearbook. We hope you find the partnering with AAA-rated institutions has feature articles interesting and informative, also opened up many new avenues for the and the data and directory useful tools for 9 commercial banks, many of whom are keen to your work in the year ahead. ■ Berne Union 2014

Changed perceptions as members enter a wider sphere

Jonathan Bell, editor-in-chief at TXF, talks with Dan Riordan, president of the Berne Union, about taking the organisation forward in its 80th year.

Dan Riordan, CEO, Zurich Global Corporate first meeting of what in North America, took over the presidency ultimately became of the Berne Union in October last year, and the Berne Union and in doing so he became the first Prague Club, representative of a private insurer to be membership elected president in 30 years. He comes in as associations of nearly president at a time when export credit 80 companies agencies (ECAs) and export credit financing representing over 60 are arguably playing a more important role in countries. global trade than ever before. “In coming in as Dan Riordan The export credit sector has changed the new president immensely since the global financial crisis especially in our 80th year, it was important (GFC) of 2008-2009. Agencies and insurers to me that our organisation provides to the have stepped-up to work with borrowers and members what they value most, while exporters in a highly proactive way that staying true to our guiding principles. What could not have been predicted before the I’ve learned through discussions and review GFC. It is a changed paradigm. And as an of past documents is that keeping the spirit organisation, the Berne Union is playing its of the Berne Union alive in the context of part as it looks to work with a positive today’s world has been a challenge for my forward vision for its members and the predecessors, and one that I accepted gladly export credit sector at large. With 2014 being late last year. In a collective process the 80th anniversary of the Berne Union, it is engaging with our members, staff, and past also a big year for the organisation. members we set out initially to understand “The Berne Union is a membership just what that value is. How do we improve association made up of a tremendously and how do we maximise our activities to interesting group of people. We are a diverse create that type of environment?” Riordan group from around the globe who have a states: “We were really challenged by the common interest in export credit and members over the year to develop more investment insurance,” says Riordan. “That transparency, openness and communication, has been true since day one.” In 1934, a and we have made good progress on that public sector agency came together with since October 2013.” three private credit insurers in Berne for the Riordan stresses that the organisation

“Making sure that we are meeting expectations for our members is paramount. On the other hand, how we build on the existing reputation of the organisation is important as well. There is a tremendous amount of experience and knowledge housed within the existing membership, and some 10 closely-tied alumni.” Berne Union 2014

provides an avenue for the members to issues such as SMEs, country risk, and claims INTRODUCTION network and share experiences, learn new and recovery trends. In this way more people techniques and come together as a are attracted to the community. Whereas it community. He adds: “It is a very powerful used to be the senior most representative, association. We are looking now at more now we see the real practitioners – new regular communication, so that we keep this underwriters, or middle-level mangers – organisation relevant. How we use the data exchanging real time experiences.” within the Berne Union will be a main With the broadening of the subject matter contributor to ensuring that we deliver on and level of discussions, the meeting that task. At the present time much of that experience is enhanced all around.” capability remains untapped. Refining how Being receptive to new ways of operating we approach, collect, and analyse member and new ideas is the mark of a progressive data has real significance.” institution. In recent years, the Berne Union “Making sure that we are, at a minimum, has become much more open which has led meeting expectations for our members is to greater avenues of cooperation with other paramount. On the other hand, how we build organisations, and it is widely felt that this is on the existing reputation of the organisation something that needs to be encouraged is important as well. There is a tremendous further. amount of experience and knowledge “We are not a shy group, but still I housed within the existing membership, and encourage members to offer feedback about some closely-tied alumni. How do we new ideas and concepts. This is important. position the Berne Union in industry, for For the last few years there has been a instance?” member-driven effort to increase cooperation with multilateral organisations Fostering further cooperation such as the WTO and World Bank. Former Closer contact between members of the Berne Union president Angus Armour was a Berne Union and the Prague Club is a priority big proponent of becoming more involved in reducing complexity and modernising the with these entities and getting more involved groups. To that end, there is an added with the G20 at the same time. Johan benefit that the groups have much to learn Schrijver continued much of that good work from and to teach one another. Business with and I want to also take that forward. I think small- to medium-sized enterprises (SMEs) the members want this too,” states Riordan. and understanding of the associated “I am also a firm believer in focus – and we requirements is one such scenario where the can’t do everything that we would like to. two groups can leverage knowledge and Initially, we should be focusing on a few experience. For the first time in 2014, the things and doing them well,” he adds. autumn Annual General Meeting will bring “To provide a forum for our members, together Berne Union and Prague Club organisations that support exporters and members. investors in tough markets, and to allow “This is what we see in our individual them the opportunities to better support businesses and in the outside world. Trade, their businesses, I think that’s really where and its finance, is more interconnected than the Berne Union shows its worth.” at any other point in history,” remarks Riordan. “Many of the Prague Club members Members continue to rise to the have already been focused on SMEs, a trend challenges that Berne Union members have become In hindsight, one thing is without question, more involved in as well. This is one and that is that Berne Union and Prague Club commonality that can encourage more members have shown their importance cooperation between members.” throughout the GFC. This ability of the He also points out: “Not only are the members to be flexible and proactive is parallels between members growing, as in something that Riordan is particularly the SME example, the range of conversation proud of. is changing as well. Our bi-annual general He states: “If we look at how members meetings have been the banner events for have helped facilitate trade and investment many years, but lately members have found in what has been the toughest economy more ways to get together to attract since the great depression, we can clearly specialist activities. Just in the last 12 months see that a lot of members rose to the 11 small specialist meetings have focused on challenge. Some of them became de facto Berne Union 2014

lenders, some have expanded their business as direct lenders on a temporary basis was models, they have increased their limits, and one such result. As we see economies they have become more creative in improve and increased involvement from the structuring to answer the needs in the global banks, some of the ECAs will pull back a bit economy. ” as their role is not to be a direct competitor “At the same time they have been working of a bank’s lending operation. There is a role in an environment where the banks were not for each, investment and credit insurer as lending, but rather sitting on cash. To a well as lender in a transaction.” certain extent, that is still a reality. Banks are Now, well into 2014, with demand for starting to lend and starting to be more financing intensifying in most industrial and trade finance oriented, but over the past five infrastructure sectors, so is increased or six years, the private and public members requirement for greater liquidity. As Riordan of the Berne Union have had to really step- points out: “The global economy is thawing up to support the sector. ” now and our members, public and private, “We say that 10% of world trade is are looking at new ways they can raise funds facilitated by Berne Union members, but I and capital to help support exporters. There actually thing that it is higher than that. In is a lot of work continuing in the capital USD that is over 1.8 trillion of exports and markets. We have also seen more ECAs and foreign direct investment. I think this could multilaterals get involved using their go as high as 20%. That’s the exciting part – guarantees or insurance capabilities to get we facilitate through insurance and finance, more capital into the market for lending and it grew on the finance side quite purposes.” substantially because of the lack of As an example of this, in September last willingness to lend by banks in response to year the Multilateral Investment Guarantee the global financial crisis.” Agency (MIGA) supported a €400-million ($553.6 million) financing backed by notes to Direct lending, new tools and growth be issued by Hungarian Exim. Specifically, In certain industrial sectors, and renewables MIGA’s guarantee provided coverage against is certainly one of those, ECAs increased the non-honouring of the sovereign financial volume of direct lending as demand has obligation for the principal and interest on come from the market since 2009. the bond notes. This deal represented MIGA’s Sometimes this has been a controversial first use of this cover for a capital markets issue with commercial banks, sparking issue. heated debate. If we have a good concept then we ought However, Riordan explains: “In the midst of to share it,” Riordan says. “We have also seen the GFC, in relation to the lack of funds proactive work with EKF in Denmark working available in the commercial bank market – with the Pension Fund of Denmark to create particularly for SMEs – ECAs in many more loan capabilities. They are very focused markets got involved to find solutions. Acting on their wind industry, so they need more

“If we look at how members have helped facilitate trade and investment in what has been the toughest economy since the great depression, we can clearly see that a lot of members rose to the challenge. Some of them became de facto lenders, some have expanded their business models, they have increased their limits, and they have become more creative in structuring to answer the need in the global economy.”

12 Berne Union 2014

to bring our two organisations closer INTRODUCTION “We will grow and change together for the benefit of our members and with the times … we will their customers. That will be an exciting thing for us.” always be looking for “Political and economic shifts on a global new ways to provide basis are already underway. By the end of 2014, 40 national elections will have taken information and place across the globe, the effects of which education to appropriate will be broad across geographies and sectors. Energy independence in North stakeholders, be it America is also creating a very interesting internal or external.” dynamic, potentially starting a chain reaction through the region, and simultaneously through current energy providers in the capacity and by partnering with the pension Middle East, as they brace for related funds they have created more export impacts. It is these types of shifts that finance.” underwriters are prepared to assess and Denmark’ PFA Pension, the country’s address.” largest pension fund is working in concert And as a private insurer, how does Riordan with EKF to provide loans to foreign see the role of these companies within the companies to help Danish groups including sector overall? “I certainly see a greater role wind companies such as Vestas Wind for private insurers within ECA-backed Systems. The programme has been highly activity. The private members that are successful and can expect to be emulated already within the BU have brought a lot of with pension funds and ECAs elsewhere in collective expertise and innovation into the due course. group as it exists today,” he believes, “This has generated a lot more cooperation – Looking ahead which has led us to do more co-insurance With ever an eye on the future in all aspects and re-insurance between the public and of the sector, Riordan sees continued strong private sector. It used to be an event when a demand for export credit financing, with private insurer did something with an ECA – financiers continuing to also look at ways to but that is no longer the case. It is business increase liquidity. He notes: “There will as usual. That has created a very welcoming continue to be calls for longer-term finance environment within the Berne Union. and related insurance. The capital markets On a final note, Riordan states: “I do see will continue to assist with this. There will be more complexity and interdependence increasing emphasis placed on the globally. There is increasing regulation. Some development of infrastructure and also a of this makes for a challenging environment, manufacturing renaissance in the US.” which is becoming ever more interconnected “I also think that securitisation will and complicated – and this can become a continue as a way to get more of the funds roadblock to exports and investment. So out there in the wider market. The demand is there has to be a good balance. Local there, and even picking up, in developed and interests and the interests of companies emerging economies. The pent up demand need to be protected, but, as a global for investment in infrastructure – particularly economy, we should be enabling an in energy, whether upstream or downstream environment that encourages trade and oil and gas, shale oil development, alternative investment. So that is really the balance for energy, for instance, are all going to be big. us all. These will require funding, and in many cases “What is the Berne Union’s role in that? will showcase expertise of Berne Union and We are practitioners of the export credit and Prague Club members.” investment insurance sector, and as such a “Some of these infrastructure source of information and expertise. We will developments will also involve multilaterals. grow and change with the times, as will And we see IFC as key in this regard. They many of the things we have discussed here, are quite creative in their facilities – but in all likelihood, we will always be looking securitisation, lending and insurance – and for new ways to provide information and they are active in setting up reinsurance education to appropriate stakeholders, be it 13 capabilities as well. We are looking at ways internal or external.” ■ Berne Union 2014 Berne Union 2014

2Data and Statistics Berne Union 2014

Key ■ INV – Investment Insurance ■ MLT – Medium/Long Term Export Credit Insurance Berne Union: Totals ■ ST – Short Term Export Credit Insurance

New Business – during each year Exposure – at year end

2,250,000 2,250,000

2,000,000 2,000,000

1,750,000 1,750,000

1,500,000 1,500,000 n n n o o io i i

l 1,250,000 l 1,250,000 ll l l i i mi m

SD 1,000,000 SD 1,000,000 USD million USD m U U

750,000 750,000

500,000 500,000

250,000 250,000

0 0 20092010 201 20111 2012 2013 2009 2010 201 20111 2012 2013

Claims Paid – during each year Recoveries – during each year

6,000 6,000

5,000 5,000

4,000 4,000 n n n o o o i i l l l l illion i m m mi

3,000 3,000 SD SD USD USD milli U U

2,000 2,000

1,000 1,000

0 0 20092010 201 20111 2012 2013 2009 2010 201 20111 2012 2013

Berne Union: Short Term Export Credit Insurance

ST New Business – insured during each year ST Exposure – at year end

1,800,000 1,200,000

1,600,000 1,000,000 1,400,000

1,200,000 800,000 n n n o o i io i l

1,000,000 l l ll l i i mi m

600,000 D million D D m D S S S 800,000 S U U U U

600,000 400,000

400,000 200,000 200,000

16 0 0 2009 2010 201 20111 2012 2013 2009 2010 201 20111 2012 2013 Berne Union 2014 DATA AND STATISTICS

ST Claims Paid – during each year ST Recoveries – during each year

2,500 500

2,000 400

1,500 300 n n n o o o i i l l l l illion i m m mi

D D milli D D S S S S U U U 1,000 U 200

500 100

0 0 2009 2010 201 20111 2012 2013 20092010 201 20111 2012 2013

ST Exposure 2013: Top 10 Countries ST Claims Paid 2013: Top 10 Countries

UNITEDUNITED STATESSTTAAATTES IRANIRAN GERMANYGERMANY ITALYITTAALLYY UNITEDUNITED KINGDOMKINGDOM UNITEDUNITED STATESSTTAAATTES FRANCEFRANCE BRBRAZILAZIL ITALYITTAALLYY SPSPAINAIN CHINA GGERMANYERMANY SPSPAINAIN UUNITEDNITED KINGDOMKINGDOM NNETHERLANDSETHERLANDS INDIA SWSWITZERLANDITZERLAND RRUSSIAUSSIA BRBRAZILAZIL POPORTUGALRTUGAL OOTHERTHER OOTHERTHER

ST Recoveries 2013: Top 10 Countries

IRANIRAN UNITEDUNITED STATESSTTAAATTES ITALYITTAALLYY GGERMANYERMANY ARGENTINAARGENTINA SPAINSPAIN IRAQIRAQ BRBRAZILAZIL BELBELGIUMGIUM LLIBYAIBYYAA OOTHERTHER 17 Berne Union 2014

Berne Union: Medium/Long Term Export Credit Insurance and Lending

MLT New Business – insured during each year MLT Exposure – at year end

200,000 800,000

175,000 700,000

150,000 600,000

125,000 500,000 n noill n oi i llm i ll io n miSD

100,000 400,000 SD U U USD million USD m 75,000 300,000

50,000 200,000

25,000 100,000

0 0 20092010 201 20111 2012 2013 2009 2010 201 20111 2012 2013

Commitio tmenments Aid-Relaale-RdA ted Cde Commitio tmenments SovereignsveSo sngire OtherehtO r PuPubliccilb BanksBanks CorporatesraorpoC ttsse ProjectsPro ej ct ArrearsrsaArre ClaalC ims, PollP iticiti cala RRl isk UnspecifiednU spe fieci d Lending ClaalC ims, Commermme cial RRlar isk RefinaneR fin ced/Resena R/d eR cheduleddeludes Ammoununu ts OverduesOve eurd s on Refin/ResRn eR fin eR/ sch Amounnu ts Lend ing

MLT New Business 2013: Top 10 Countries MLT Exposure 2013: Top 10 Countries

UNITED STTATES UNITED STTATES VIETNAM RUSSIA TURKEY TURKEY RUSSIA INDIA SAUDI ARABIA BRAZIL ITTAALLY SAUDI ARABIA INDIA VIETNAM CANADA INDONESIA CHINA UNITED ARAB EMIRAATES KOREAA REP. CHINA 18 OTHER OTHER Berne Union 2014 DATA AND STATISTICS

MLT Claims Paid – during each year MLT Recoveries – during each year

3,500 5,000

3,000 4,000

2,500

3,000 n n n o o 2,000 o i i l l l l illion i m m mi

SD SD USD USD milli U 1,500 U 2,000

1,000

1,000 500

0 0 20092010 201 20111 2012 2013 2009 2010 201 20111 2012 2013

Politicalolitical RRmmiskisk Commeercialrcial Riskisk Lending PoPoliticallitical Riskisk CCoommercialmmercial Riskisk Lending

MLT Claims Paid 2013: Top 10 Countries MLT Recoveries 2013: Top 10 Countries

IRANIRAN IINDONESIANDONESIA SAUDISAUDI ARABIAARABIA EGEGYPTYPT UNITEDUNITED ARABARAB EMIRATESEMIRAATTES IIRAQRAQ UKRAINEUKRAINE PAKISTANPPAAKISTTAAN EGYPTEGYPT IRANIRAN BRAZILBRAZIL KAZAKHSTANKAZAKHSTTAAN MYANMARMYYAANMAR SERSERBIABIA LIBYALIBYYAA UUNITEDNITED ARABARAB EMIRATESEMIRAATTES SPAINSPPAAIN CANADACANADA RUSSIARUSSIA ECUADORECUADOR OTHEROTHER OTHEROTHER 19 Berne Union 2014

Berne Union: Investment Insurance

INV New Business - insured during each year INV Exposure - at year end

120,000 250,000

100,000 200,000

80,000 150,000 n n n o o io i i l l ll l l i i mi m

60,000 SD SD USD million USD m U U 100,000 40,000

50,000 20,000

0 0 2009 2010 201 20111 2012 2013 2009 2010201 20111 2012 2013

INV New Business 2013: Top 10 Countries INV Exposure 2013: Top 10 Countries

KAZAKHSTANKAZAKHSTTAAN RUSSIA CHINA CHINA RUSSIA KAZAKHSTANKAZAKHSTTAAN BRAZIL INDIA VIETNAM BRAZIL INDONESIA TURKEY PERU EGYPT INDIA INDONESIA UZBEKISTANUZBEKISTTAAN VIETNAM UNITED STATESSTTAAATTES UNITED STATESSTTAAATTES 20 OTHER OTHER Berne Union 2014 DATA AND STATISTICS

INV Claims Paid – during each year INV Recoveries – during each year

350 120

300 100

250 80 n n n o o 200 o i i l l l l illion i m m mi

60 SD SD USD USD milli U 150 U

40 100

20 50

0 0 20092010 201 20111 2012 2013 20092010 201 20111 2012 2013

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INV Claims Paid 2013: Top 10 Countries INV Recoveries 2013

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Berne Union members on the way to cover $2 trillion of export credit and investment

By Fabrice Morel, deputy secretary general, Berne Union

Export credit insurance reaches Short-term $1.9 trillion in 2013 business – healthy While international trade seems to have growth and good increased towards the end of 2013, the results growth for the whole year has remained Short-term business sluggish. Against this backdrop, the represents insurance volume of exports and investments of exports with covered by members of the Berne Union repayment terms of increased by approximately 4% driven less than one year – by growth in short-term export credit often 30, 60 or 90 Fabrice Morel insurance. The total amount of cross-border days. These transactions facilitated in 2013 reached transactions are typically shipments of $1.9 trillion. consumer goods, and the evolution of ST Out of the total business volume, export credit insurance is closely linked with more than $1.6 trillion represented short- the ups and downs of the global economic term (ST) export credit insurance, while environment. medium and long-term (MLT) export credit The volume of ST export turnover insured insurance amounted to just over $160 billion. by Berne Union members grew by 5.7% in Newly underwritten investment insurance 2013 and reached over $1.6 trillion. This is (INV) transactions totalled close to significantly higher than the growth rate for $100 billion. international trade previously mentioned, and Based on export figures for the first three may reflect an increased demand for risk quarters of 2013 published by the United mitigation products to protect international Nations statistics division, global exports sales transactions. grew by 1% compared to the same period in To support these international sales, the 2012. The growth rate for export credit insurance capacity provided by Berne Union insurance was therefore significantly higher, members, measured by the amount of credit and Berne Union members supported 10% of limits approved and granted to exporters at a international trade in 2013. given point in time, stood at over $1 trillion Total claims paid by Berne Union throughout 2013. At the end of the year, the members during 2013 amounted to $4.5 capacity reached $1.1 trillion – the highest billion, a slight reduction compared to the level ever. previous year. While ST and INV claims ST claims paid by Berne Union members moderately increased, MLT claims reduced to exporters to indemnify them for defaults by approximately 6%. on their trade receivables went from $1.8 Since the beginning of the global financial billion in 2012 to $1.9 billion in 2013. This 4.7% crisis in 2008, Berne Union members have increase is slightly lower than the growth rate paid more than $24 billion to exporters and of the business and reflects a sound investors to compensate them for losses underwriting by the industry. It is noteworthy suffered due to defaults by buyers or other that the total claims figure is influenced by obligors. one of the large Berne Union members, who Within the continued volatile risk suffered an over proportional rise in claims. environment, Berne Union members provide For most of the membership, ST claims paid ample insurance capacity to support have actually remained stable or even 22 international trade transactions and foster reduced year over year. sustainable economic growth. In spite of strong pricing competition in Berne Union 2014

some areas of the market, it seems that DATA AND STATISTICS Berne Union members have been able to While the situation command adequate premium rates, remains volatile, it is commensurate with the risks they bear. business as usual for Although not all 2013 data is fully available at this stage, the ST loss ratio for Berne Union export credit insurers members as a whole is expected to be stable who are used to dealing or slightly lower than in 2012. Historically, export credit agencies (ECAs) with commercial and tend to have higher ST loss ratios than political risks and private market insurers. A plausible are well equipped to explanation is that, by mandate, the role of ECAs has always been to support their handle these. national exporters and to cover transactions across the full risk spectrum, and where insurance cover might otherwise be difficult increase of 4.5% and is the highest level of to obtain. exposure ever recorded. The highest volumes of ST claims paid per New business in 2013 reduced by 11% to country in 2013 resulted from defaults in Iran $161 billion of insured transactions, which is ($191 million), Italy ($186 million), the United lower than the historical records of the years States ($145 million), Brazil ($143 million), 2009 and 2011 ($191 billion in both years), but and Spain ($108 million). still higher than before the global financial Many Berne Union members paid claims crisis. due to buyer defaults in Western European It might appear counterintuitive that the countries and the United States. This is quite total portfolio is growing while new business normal and reflects the fact that these is reducing. This can be explained by the fact countries are those with the largest volumes that reductions of the existing portfolio – of international trade and, as a consequence, expirations or cancellations of insurance with the largest ST exposures for Berne policies – have been limited. Union members. Trade with Brazil has New business has decreased for most of significantly increased in recent years and the large providers of MLT cover, certainly for therefore the amount of insured transactions the ECAs in OECD countries. This is not a and related claims paid has risen as well. result of a change in cover policy by the Currently, only a few Berne Union ECAs but reflects the underlying deal flow members continue to insure ST exports to upon which ECAs are dependent on. In a Iran. The exposure on Iran is small and the continued challenging global risk high volume of claims paid is the result of a environment, Berne Union ECAs continue to limited number of insurers who have offer risk mitigation capacity to protect indemnified significant amounts to exporters. banks from obligor defaults. Claims paid to customers by ECAs under Medium and long-term business – MLT transactions reduced by 6% from $2.6 high demand for ECA cover billion in 2012 to $2.4 billion in 2013. The The MLT statistics of the Berne Union highest amounts of claims paid per country capture insurance coverage provided by were due to defaults in Iran ($871 million), state-backed ECAs only. Alongside insurance Saudi Arabia ($221 million), United Arab business, some ECAs in the Berne Union also Emirates ($178 million), Ukraine ($113 million), provide financing, which is also reflected in and Egypt ($99 million). the data and represents approximately 10% The background to the various claims of the total business reported. situations is specific and differs significantly MLT export credit insurance covers from country to country. A number of Berne exports of capital goods. These are Union ECAs have been affected by the transactions with longer repayment terms of Iranian situation, where obligors experience typically 5-7 years, and up to 10 years or difficulties to transfer payments abroad. The even 15 years in some cases. Most of the Iranian claims are linked to long term business is done with banks as the insured. transactions signed prior to the imposition of The total portfolio of MLT transactions the sanctions. Hardly any new cover on Iran insured by Berne Union ECAs reached $657 has been issued in 2012 and 2013. 23 billion at the end of 2013. This represents an Although the circumstances are Berne Union 2014

completely different, a number of ECAs have ($19 million), and Myanmar ($15 million). been affected by losses also in Ukraine. This Compared to the exposure, claims levels is different from the claims profile for Saudi have generally been low in this class of Arabia, the United Arab Emirates and Egypt, business over the past few years. While this where the bulk of claims paid were born by reflects solid underwriting, it must not be one or two ECAs respectively. forgotten that investment insurance is If it were not for the Iranian claims, the typically “lumpy” business, where only one losses in the MLT class of business in 2013 large claim could wipe out years of premium would have been at their lowest level since income. Insurers therefore need a strong 2008. However, the fact that a single capital base or state backing to be prepared situation significantly affects a large number for the worst. of exporters in multiple countries illustrates the need for risk mitigation in cross border Outlook – a strong industry prepared transactions. Given the political and to handle international risks economic uncertainties in the global With the exception of claims on Iran, 2013 environment, the support of ECAs appears has been a very good year for Berne Union to be more than ever crucial to help banks members. The economic outlook is and exporters trade internationally. characterised by mildly positive signs for the recovery in Europe and other industrialised Investment insurance – stable at countries, while the growth in emerging top levels markets has started to look less robust in Investment insurance protects investors and recent months. lenders against political risks linked to While the situation remains volatile, it is foreign direct investments. Due to the long business as usual for export credit insurers term character of investment, coverage can who are used to dealing with commercial typically be granted for extended tenors, up and political risks and are well equipped to to 20 years or even more, depending on the handle these. risk appetite of the respective ECA or private Parts of the credit insurance market market insurer. Also loans to sovereign or experience strong competition which leads quasi-sovereign entities can be insured to ample capacity and attractive pricing for against payment default and fall under this exporters and banks. However positive the class of business. situation was in 2013, past losses serve as a After phenomenal growth of new business reminder that pricing of risk mitigation in 2012 (an increase of 33% compared to products needs to be commensurate with 2011), new business reached $96 billion in the risks taken. 2013. This was 3.5% lower than the record As usual, the performance of credit and level of the previous year but, nevertheless, investment insurers in 2014 will depend on new investment insurance reached double global trade and global growth. With strong the volume of 2009, when global financing risk management tools and underwriting was at a low point. Total portfolio figures processes in place, Berne Union members, amounted to $235 billion of insured both public and private, have a major investments at the end of 2013, an increase contribution to make in sustaining trade by 6% and the highest level ever attained. flows and further strengthening economic Total claims paid by Berne Union growth. members in investment insurance in 2013 Celebrating its 80th year in 2014, the odds amounted to $147 million, an increase by 17%. are that Berne Union members will top the High claims countries included Libya ($28 $2 trillion mark very soon. Very best wishes million), Venezuela ($21 million), Vietnam to the Berne Union! ■

The economic outlook is characterised by mildly positive signs for the recovery in Europe and other industrialised countries, while the growth in emerging markets has started to look less robust in 24 recent months. german export and investment promotion programmes

@ Support German companies when they do business abroad @ Secure growth and jobs in Germany @ Protect export receivables against commercial and political risks @ Assume the political risks involved in foreign investments @ Increase the security of supply with raw materials

Euler Hermes and PricewaterhouseCoopers have more than 60 years’ experience in managing these foreign trade promotion programmes of the German Government.

[email protected] www.agaportal.de +49(0)40/88 34 -90 00

The German Government has mandated a consortium formed by Euler Hermes Aktiengesellschaft and PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft to manage these promotion schemes. Berne Union 2014 Berne Union 2014

3 Expert analysis Berne Union 2014: Overview

Nothing changed – but everything different: the paradox of the Berne Union

By Dr Hans Janus, member of the board of management, Euler Hermes AG

Global trade and foreign direct investments key competence of have seen dramatic changes in the 80 years the Berne Union. since the Berne Union was founded. Not surprisingly, the Berne Union itself has Recipe for changed in tandem with these. But the world success of the Berne Union is more complex than this The recipe for the simple picture. One of the characteristics of Berne Union’s success the Berne Union is its remarkable ability to is quite simple: bring preserve the qualities, strengths and unique together the most features of a diverse and truly global experienced Hans Janus organisation over decades while international colleagues from politics and the world economy have member companies and invite external changed fundamentally –more than once. experts from banks, research institutions and We do not know very much about the multilateral organisations for an extensive early years of the Berne Union. But from the professional exchange on developments in last thirty to forty years, we do know from the markets. The focus in this is always clearly our own experience, and from contacts with possible future developments, since credit colleagues active in the Berne Union before and investment insurers have to cope with us, that one core value has always been a the challenge of predicting future risk cornerstone of the uniqueness of the Berne scenarios and taking appropriate decisions to Union and helped to preserve its genuine deal with them. club atmosphere: friendship. Despite different Fundamental changes in the organisation business approaches and the growth of the of the union became necessary and were organisation, and even transcending their carried out in the 1990s. At that time the competition in the markets, the delegates of world of export credit and investment member companies have very often insurance was still clearly dominated by developed a bond of real personal friendship. official export credit agencies (ECAs) The regular attendance at Berne Union operating under various legal forms for their meetings for a couple of days once or twice a respective national governments. Private year is a high investment in time for senior credit insurers were strong in domestic short- executives in the credit and investment term credit insurance and bonding business. insurance industry, particularly in our fast- But in the 1980s several private insurers were moving times. But the great continuity with already starting to develop their short-term which leaders of our industry have attended export credit businesses; they set up the meetings for many years demonstrates branches or subsidiaries in other countries, that this investment pays dividends. they acquired existing companies and I have had the chance to play an active diversified their product range, and they role in the Berne Union for more than 20 exhibited a rapidly growing risk appetite. This years now. This is no more than a quarter of development only became possible after the Berne Union’s entire history. This short period world’s leading reinsurance companies gave alone, however, has shown dramatic changes up their extreme reluctance to reinsure the in our business, and there is no reason to commercial risks of export transactions. For assume that the first sixty years might have political export risks it even took a few more been less dynamic. The promotion of global years until they became reinsurable on a 28 trade and foreign direct investment has larger scale. always been the overarching purpose and the These developments triggered a very Berne Union 2014: Overview

fundamental debate in Europe about One year earlier at the annual general EXPERT ANALYSIS competition between public and private meeting in Cape Town in South Africa in insurers operating in the same market for October 1998, the Berne Union had set the short-term export credit insurance. The course for its enlargement by private credit radical step taken in the UK in 1991 to insurers. This was the completion of a multi- privatise the short-term business of ECGD year strategic debate which was driven and sell it to the Dutch NCM (today Atradius) forward in particular by the presidents was only a logical consequence of this, but Soledad Abad of Cesce (Spain) and François one which dramatically changed the entire David of Coface (France) and the then landscape of credit insurance in Europe. secretary general, Anne van’t Veer. Malcolm Stephens, chief executive of ECGD, A no less important result was the splitting president and later secretary general of the up of the export credit insurance committee Berne Union, was a driving force behind into two committees for short-term and these developments. medium and long-term business. With this separation, the short-term committee could Adapting to change be opened up for private companies whereas The Berne Union had to adapt to this the MLT committee remained a closed shop changed situation, which was a long and for government-linked ECAs only. This difficult process. Many of the established limitation is still in place but it will not persist ECAs wanted to defend their exclusiveness. very much longer. The investment insurance To understand just how deep and radical the committee has also gradually opened up for needed reforms were, one has to bear in private political risk insurance companies mind that until the 1990s, with the exception (PRI) since Cape Town. Several new members of FCIA in the USA, Trade Indemnity from the joined the union after the groundbreaking UK (later Euler Hermes), SIAC from Italy (later decisions had been made in Cape Town: AIG, Euler Hermes) and Eidgenössische/Federal Sovereign, Zurich, Chubb, Hiscox. from Switzerland (later Winterthur and then The global geopolitical changes in Europe AXA), only government-linked institutions in the early 1990s following the fall of the were members of the Berne Union. Berlin Wall in November 1989 also changed This contrasts the mere foundation of the the Berne Union enormously. New ECAs were union. Originally founded in 1934 by private founded in most of the former Comecon and public insurers, the ECAs got more and countries. The Berne Union proved to be the more important after the Second World War ideal organisation to ease the birth of these since export credit insurance was mainly new agencies. done by them. The open conflict which broke out concerning the membership application Together with partners from multilateral of NCM UK, the former short-term arm of ECGD, in 1993 was probably the most critical agencies and the banking industry, the threat ever faced by the friendship-based Berne Union and its members will Berne Union community. Although the always generate solutions for fostering application was rejected this event symbolises the entrance of the Berne Union global trade and foreign direct into a radically new phase of its history. investment. The 1990s were also a period which saw growth in membership. Important emerging With the help of funds channeled through markets’ ECAs joined the union. Turk the newly founded European Bank for Eximbank, PICC (today Sinosure), TEBC Reconstruction and Development (EBRD), (Chinese Taipei), SBCE of Brazil and others the Prague Club convened for the first time in applied for membership. But the real Prague by invitation of Czech EGAP in 1993. challenge for the Berne Union was the Other Eastern European ECAs such as KUKE number of private credit insurers interested in (Poland), MEHIB (Hungary), SID (Slovenia) becoming members. John J. Salinger, rapidly joined and later became Berne Union president of AIG Global Trade & Political Risk, members as well. Today the Prague Club has had for years already argued for more more than 30 members from all parts of the cooperation between public and private world and its integration into the Berne Union credit insurers. He finally led AIG as the first is planned. newly entering purely private insurer into the When I compare 2014 to the late 1980s or 29 Berne Union in 1999. early 1990s, I see two fundamental Berne Union 2014: Overview

developments which have completely plunge in stock markets all over the world. reshaped our industry and thus the Berne The Berne Union decided, for the first time Union with it. ever and spontaneously in an early breakfast First, there is a great shift in the centres of meeting, to launch an initiative to maintain world trade. Asia has become a new centre of cover open and to assure the industry of the gravity on the world map of foreign trade countercyclical approach of ECAs based on activities. China, Korea and India have not the strong intention to help to stabilise trade only tremendously increased their export flows and support the real economy. This business, they also play a very important role message was much appreciated by nowadays in the Berne Union together with international organisations, governments, Japan, the traditional strong player from Asia. exporters and their associations around the Important steps forward in this development globe, and helped to stabilise a very critical were the very successful presidency of and highly volatile situation. Hidehiro Konno from Japan, the first The global financial crisis also shifted the president of the Berne Union coming from an focus of the Berne Union’s debates to the Asian country, and the highly constructive financial dimension of export credit role Geetha Muralidhar from India played as insurance. The severe difficulties of exporters vice president a few years later. to get bank financing for their business The second great shift is that from political superseded the risk situation of the to commercial risk. Only 25 years ago transactions. Direct lending and guaranteeing approximately 90% of all claims paid and the availability of financing for exporters, but reported to the Berne Union were political also securing the refinancing for banks, claims. ECAs worldwide suffered from the became the most pressing needs and the international debt crisis of the emerging hottest topics for Berne Union members. markets and developing countries. Claims Basel III and the global financial crisis led to a payments were extremely high, many ECAs completely different approach to export had to report financial losses and the credit insurance and gave it new importance. underwriting of new business became very The business figures of Berne Union cautious. The transformation from state members went up dramatically during the planned economies to market economies in crisis and maintained or even increased this Eastern Europe in the 1990s marked this level in the following years. It is no historic turning point. exaggeration to say that ECAs, and with Political risk lost its dominance for credit some time lag, the private credit insurers too, insurers and in particular the currency helped to pull the world’s real economy out conversion and transfer risks disappeared of the most severe crisis of the last decades. entirely as a consequence of the abolition of The future challenge for the Berne Union currency controls in most of the countries. will be to spearhead risk assessment, risk This changed the work of the Berne Union: coverage and risk transfer in the field of country discussions became less important, export credits and foreign direct investment. the assessment of private buyer risks took Short-term, medium and long-term export centre stage. Is a maxi devaluation and a credit insurance, direct lending, project consecutive corporate insolvency a finance, ship and aircraft finance are all areas commercial or a political risk? How should in which the union has expertise as well as corporate restructuring schemes be treated? claims, multilateral reschedulings, corporate The Berne Union had to deal with questions restructurings and debt recovery. Together which hitherto had played a rather minor role. with partners from multilateral agencies and the banking industry, the Berne Union and its The global financial crisis members will always generate solutions for The Berne Union’s most dramatic phase, fostering global trade and foreign direct however, was the global financial crisis. The investment. With a combination of the annual general meeting in Banff in Canada in highest professional expertise, global October 2008 was an unforgettable event. networks and best practice solutions, and During the meeting in the heart of the based on mutual understanding and personal Canadian Rocky Mountains which was mainly friendship, the Berne Union will be able to dedicated to corporate social responsibility remain unchanged and different at the same matters, sustainability and environmental time: a highly efficient group of experts, 30 topics, the delegates were suddenly ready and able to cover the financial risks of confronted with a historically unprecedented the future. ■ www.crlacorp.com Berne Union 2014: Overview

Yet another upheaval?

By Peter Hall, chief economist, EDC

“It’s different this time.” A simple phrase, but Key indicators a potent one. Its reappearances all feel novel, seem to suggest so. and more’s the pity. It seems we repeatedly The OECD leading forget that these four words are a bellwether indicator saw an of upheaval. They wreaked havoc with the uninterrupted 16- world economy in the latter years of the last month increase cycle, inducing excessive risk-taking which through January, produced over-activity, creating a unseen since the false mountainous, planet-wide surplus of goods rebound in 2009-10. and productive capacity. More than five years Most indicators within Peter Hall later, the same phrase has again been trotted the 34-country club out, proclaiming that the structural fallout of supported this upswing, a strong message the crisis will keep growth suppressed on the depth and breadth of the growth. indefinitely. True, there was a flattening in February, but Perhaps this time, the phrase and its much of that was related to severe North consequent predictions will prove correct. American weather disruptions. Early Yet if history is any guide, it’s unlikely. indications point to a rebound in March. Without a doubt, every economic cycle has Cynics would rightly note at this point that new features, but each cycle tends to pinning hopes on such high-frequency data operate in roughly the same fashion. movements is flimsy at best, and at worst, a Economic recovery always comes as desperate attempt to put a positive spin on something of a surprise. At the early stages the same old sluggishness. Surely there is of the growth cycle, businesses are typically more evidence? Indeed there is. caught flat-footed, scrambling to hire workers and put plant and equipment in Basic requirements surface place that will ensure they meet their To be sustained, growth needs an underlying burgeoning order-book. If this pattern is driver. In the current situation, it’s pent-up indeed typical, is there any chance that we demand. In the world’s richest economies, face an imminent positive shock to global consumers have delayed purchases for years, growth? as they were in many ways able to live off the excesses of the prior boom. Those excesses are long since exhausted, particularly in America; meeting basic needs now suggests an imminent upsurge in growth – one that has already begun in certain sectors. Without a doubt, every Industry is also guilty of under-spending. Anxious to preserve the bottom line, economic cycle has businesses have filled orders by using current new features, but each capacity as much as possible. Capacity is cycle tends to operate now considerably tighter, and in certain cases, approaching pre-recession peaks. in roughly the same Flush with cash, businesses the world over fashion. Economic are poised to spend, but have been shackled by a ‘you-first’ investment psychology. recovery always comes That, too, is changing. After years of as something of a surprise. uncertainty, confidence is growing. Businesses are definitely more upbeat in Japan and Europe. In both the US and 32 Europe, consumer confidence is on an impressive uptrend, and now out of the Berne Union 2014: Overview

recession-zone. This general improvement in as a whole are still followers, capitalising on EXPERT ANALYSIS market sentiment is all the more eye- growth in the wealthier economies. catching precisely because of our prolonged Decoupling from the richer economies stay in the psychological abyss. Pessimism during the crisis occurred only because their has an alarming ability to become self- pre-crisis earnings funded substantial fulfilling, and moreso the longer it is present. stimulus measures. Now they find themselves As such, the developed world’s nascent between the end of policy-propelled growth emergence from its slough of despond is and the return of global trade. The imminent probably one of the most remarkable revival of the latter is expected to spur on developments of 2013. Its message is simple: emerging market growth through 2015. pent-up demand says we all have to get out and spend; improved sentiment shows that Proper preparation prevents poor for the first time in a long spell, we want to. performance These fundamental strengths are getting a Thus far, the story is a surprisingly happy push from an unlikely source. one. It runs cross-grain to ‘new normal’ Government spending and taxation thinking, the fashionable story-line measures have for years exacted a scathing perpetuated by a large group of pundits who toll from OECD economies, thanks to deep believe it is different enough this time to hold austerity programmes. It is obvious from world growth back. In this context, growth recent data that the measures have done the will be a refreshing change, but we are so trick: one by one, economies all over the unprepared for it that it is likely to come as a OECD are posting dramatic improvements in great shock. Take, for example, labour public finances, even among the most markets. Their overplayed dirge chronicles conspicuous of the fiscal sinners. Simply put, high unemployment rates and laments the the cuts are no longer needed. Governments fate of the long-term unemployed. However, will be far less of a drag on economic growth a rush of growth could run headlong into this year and next. It is a timely, coordinated markets with rapidly aging populations. It fiscal dividend that will contribute no small seems preposterous at this point, but in amount to near-term global economic many economies, labour markets in the growth. coming cycle will have much narrower If realised, the ‘new-growth’ story is the bandwidth than usual. This time around, it’s best news OECD economies have heard not just an OECD-area problem. since the crisis. That covers about half of A second threat is business investment. global GDP. What of the other half? News in Not investment itself, but the means to emerging markets has been on the grim side invest. Once businesses catch on to the fact for months. Excesses in China, bumbling in that the growth they see is here to stay, there India, delays and insurmountable capacity will be no shortage of willingness to invest. constraints in Brazil, conflict in Russia – from Neither will there be a shortage of funds – in a large-emerging-market perspective, most developed countries, corporations are nothing seems to be going well. Moreover, cash-rich. Rather, the problem lies in the the effect is cascading to their smaller world economy’s capacity to absorb the cousins. investment demand. Will we indeed be able It’s tempting to see in this a leveling, or to put machinery in place and build new rebalancing, of developed and emerging facilities quickly enough to absorb growth? market growth. But that would be short- Time will tell, but tightening industrial sighted. For the moment, emerging markets capacity utilisation suggests the possibility of

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. 33 Berne Union 2014: Overview

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 fronts Well-capitalised banks suggests that prices may be somewhat and institutional tougher to control. Central banks will want to lenders, not to mention stem price increases in an effort to manage our expectations around pre-set target sovereign wealth levels. The opposite – nagging disinflation – is funds, are almost sure their present problem, but the tables may turn rapidly. Complicating the task is the vast to face a greater range amount of excess liquidity that is currently of high-growth lending available. options. At this point, the tale takes an interesting twist. The injection of vast amounts of liquidity, primarily by the Federal Reserve Board (Fed), is historically unprecedented. For decades to come, academics and business analysts will be dissecting its as growth ramps up, their access to faster- effects. Even so, the experiment is only half growing emerging markets increases. done. Withdrawal of the liquidity – which Well-capitalised banks and institutional theory states is exactly the same mechanism lenders, not to mention sovereign wealth as injection, only in reverse – has also never funds, are almost sure to face a greater range been done before. Weathering the effects of of high-growth lending options. the unwinding of quantitative easing could Other risks to look out for include financial well be the greatest near-term risk the global market vulnerability. Growth together with economy faces. revamped regulatory measures is helping to We already have a sense of the effects we heal structural weaknesses. Still, unforeseen can expect. The mere mention that the Fed disruptions could still have unpleasant might be considering tapering the $85 billion domino effects, a lingering threat that could of monthly bond purchases sometime in the produce more hesitant lending, exacerbating near future, maybe, was enough to throw tighter-than-normal access to capital. In markets into turmoil immediately. Emerging addition, although improved, the fiscal markets felt the effects disproportionately. picture in certain locales is fragile. Also Their stock markets tumbled. Currencies did making the short-list is what may well prove the same. Bond rates soared. To make to be a lasting legacy of this downturn: matters worse, commodity prices – political unrest. If the nascent cycle does particularly base metals and energy – prove to be an uneven expansion, unrest is swooned. The effects have continued with more likely to persist. the onset and continuation of tapering. Negative forces are less likely to interrupt Guidance from the Fed has enabled growth than to make it a wilder ride. Given markets to attempt pricing-in the expected fundamental strengths, it’s reasonable to see effects, but it’s not clear at this point if US growth rise to just under 4% in 2015. This markets foresee a net withdrawal of currency will be instrumental in pulling along other once tapering is complete. At the very least, industrialised markets. Collective OECD we can expect that emerging markets’ growth will enable emerging markets to access to capital will be somewhat regain momentum – enough to get world constrained. Excessive worry about these economic growth above the 4% mark in 2015. effects may be misplaced, though; in the It’s different this time. Of course it is. But turbulence, it will be important to remember it’s important to entertain the notion that, at that growth itself is the catalyst for the this point in the economic cycle, it may not unwinding of policy measures. One hopes be different enough to produce the sluggish that any unintended asymmetric effects, if ‘new normal’ growth trajectory that is they occur, will not be too exaggerated. currently all the rage. If that four-word phrase works its prescient magic, and the Taking off the blinkers world economy is indeed set to heave in 34 Amid the turbulence, an opportunity. Those an unexpected way, at least it will be with ready access to capital might find that an up-heaval. ■ TURNING UNCERTAINTIES INTO OPPORTUNITIES.

In Abidjan, everything seemed blocked. Yet we managed to unblock the situation from Paris.

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. Berne Union 2014: Overview

The political risk imperative

By Professor Alyson Warhurst, CEO of global risk analytics company Maplecroft

Having turned their attention further towards identify not only developing economies to compensate for a those countries with a lack of demand from traditional western heightened risk markets following the global financial crisis, profile, but also those export credit agencies (ECAs) now face a which are making the progressively complex global, societal and necessary reforms to political risk landscape. support the long term The factors driving this risk environment growth environment, are increasingly interrelated, with key thus providing key flashpoints around the world, especially in opportunities for Alyson Warhurst the emerging markets, sharing significant investors. commonalities. These include rising political Maplecroft’s Political Risk Atlas 2014: The oppression, the unfulfilled aspirations of political risk landscape, hotspots, drivers and growing middle classes, high levels of trends, are as follows. corruption and the inequitable distribution of wealth derived from foreign direct 1. 10% of countries see a significant investment and natural resources. rise in political risk As more countries see these issues Since 2010, a rising trend of conflict and combine, the risks are multiplied and the societal unrest has seen almost 10% of the likelihood of societal and labour unrest and 197 countries assessed by Maplecroft regime instability increases. As a result, the experience a significant increase in the level increased potential for heightened levels of of dynamic, short-term, political risk. conflict and political violence, legal and Unsurprisingly, given the turmoil which regulatory uncertainty, increased risks of continues to dominate the region in the wake resource nationalism and expropriation, and of the Arab Spring, more than half of the an elevated likelihood of the imposition of countries experiencing this deterioration are sanctions are being experienced by a located in the MENA region. growing number of countries. The situation in Syria (ranked 2nd most at The refocusing of ECAs’ operations to the risk after Somalia in Maplecroft’s 2014 developing economies has resulted in greater Political Risk – Dynamic – Index), Libya (8th) risk exposure of assets and investments, and Egypt (15th) has now deteriorated to creating a highly challenging environment for such an extent that these countries will be these agencies to operate and prosper in. mired in exceptionally high levels of dynamic However, by assessing the root causes of political risk for years to come. This ‘vicious political risk over time, it is possible to circle’ reflects the self-reinforcing impact of extremely poor governance, conflict, high levels of corruption, persistent regime Since 2010, a rising trend instability and societal dissent and protest. of conflict and societal East Africa has also seen a considerable unrest has seen almost rise in political risk, primarily due to significant increases in political violence in 10% of the 197 countries countries such as Tanzania (ranked 61st assessed by Maplecroft highest risk in Maplecroft’s Political Violence Index) and Mozambique (62nd). When experience a significant coupled with extreme levels of political increase in the level of violence in Somalia (5th) and South Sudan dynamic, short-term, (10th), along with the high risk in Kenya 36 (24th), which saw 67 people killed in an Al political risk. Shabaab terrorist attack in September 2013, Berne Union 2014: Overview

this has contributed to East Africa overtaking and disruption to logistics and EXPERT ANALYSIS Central Africa as the highest risk region for transportation. political violence in sub-Saharan Africa. The failure of a government to East Africa’s dynamic political risk profile accommodate the demands of an evolving for 2014 is further intensified by a significant society significantly increases the risk of increase in the likelihood of ‘soft’ resource societal unrest, which may ultimately result in nationalism, which has pushed the regional societally forced regime change. Even if this average from ‘medium’ to ‘high risk’ over the structural risk does not manifest in regime past year. This score change reflects a change, government efforts to placate substantial increase in mining royalties paid societal groups may manifest in policies in Kenya and the imposition of capital gains which undermine the business environment. taxes in Mozambique. Combined with the These can include increased taxes, local trend of increased political violence, this content requirements, resource nationalism presents significant operational challenges and asset expropriation. for the oil and gas sector at a time when As seen in Figure 1, a number of countries investors are increasingly attracted to the (located in the shaded areas) are host to region following the discovery of substantial significantly higher levels of social gains than hydrocarbon reserves. established political freedoms. Demonstrating how this imbalance can 2. Increasing trend of societal risk provide a leading indicator of the potential Many of the dynamic short term political risk for a significant increase in political and trends currently being witnessed are driven business risks, the year prior to the Arab by underlying longer term structural Spring, Libya had the largest disparity challenges. As a result, monitoring structural between the key structural factors of social political risk trends, including the level of gains and political freedoms of any country human rights risk, particularly human in the world. In addition, Tunisia, Syria and security factors, such as arbitrary arrest and Egypt were also among the top 20. In all four detention and extra-judicial killings by countries, an increasingly educated, security forces, as well as the level of societal politically aware and IT-literate youth with a resilience, can provide a leading insight into burgeoning middle class grew frustrated with countries which have a propensity towards the failure of the ruling political class to instability and civil unrest. This insight can either reform sufficiently quickly to address then enable ECAs to take steps to mitigate corruption and growing youth their risk exposure. unemployment, or seek to halt a rise in Over the past four years, more than 20% human rights abuses by the state security of countries have experienced a significant forces. increase in the level of long term structural Emerging risk hotspots can be identified political risk. This dramatic shift has been by examining those countries which are host driven by a host of factors, pre-eminent to a rapid deterioration in their level of among which is the increase in human political freedoms. The increase in tension security risk and the undermining of political created by the loss of rights which were freedoms by oppressive regimes. The previously enjoyed significantly increases the repression of these freedoms creates a potential for unrest and instability, significant risk for investors, either via their particularly in countries with comparatively direct operations, or through their supply high levels of societal, including educational chains. development. In the short-term, the immediate impact of The value of this trend analysis is aptly an increase in the level of oppression in a demonstrated by recent events in Ukraine. country is reputational, as investors may be The downward trajectory for the country perceived as complicit in human rights (illustrated in Figure 2) was the result of a abuses committed by the state, especially significant deterioration in the level of where state security forces are seen to act political freedoms over the past four years. In with impunity. However, this source of particular, during the tenure of former reputational risk is also central to driving the President Viktor Yanukovych, the wider risk of societal unrest and political undermining of civil and political rights and instability in the medium to long-term, judicial independence and a significant potentially creating significant operational increase in human rights violations by the 37 risks, including increased security challenges security forces combined with ‘extreme risk’ Berne Union 2014: Overview

levels of corruption created the conditions corruption measures. for societally forced regime change. A further example is Myanmar, which In contrast, while countries such as China although presenting significant challenges are identified as being host to a critical particularly with regard to human rights, it is disparity between political freedoms and host to one of the fastest improving legal social gains, Maplecroft believes that the and regulatory environments, highlighting current pace of government reform is the potential for a significant improvements sufficient to keep pace with popular in the investment environment. expectations. Recent significant reforms include the further loosening of investment 3. The growth of the global middle restrictions on foreign and private capital, class the relaxation of the one child policy, and the In the long term, the expansion of a introduction and enforcement of anti- country’s middle class should significantly

Figure 1: Social gains vs. Political freedoms Political freedoms

38 Social gains Berne Union 2014: Overview

reduce both dynamic and structural political associated with the failure to maintain high EXPERT ANALYSIS risks, considerably improving the investment levels of economic growth to which climate by increasing stability and reducing populations have become accustomed complicity risks. However, in the short to significantly increase the potential for medium term the rise of this income group societal unrest. has substantial implications for the political risk environment, with the following issues 4. Heightened political risk in presenting particular challenges for investors: developed economies due to the 1.) Increased pressure to combat fallout of the global financial crisis corruption, which is significantly raising In the wake of the global financial crisis, a compliance challenges for investors. heightened level of political risk also 2.) Demands for political accountability continues to prevail within the USA and and improved services, aspirations which, if Europe. Despite a tentative return to unmet, may result in widespread protests, as economic growth in the majority of witnessed in Brazil and Turkey in 2013. developed economies, the impact of the 3.) Rising inequality and the risks global financial crisis remains evident. High

Figure 2: Social gains vs. Political freedoms in selected countries 2011-2014 Political freedoms

Social gains 39 Berne Union 2014: Overview

levels of unemployment combined with austerity measures introduced in order to address fiscal deficits and restore investor A number of leading confidence, have contributed to growing growth economies have income inequality and stagnating or declining living standards. The dissatisfaction experienced a significant created by this decline is contributing to the fall in the level of political rise of populist parties both in Europe and the USA, leading to the fragmentation and risk over the past four polarisation of the political landscape. years, reducing both The influence exerted by emerging parties the reputational and and pressure groups, and the response provoked in mainstream political parties as operational challenges in they attempt to retain their support base, these countries. has undermined the stability and predictably of governments, significantly increasing macroeconomic, regulatory and operational uncertainty for investors. By quantifying and continuously How do planners allocate risk for each monitoring political risks – in particular the country? structural risks which serve as leading By quantifying risk, it is possible to indicators of the potential for unrest and compare the relative risk in different instability – ECAs should be well placed to countries, either for the overall level of reduce their risk exposure in the short, ■ political risk, or for a specific issue of medium and long-term. concern. This enables ECAs to assess their risk exposure, and to take steps to diversify Professor Alyson Warhurst is CEO and their portfolio where necessary. Using this founder of risk analysis and mapping insight, they can also identify countries company Maplecroft. Over the last 10 years which are performing comparatively well, she has built Maplecroft into the leading and thus present significant opportunities. source of extra-financial risk intelligence for A number of leading growth economies the world’s largest multinational corporations, have experienced a significant fall in the level financial institutions, governments and NGOs. of political risk over the past four years, Coming from an academic background, she reducing both the reputational and now advises at board level on societal and operational challenges in these countries. political risks, human rights, supply chain Examples include the Philippines, India and management, corporate reputation and Uganda, which were all host to a significant sustainability. Alyson is a consultant to the reduction in the level of political violence, World Economic Forum, where she is also while Ghana has seen its risk level improved part of the faculty; she is a contributor to the by continued improvement in its business Clinton Global Initiative and on the board of environment and in the rule of law. trustees at Transparency International UK. When allocating resources, it is also She is a non-executive director of the FTSE important to assess the sub-national 250 listed New World Resources. From 1999 variation in the level of risk across a country. to 2009 Alyson was professor of strategy The risk of political violence for example, is and international development at Warwick rarely uniform across an entire country. By Business School, where she won the assessing risk at a sub-national level, it is inaugural Faculty Pioneer ‘Beyond Grey possible to take advantage of opportunities Pinstripes Award’ (called by the FT the in regions which might otherwise have been ‘Business School Oscars’) and regularly won dismissed if one had simply focused on the the ‘Outstanding Teacher Award’. She was ‘headline’ risk level. India, Philippines and made an honorary professor in 2010. She is Colombia are among the countries which an accomplished speaker at high-level Maplecroft classifies as ‘extreme risk’ in the international events and has written several Political Violence Index 2014, but all have books and more than one hundred articles, areas which experience significantly lower including a column for Business Week. In levels of conflict and terrorism, reducing 2010, Alyson was a recipient of a Business 40 operational risks to businesses operating Insurance Magazine ‘Women to Watch’ there. award.

Berne Union 2014: Overview

An update on the short-term credit insurance market

By Ralph Lai, commissioner, Hong Kong Export Credit Insurance Corporation

Capacity in short-term credit insurance has Self-insurance is been steadily returning since the 2008 global never a difficult financial crisis (GFC) and premiums have choice for exporters, recovered. According to Berne Union’s data, especially those who commitment of its short-term members has do not have come back to the pre-GFC level since late established internal 2012 (America and Asia even exceeding, credit management Europe slightly below). It may not be in the guidelines. The same exuberant mood as before the crisis, premium payment, but supply is coming to the market strong. already meagre, is Ralph Lai One strong supporting factor is that the frequently deemed as loss ratios have been on the low side over an expense (rather than what insurers would the last few years, and in general corporate argue as an investment), and is quite often performance in advanced economies has taken out from the cost formula as soon as been improving. Although the market the economy recovers. expects a slight increase in loss ratios in On the positive side, world trade is set to 2014, overall sentiment of credit insurers is grow modestly but steadily. In mid-April quite positive. 2014, the World Trade Organisation (WTO) In reinsurance, the January 2014 renewals forecast a 4.7% growth in world trade this saw reinsurance premium very stable. year (IMF 4.3%). Some may argue that Placements have frequently been heavily growth in emerging market economies was oversubscribed, given the return of some still sluggish and some experienced capital large reinsurers to the credit and surety outflows and currency depreciation. There is market, as well as new entrants even as late also the common belief that China is going as in early 2014. Ceding insurers are now to grow much slower, as can be seen in the enjoying favourable reinsurance country’s export growth in February and commissions, highest levels since the GFC. If March of this year, which was negative. asked how well they are prepared for another However, the biggest export country of the financial crisis, credit insurers would now world is still forecasting a 7.5% growth of its argue that underwriting is still very prudent, $2.2 trillion-strong export volume. and an efficient warning system has been Technology plays important roles in implemented to monitor buyer’s payment. international trade. World trade in high-tech While there is obviously more supply, goods will outpace growth in total demand is affected by both positive and merchandise exports. Developed countries negative factors. For the latter, exporters are are leading the supply chains for high-tech fully aware of the low loss ratio, and products through global supply chains. improved buyer performance, and thus self- Global products (such as smart phones) are insurance is gaining its ground. wooing the rapid growing middle class in the

Although the market expects a slight increase in loss ratios in 2014, overall sentiment of credit insurers is quite positive. 42 Berne Union 2014: Overview

developing economies. Besides further EXPERT ANALYSIS strengthening Western brands positions in Some structures which are these markets, it also opens up the local normally for longer term markets in developing their own brands. transactions are now Technology advancement also helps the increase in non-traditional payment methods. being considered for Already, uncollectible receivables were on short-term as well, such the rise, due to the sheer growth in B2B payment, especially in China (someone as buyer credit. called the China e-Commerce market the “most important business battlefield in the world”). payment of letter of credit (LC) issuing Short-term credit insurance and banks. This may not be the conventional banks arena for a credit insurer. However, through Banks continue to be restrictive in growing such an arrangement, the credit insurer in their on-balance sheet assets due to more fact is reaching out to overseas buyers (ie. stringent regulation. They are more willing to the LC applicants) who otherwise may be seek credit enhancement either to grow their declined a buyer limit by the credit insurer. asset-backed lending (such as factoring in short-term business) or simply to reduce Public export credit agency capital requirement. Traditionally the need is Export credit agencies (ECAs) who more for longer-term commitments, but endeavoured to fill the market gaps during considering the revolving nature of short- the GFC continued to play a significant part term business, the aggregate commitment in the pursuing years. While in some parts of and exposure may well be worth the bank’s the world, ECAs still serve as the insurer of while to seek support from credit insurance. last resort, and only cover ‘non-marketable The experience of many Berne Union risk’, in other parts of the world, ECAs’ short- members is that they are now doing more term business flourished. According to Berne with commercial banks. Union’s figures, ECA members of the short- Furthermore, some structures which are term committee contributed to 43.5% of all normally for longer term transactions are the short-term insured business volume in now being considered for short-term as well, 2013, compared to 23.8% in 2008. The Asian such as buyer credit. This also illustrates the members contributed much to this growth, strength of those who can leverage their given the leading position in exports they international presence to offer efficient enjoyed in the last decade, with China financing options to the bank customers in surpassing Germany and then the US as the the global supply chain. world’s number 1 exporting country. On the other hand, partly due to banks’ Public ECAs will continue to be important internal counterparty risk management, thus players for international trade especially affecting their capability to finance export, when financing is harder to come by. Many and partly due to the straight-forward need ECAs who operate at no cost to the to cover risks in trading with emerging taxpayers have satisfactory experience in markets, exporters or their banks may turn to short-term business. Since there is a vast credit insurers for insurance against the non- portfolio of self-liquidating short-term

Since there is a vast portfolio of self-liquidating short-term receivables, whose performance can be monitored regularly, ECAs normally cover short-term business with their own resources (and with the help of private reinsurers). It is one of the drivers in fast-growing economics in pursuing export-growth economic models. 43 Berne Union 2014: Overview

receivables, whose performance can be closer cooperation with banks, more monitored regularly, ECAs normally cover products are being developed with banks: short-term business with their own resources some ECAs may go further in insuring the (and with the help of private reinsurers). It is banks export finance, especially the pre- one of the drivers in fast-growing economics export portion. in pursuing export-growth economic models. In recent Berne Union meetings, members discussed the application of E-commerce Emerging markets and many are using online systems to On short-term world trade, traditional address the burden of high frequency and attention is on the trade flows from the Asian voluminous declaration and buyer limit countries to the US and Europe. It is now applications. Easier online access to very much noticeable that growth in South- information online by the insured is another South trade (between emerging markets) developing area. and intra-regional trade is leading the For ECAs, to further enhance its service, growth. As supply chains become more international, movement of parts and semi- finished products are adding to world trade, albeit covering shorter distance among the production bases in each region. To illustrate, Credit insurance not in 2000, intra-regional trade only accounted only turns export for 41% of Asia’s total trade, and in 2012, it was 53%, adding a 12% share in its $5.6 opportunities into sales, trillion of exports. it could also be the Short-term business to emerging markets still sees limited growth as households in exporter’s companion in developing economics tend to consume local the whole process from products, except for global products such as negotiation of sales smart phones. That said, the international supply chain does render global production contract to payment. an important demand for short-term business. Electronics in the cluster of smart phone production are key merchandise under short-term cover. Volumes on those they may need to liberalise their cover to transactions are huge, but pricing usually is meet the challenge of the global supply thin, further exerting pressure on premium chain. As most ECAs do not operate in any rates. country other than their own, in order to support local companies going overseas, Development they may enter into a reinsurance Credit insurance not only turns export arrangement with another ECA if the latter opportunities into sales, it could also be the happens to be in a country where the exporter’s companion in the whole process exporter sets up an overseas operation. from negotiation of sales contract to During the GFC, the biggest drop in payment. Insurers in short-term business are policyholders was from the SMEs. Berne often asked to think more in terms of Union members are sharing experience in innovation, besides just providing capacity. how to address the need of the SME In addition to the standard credit check exporter mass. Some are developing new function, insurers can now cover pre- insurance policies, some devising simplified shipment risk, in the event the overseas administration and policy management. buyer goes bankrupt before the shipment is One of the key challenges post-GFC is the made. Besides suffering losses in material, need for the short-term credit insurers to the exporter still needs to repay the bank rebuild their reputation. Among the who provides pre-export finance. And in innovation in the market, many aim at the some other cases, even if shipment has been certainty of cover, such as non-cancellable made, the goods may not have been limits, excess of loss policies. The process will delivered (such as in an in-transit continue for the insurers and the insured to warehouse). As long as the sales contract is find the equilibrium among innovation, 44 enforceable, insurers can still cover losses affordability and consistency of quality arisen before the actual delivery. Given the service. ■

Berne Union 2014: Overview

Continuous high demand for medium and long-term risk mitigation

Medium and long-term export credit insurance and lending is often crucial to the enabling of global trade. Cooperation among different market players is a key factor, explains Karin Apelman, director general of EKN.

When I was appointed chairman of the lately been discussed. medium and long-term (MLT) committee at It has become the annual general meeting last October, the customary in many total volumes for insurance of long-term global transactions to export credits worldwide had once again put together a team reached the highest level ever for the first with exporters, half year. We might not see record levels in financiers and ECAs the years ahead, but I am positive that the in order to offer a world economic developments over the last competitive financial year have created a new platform of demand solution, which is Karin Apelman for long-term risk coverage in global trade. jointly structured and This new level of demand implies both monitored throughout the entire maturity challenges and opportunities for us being period. I am convinced that the ability of part of the export credit insurance sector. international companies to obtain security I am delighted by this vote of confidence and funding has been further strengthened and I look forward to managing the working by this cooperative approach. partnership within the Berne Union committee for medium and long credit Steady long-term growth terms. Furthermore I am also pleased to lead Looking at the statistics of the Berne Union this committee together with Jing Feng Lei for the latest six or seven years, one would from Sinosure as deputy chairman. note that medium and long-term commitments stand at an all-time high, $657 ECAs and banks are needed billion for 2013, representing a steady growth Some years ago, before the financial crisis, from the $292 billion of 2005. In comparison, the role and existence of export credit new business has not been showing the agencies (ECAs) were sometimes subject to same upward trend without exception as has discussion. The lingering uncertainty the total MLT exposure at each year end. following the crisis confirms that the However, the differences are not very guarantees offered by ECAs are still in high important, but may be explained by the demand for guarantees to high, middle and heavy increase in demand for MLT cover low income countries. Since 2009, notably during the years of the financial crisis, the demand for guarantees covering export leading to long-term repayments of export transactions to OECD’s high income countries has increased significantly. As growth strengthens in the USA and in Japan Before the financial crisis – as well as in the European countries which were severely hit by the last recession – it is the need for risk likely that exports to countries in Asia, Africa, mitigation was very often Latin America and the Middle East will once again dominate the requests for ECA questioned but nowadays guarantees. it is generally recognised In other forums, where efforts are being that official support is made to analyse issues regarding export necessary. 46 finance in a global perspective, the necessity and benefits of cooperating with banks has Berne Union 2014: Overview

credits which are still not completely depend on a variety of favourable market EXPERT ANALYSIS reimbursed. conditions or decisive political decisions. These figures are also – to some extent – Some of the factors that are often identified dependent on the exchange rate of the US are reduced indebtedness, rising commodity dollar versus all other currencies which gives prices and reforms. As growth picks up, a somewhat “jumpy” graph around the year infrastructure and other areas are improved, 2010. Short-term is an exception; here the which in return generates new growth. trend is quite a steady increase and this is ECAs from emerging markets are also valid for Investment Insurance. increasing their activities much faster than Worth mentioning is the increasing other Berne Union members. Three of these exposure that Berne Union members have on ECAs are now in the top ten. Significant their own country, assumed to represent in increases are reported for SBCE, K-sure and all or part support of working capital. Some Sinosure. Another group of ECAs that have members have introduced working capital increased their activities can be found in the credit guarantees much later than others, Nordic countries with increases of about which could prove that the product itself is 400% in outstanding MLT commitments. It not only a relevant tool in crises but a much should also be noted that all ECAs have needed standalone guarantee. expanded their activities during this time period, which partly reflects the need for A better world – steady growth in official support during the financial crisis. emerging countries Twenty years ago many of the sovereign All markets available states that defaulted on their external debt In recent years, economic activity has been payments, are now emerging economies with rising in the emerging and developing healthy finances. Not too many years ago, countries of the world. Behind this positive people in the Western part of the world were trend, growth-promoting policies have been becoming accustomed to reports of soaring implemented for a long time. In contrast to government debt and reduced credit ratings. high income countries, the public sectors in Yet on continents beyond Europe and North most emerging and developing countries are America, steadily the opposite trends are moderately indebted. These countries have developing. become increasingly important for the world economy. The extensive purchases of government The development of new bonds by the central banks of the USA and Europe have also contributed to this trend. more SME targeted The liquidity in global financial markets has guarantees has led to an thereby increased and its ability to supply capital to many emerging countries has been interest from large strengthened. corporates, even though An important motive for the expansion of the product was first the private sector is direct investment and the transfer of knowledge to emerging and intended to meet SME developing countries. Over the last twenty demand. years, direct investment has increased nearly ten-fold, demonstrating the production benefits that many emerging and developing A while ago, EKN, the Swedish ECA that I countries are enjoying. For another set of am heading, conducted a survey that developing countries the key to earn hard showed that most Swedish companies currency and to import essential exaggerate the risk of payment default on commodities and services, are the high their exports to emerging economies in Latin prices of raw materials which hopefully will America, Africa and Asia. Their assessment is remain a stable source of revenue for these considerably more pessimistic than EKN’s countries. which also exposes them to another risk, the All markets need to be available in order risk of losing key export opportunities. to create growth opportunities for exports. Moreover, to determine generally the most For eighty years, the members of the Berne important reasons for a positive Union have been offering security in export 47 development is not an easy task. It could transactions. More and more companies in Berne Union 2014: Overview

the world consider ECAs as a strategic to poor indebted countries are also included. partner in their business planning and credit The development of new sustainability insurance as a natural part of the business processes must be done in close model. collaboration with the exporters to ensure that the application of for example the UN Increased focus on SMEs guiding principles on business and human During the most recent encounters between rights fits with the exporters’ and banks’ members, an increasing number of ECAs sales and finance process and is specific to have reported a stronger focus on small and the issues of the particular industry. medium-sized enterprises (SMEs), describing how they have established new teams and in A new landscape what way they both meet demand from Globalisation is being increasingly evident in SMEs and how they market their products the transactions guaranteed by all Berne towards SMEs. Union members and international In terms of the products offered to SMEs, cooperation is becoming increasingly both MLT and short-term (ST) products have important to all of us. It has become proven to be relevant. The development of inevitable as many companies have new, more SME targeted guarantees has led production, research and development, to an interest from large corporates, even marketing and management operations both though the product was first intended to in their home countries and abroad. The meet SME demand. issuing of guarantees for subsidiaries is an example of how ECAs can promote the Opportunity to influence internationalisation of business. Experience shows that trade is important for Recent years’ world economic development if it is done responsibly. MLT developments have created a new platform credits provide an opportunity to influence of demand for long-term risk coverage in how companies manage environmental and global trade. However, ECAs have an human rights issues. With the relatively new important role to play in any market UN guiding principles on business and condition. Before the financial crisis the need human rights, ECAs are explicitly targeted as for risk mitigation was very often questioned important institutions with a particular but nowadays it is generally recognised that official support is necessary, as a complement to the market players and then We can in the future most notably during a situation of market failure. foresee that there will be a From this point of view, one can see the gradual increase in the strong need for ECAs to continue our activities. During the last few years different cooperation between the attempts have been made to create a level ECAs in the world. playing field among ECAs in the world. From different sources initiatives have been taken responsibility to respect human rights. As to streamline the activities on a worldwide trade promoters I believe we have a basis. The International Working Group responsibility to ensure trade is positive and (IWG) is an initiative to create a level playing build confidence within and between field among ECAs from all parts of the world. societies. We can in the future foresee that there will As most business development, also be a gradual increase in the cooperation sustainability is a never-ending journey, between the ECAs in the world. In different where ambitions are constantly raised. forums the need for cooperation among Experience proves that there is a connection ECAs and other players has been discussed. between sustainability issues and financial The cooperation could take different forms, risk. Inadequate management of CSR-issues stretching from bridge-building activities can cause disruption in the production, for with IFIs to creating funds and also pooling example as a result of government of risks among ECAs. During our upcoming intervention, riots or other types of unrest. In meetings I foresee extensive discussions addition to assessing environmental and around cooperation among ECA’s and 48 social issues in the transactions, anti- private insurers, partnership with banks and corruption measures and sustainable lending continued focus on sustainable trade. ■ Unlocking Uzbekistan

Uzbekistan contains some of the most promising investment opportunities in the world, and some of the most stable conditions in the CIS. However, as with all emerging markets, the key to successfully unlocking the upside is effectively to cover the downside.

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UIIC shares the risks on co-insurance basis with AIG. All business insured 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 agency enables the company to be established in a cost-effective way and to employ the considerable world-wide resources of AIG to assist in the production of business. Underwriting process, claim handling and other insurance issues are affected in the United Kingdom.

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Uzbekinvest International Insurance Company Limited is authorised and regulated by the UK FCA and PRA, FRN: 202923. Registered in England company no.: 2997845. Berne Union 2014: Collaboration and liquidity

Easing the regulatory challenges facing export finance

By Henri D’Ambrieres, ICC advisory board member

Export credit is a tool which has been used long-term period. The for decades to support exports in a world objective is not to where the main driver of economic growth make large profits, has been international trade. The need for but to prevent the export finance has been questioned for 40 need for any subsidy years, but today after several years of crisis, from the tax-payers. most people recognise the importance of this This was achieved tool to support the economy. over the last 15 years The main stakeholders of this lending thanks to the activity are the export credit agencies (ECAs Knaepen Package, Henri D’Ambrieres – and the authorities they represent), the which imposed banks, the exporters and the importers. The minimum premiums, and a better selection of interventions of the first two groups in that risks. It should not be forgotten. business are highly regulated with cross- The consensus has to integrate evolutions border rules. In a changing world, the of a globalised economy and to recognise regulatory frameworks are becoming stricter that it will be effective if its rules remain and stricter. Export finance will have to adapt stable, simple and acceptable to non- itself to these rules or convince regulators participants. that there is a need for some amendments to Some challenges ECAs will have to deal make them applicable to export finance. with are: New exporting countries: The arrangement Relevant frameworks was designed by rich countries which were The relevant framework for the organisation the largest exporters of capital goods. Over of ECA business and its self-regulation is the the last 10 to 15 years, some emerging consensus of the OECD. countries have seen the emergence of ECAs were established by most OECD national providers of capital goods which countries after World War II as a tool to compete efficiently with the established ones. support their own exporters – and develop Without being a member of the OECD, Brazil exports – competing with exporters from supported the last agreement on aircraft other countries and offering financings to (ASU). Will it be possible to extend this importers that faced difficulties in raising beyond aircraft? The extension of the funds. In 1978, ECAs agreed on rules for fair consensus would be important to maintain a competition (the arrangement) and since level playing-field among old and new then they have respected a soft law, although exporters. it has no strict legal value. While most people do not accept state- A new financing landscape will be designed aid, and others even question the validity of by financial rules under implementation any public support to the industry, ECAs have (Basel III): Banks were the traditional financial to show to their stakeholders that they are a actors dealing with ECAs; they will be sustainable activity in their home countries. affected by limitations on long-term funding Two good reasons for this are: for large amounts. Other fund providers  They support their exporters and looking for long-term investments exist but exports out of their home countries (being are less flexible. A refinancing is an more flexible to consider the impact of opportunity for a commercial bank which globalisation on foreign and local content) looks for new activities generating fees, but it and are an efficient counter-cyclical is a threat for an investor which selects instrument to support the economy in tense stable long-term investments to pay for a 50 situations when no other solution is available. retirement plan. Contrary to investors, banks  They are a profitable activity over a manage easily large and flexible drawing Berne Union 2014: Collaboration and liquidity

periods. The capacity to accommodate know that ECAs have been able to develop a EXPERT ANALYSIS opposite but complementary constraints will self-supported business since the be a key challenge for ECAs and fund implementation of the Knaepen Package in providers. 1997. However, the general perception remains that it is a highly subsidised activity The focus on sustainable projects as most as it was the case in the mid 80’s. In addition, shareholders (ECAs, financial institutions, the crisis which appeared in 2007/2008 large corporates) cannot put at risk their made clear their contra-cyclical role to reputation: support international trade when other  The need to know perfectly its financings vanished. In a fiscal constrained customers, being exporters or importers, environment for most governments, ECAs imposes itself on banks and ECAs. should make their positive contributions to  Global warming is a growing concern. global growth even more visible. ECAs will have to accommodate the need for a cleaner industry, in order to contribute to the Simplicity and stability prevention of global warming and to make this Simplicity is very important: the consensus is activity compliant with the expectations of a soft law which cannot be dealt with in a civil society. This should not prevent them court. As such, it has to be easily accessible to from supporting projects with a high-carbon its users. Today, ECAs use two different intensity as long as they comply with local and guidelines for the analysis of environmental international regulations and they support the impacts, promoted by the World Bank for general trend. As an example, some low- sovereign and public entities on the one hand, income countries might have no other and by IFC for corporates on the other hand. resources other than a coal-fired power plants Hence corporates established in the public to support their initial growth at an affordable sector are in a grey area. One unique set of cost for the local economy. applicable environmental rules would make  Prevention of corruption is recognised sense as long as it also recognises that a $10 (apart of any moral consideration) as an million investment does not require the same efficient tool to support growth by limiting analysis as a $5 billion one. the costs of the projects financed through The strength of a rule comes from its ECA loans. stability. The consensus has to manage trends On the contrary, ECAs should not be used and should not be used to deal with for purposes other than their mission of provisional situations. As an example, a stable supporting exporters. The respect of human rule for the determination of the Commercial rights in a country is important, but it is a Interest Reference Rates (CIRR) (treasury political issue as long as the corporates bonds + 100 basis points) was very efficient involved in a project respect them. for decades and will be efficient again in a stabilised financial market once Basel III Financing of contracts awarded to SMEs: becomes operational. These contracts usually require for export Rules established by the consensus apply credits with limited amounts. They also first to the ECAs themselves, but then to involve as borrowers smaller companies financial institutions, exporters and importers. which have often weaker ratings, if any, than While a dialogue, more or less extensive, large corporates, thus presenting higher risks exists in most individual countries among of defaults. As costs of implementation of these stakeholders, global exchanges are small export credits are mostly fixed (and rather limited. then proportionally higher for small loans The stakeholders’ meeting organised by than for large ones) and costs of risks are the export credits group of the OECD is the higher, commercial banks consider them only place where stakeholders of different reluctantly. While maintaining a safe risk- countries meet once a year. The Berne Union analysis, simplified (and less-costly) also sometimes invites its partners to some procedures will have to emerge for small meetings. These large gatherings are very projects. The ‘one-size fits all’ approach important, but not the right place for in- explains the vanishing offer in small export depth exchanges. Focused working groups credits, and simpler processes are required (like an advisory board) with limited for these smaller loans. assistance might make sense if an important reform (such as minimum floating rates) were 51 Its image of a subsidised activity: Insiders to be considered. ■ Berne Union 2014: Collaboration and liquidity

Standardising export credit in the post-crisis environment

By Andreas Klasen*, partner at PwC and vice-president of the Berne Union

Export-oriented economies benefit from new willing to finance jobs, more innovation, reduced welfare costs transactions with and economic stability. Creating growth extended credit through trade is an elemental part of the periods, several Gulf policy approach of many industrialised Cooperation Council economies. Although emerging countries (GCC) countries have were latecomers to global trade, they have launched export considerably benefited from trade promotion liberalisation. India and Brazil, for example, instruments or intend have developed competitive export to do so. Qatar’s industries over the past decade and have Andreas Klasen approach is a good been rewarded with significant economic example: After oil and growth. gas have contributed significantly to the country’s wealth, the government now Supporting exporters in global trade focuses on diversifying the economy and on Export credit insurance for large industrial boosting other exports with the newly sectors such as manufacturing, aerospace or established ECA ‘Tasdeer’. shipbuilding is of great importance in mature Exporters frequently require insurance economies. For example, order values for cover for risks linked to export transactions. Airbus aircraft insured by the German export Typically, these risks arise from non-payment credit agency added up to $4.8 billion in for political or commercial reasons. As export 2013, accounting for more than 10% of total credit coverage available from private new insurance cover. Innovative small and insurance companies is sometimes restricted, medium-sized companies (SMEs) engaged in export transactions can often only be the export economy also received strong realised on the basis of governmental support and are considered to be especially support. Export credit agencies pursue their eligible for cover. aims by providing export credit insurance In addition to highly industrialised facilities for privately financed transactions economies such as Germany, Italy or Korea, through direct lending or pure cover support. many developing countries have understood This enables buyers particularly in emerging the importance of government financing markets to finance transactions where instruments. Russia has recently established commercial lenders fail. an export credit agency (ECA), known as EXIAR, and intends to further develop other Export credit support during the foreign trade programmes. As commercial financial crisis lenders in the Middle East are often not The sovereign debt crisis in Europe and the 2008-09 recession had a massive impact on exporters. This was because banks providing Given the importance financing were more selective, concentrating of international trade in on primary markets and core clients as well as on smaller transactions with shorter the economic strategies maturities. The economic situation in of many governments emerging markets also led to a decrease in and given the fiscal cover possibilities from private insurers. ECAs were able and willing to offer more neutrality of export support. For short term export credit credit agencies, ECAs can insurance covering transactions with repayment terms of one year or less, credit make a significant 52 limits were substantially reduced by private contribution to growth. credit insurers which affected especially Berne Union 2014: Collaboration and liquidity

importers from EU countries. ECAs increased responded quickly by expanding operations EXPERT ANALYSIS capacities filling the gap in export credit in order to support the banking system insurance supply. providing liquidity and restore lending. During the financial and economic crisis, Having facilitated international trade for ECA coverage also grew significantly for many years, ECAs stepped in with new and medium and long-term cover for transactions innovative cover policies to fill the gap left by of more than one year. Especially in highly private export finance markets. industrialised economies, governments saw a huge increase in demand in this area. Their Continuous support on different levels ECAs also proved to be flexible by adapting The footprint of government support in trade their supply to the high demand for cover in and export finance continues. Some an environment in which general financial risk countries have undertaken efforts for a more perception had increased. ECAs financially strategic use of government or government- supported numerous industrial and backed institutions, which has been critical infrastructure projects. to export success. For example, the China During and after the 2008-9 recession, Export-Import Bank, the China Development there has been great innovation amongst Bank and Sinosure achieve the country’s goal ECAs. This has included establishing new of supporting foreign trade by providing products such as securitisation and export liquidity to exporters and investors abroad. In funding guarantees in Belgium, the addition, they insure commercially financed Netherlands or Spain. The United States, transactions through pure cover support. France and the United Kingdom have been Using the instruments of various government trendsetters introducing a bond cover institutions in a concerted manner, this solution for Boeing and Airbus aircraft export strategic framework is one of the key success financing. New or amended direct lending factors for Chinese exporters and investors. schemes have been launched, for instance in The economic success of China’s support the United Kingdom. Existing products were becomes obvious, for instance, when looking also improved, for example with reduced at sub-Saharan Africa. Despite a number of retention in France, Germany and serious challenges on the continent, Switzerland or enhanced working capital countries such as Angola, Mozambique and facilities. Governments around the world thus Nigeria have been growing rapidly over the

EXPORT BANK INSURANCE

Hungarian Export-Import Bank Plc. Hungarian Export Credit Insurance Plc.

IN THE SERVICE OF HUNGARIAN EXPORT FOR 20 YEARS 53 Berne Union 2014: Collaboration and liquidity

last decade, amongst others facilitated through China’s economic and political If common rules for export support. credit agencies are Construction and telecommunications are developed further without booming due to a strong involvement of Chinese exporters. Government institutions excessive regulation play a decisive role in financing these endangering growth transactions, fostering both domestic growth and global trade. For instance, an innovative through trade, global financing solution in the telecommunications standards are the sector has attracted a great deal of market appropriate way forward. attention. China’s export credit agency has provided competitive advantage in terms of governments supports exporters in securing pricing and capacity for a large transaction financial resources from commercial lenders, involving one of Africa’s largest integrated products have to be designed accordingly to communication service providers. meet demand for financing and refinancing China’s role has resulted in positive purposes. financial effects not only for the Chinese but also for sub-Saharan economies. Through the Standardising export credit opening up of important sectors with insurance attractive interest rates and repayment With the global economy moving back on schedules, African countries have track, exporters face new challenges: besides substantially benefitted from infrastructure continuous government support through development. Long-term growth is also export credit insurance as part of a national driven by investments in other sectors such ‘strategic econsystem’, exporters now ask for as manufacturing, wholesale and retail. a global equality of opportunities and competition. This applies, in particular, for the Using a ‘strategic econsystem’ application of international rules and It is important for governments to realise regulations as well as a comprehensive that policy initiatives work best when adoption of global standards to provide a embedded in a strategic framework. level-playing field. Furthermore, individual Enhancing trade policies is not the only measures have created cover policies which necessary measure to lead economies onto are often still focusing on the latest financial the growth path. But given the importance of and economic crisis from a national international trade in the economic strategies perspective. of many governments and given the fiscal For decades, many ECAs have cooperated neutrality of export credit agencies, ECAs in a fair competition for the benefit of can make a significant contribution to national exporters. Since the 1970s, ECAs growth. As part of a ‘strategic econsystem’, have jointly improved rules and regulations focused and interconnected policy through gentlemen's agreements like the programmes are a key factor for innovation 'OECD consensus' and the 'common and growth. approaches'. They agreed on common rules By using a ‘strategic econsystem’, and definitions for terms and conditions for governments also have to evaluate if their export credit cover. Examples are minimum strategic aims and policies are in accordance advanced payments and interest rates, with the motivation for exporters to apply for maximum credit periods as well as limits for insurance cover. It is worth assessing if local costs and environmental guidelines. The insurance products, cover policies and ‘common approaches’ ensure, in particular, conditions are adequate to accommodate coherence between exports supported by demand. This is in line with the question if, national governments, and environmental for example, small and medium-sized protection. International trade affecting the companies’ needs are fulfilled. environment such as hydropower plants or Further considerations to simplify large infrastructure are subject to a screening products and to offer specific cover solutions with the objective of anticipating, minimising for SMEs might be necessary. Understanding and mitigating ecological impacts. exporters’ current financing needs is highly As the compliance with standards is 54 relevant concerning product offerings. As limited to OECD participants, for example to export credit insurance provided by Japan, Italy and the United States, there is a Berne Union 2014: Collaboration and liquidity

need to establish environmental rules and sufficient insurance facilities. They have to EXPERT ANALYSIS regulations on a global level. Ambitions to confirm their strong commitment to remain amend and tighten these OECD regulations reliable partners for exporters and financing might endanger the competitiveness of banks where the private market fails to exporters from the OECD. Therefore, supply sufficient financing and insurance. improved standards for financial terms and ECAs have to act counter-cyclical and prove conditions have to be agreed upon jointly. their capability as an effective instrument The development and application of truly against market failure. However, it is international norms ensuring ‘ethical’ important for governments to realise that behaviour is obviously necessary. The current policy initiatives work best when embedded multilateral initiative to build new global in a permanent framework that focuses on standards on export credits is a vivid important sectors of the economy. If they example. Many exporters would acclaim the use a ‘strategic econsystem’, governments success of the ‘International Working Group’ can make a significant contribution to agreeing on international rules for mandatory growth through trade. practices for financing global trade. Will excessive regulation endanger Common rules for export support are, economic growth? Do global standards however, not only restricted to existing impair successful examples of self- OECD regulations. Many exporters regard regulation? Rethinking cover policies and new products introduced during or after the negotiating international rules and financial crisis only in a few economies as a regulations needs a compass. There is no competitive disadvantage for their danger for economic growth if governments operations. Small and medium-sized form a comprehensive ‘trade policy’. If there enterprises often need working capital is a willingness to create the institutional facilities, but only a small number of framework that provides a fertile breeding governments currently offer support. Some ground for trade to flourish, both exporters ECAs focus more on the national interest and governments will benefit. If common than the national content threatening rules for export credit agencies are competition in global markets. developed further without excessive For a growing number of financial services regulation endangering growth through providers, it is difficult to understand the trade, global standards are the appropriate different and often complex terms and way forward. This includes an integration of conditions. Assessing the legal protection the BRICs economies as well as other and financial quality of export credit developing countries to create a level insurance products is a further challenge for playing-field for exporters around the world. banks. Therefore, providing a level playing- There is a need to further develop or field for exporters can also be associated amend existing OECD rules to gain with products and cover policies. worldwide acceptance. Furthermore, it is Rules and regulations have to be crucial not to limit the question of global developed further in a changing world. This rules and regulations on existing approaches is a crucial point to substantially reduce but to include the question of products and potential negative effects. Despite premium cover policies. By collaborating to adjust levels and credit periods, there is a variety of policies and practices, ECAs are in the reasons why common agreements for global position to improve exporters' global standards on a product or cover policy level competitiveness. ■ would make sense. *Andreas Klasen is a partner at PwC and Conclusion vice-president of the Berne Union. He is also In order to foster growth through trade, honorary fellow in the Institute of Global export credit agencies have to provide Policy at Durham University.

Assessing the legal protection and financial quality of export credit insurance products is a further challenge for banks. Therefore, providing a level-playing field for exporters can also be associated with products and 55 cover policies. Berne Union 2014: Collaboration and liquidity

Capital markets and export finance – is the third time a charm?

By Jim Cruse, senior vice president, policy and planning, Export-Import Bank of the United States

An arguably common theme in medium- and ragged, financiers long-term (MLT) export finance circles today would look to see is that full implementation of Basel III will what capital markets elicit the end of commercial banks as the could do. funding source for long-term financing – with Due to a relatively long term export finance1 as one of many unique combination segments affected. Typically, export of both housing the financiers assert that the capital markets world’s major capital must, can, and will fill in the void – either markets in the post- directly under a perfected export credit World War II era and Jim Cruse agency (ECA) guarantee, or indirectly as the having a domestic funding source for official financing (i.e. direct political environment inherently tilted to lending by ECAs). This paper reviews the oppose government involvement in three attempts by the Export-Import Bank of commercial activities (like lending), US Ex-Im the United States (US Ex-Im) to bring capital has tried to access the capital markets markets directly into case-specific long-term directly for case-specific long term export export finance and examines the issues finance three times3 in this 40-year period. surrounding the latest effort to see if more The next section briefly reviews each effort to permanence may follow the current effort. explain why US Ex-Im made each effort and identify what issues emerged. Historical evolution of capital markets and export finance US Ex-Im and capital market access Although commercial banks and capital for individual cases markets have both been involved in MLT Every country (or currency area) tends to international finance for hundreds of years, have a variety of sources of long-term debt until the late 1960s there was a fundamental capital (eg. pension funds, insurance division of labour: commercial banks companies, etc.) willing to invest funds for 5- generally funded transactions with 20 years for governments, projects and repayment terms under 10 years, while capital buyers. Accessing these sources is typically markets (first in Europe, then since World done in one of two ways – directly (one War II mostly in the US) tended to fund transaction to one investor), or indirectly general purpose bonds to sovereigns and (through the use of a security such as a bond other major entities. If transaction-specific sold by an entity to multiple investors). While long-term funds were needed, governments the former has advantages in its flexibility of set up special institutions2 to provide direct mechanisms and handling of both the timing lending. and number of disbursements, the latter Starting in the 1960’s with the tends to be cheaper (if there is a marketable development of the eurodollar market, the security format available). The US is unraveling of post-WWII capital controls, and considered to have the largest and most incremental easing of regulatory limits, efficient (meaning you can generally get the commercial banks began a 40 year period of lowest costs) debt capital markets in the expansion—sometimes rapid, sometimes world. ragged—of their role in international and Although US Ex-Im has researched the export finance. When the banks were direct method every time a capital markets 56 growing rapidly, they took over many of the effort has been attempted, the responses roles of capital markets; when the banks were have always been the same – there is little Berne Union 2014: Collaboration and liquidity

appetite in the investor community in being a security form by putting each case into a EXPERT ANALYSIS direct investor in the fairly complicated and single-use special purpose vehicle (SPV) and unusual business of export finance (and what standardising how the many loose ends of an little there is would be quite expensive). export transaction can be covered to fit As every US Ex-Im attempt to access capital market needs. capital markets was to be gauged by how This programme averaged perhaps $0.5 to well it achieved rates comparable to what US $1 billion per year in activity during the Ex-Im direct lending could provide, each middle years of the 1990s, then dipped to attempt has focused on the indirect method. perhaps $100 million per year as commercial This choice means that the fundamental banks began a decade-long practice of issues that US Ex-Im has had to address aggressively pricing under an US Ex-Im revolved around how to take an export guarantee. Nevertheless, while eventually transaction and create a marketable security eclipsed by exceptional bank pricing, the with as little ‘story’ as possible. Developing programme features attained in the 90’s that instrument and refining its features has established the tools and procedures that taken decades. could regularly allow non-project finance US Ex-Im’s first attempt to access the individual cases to access capital markets at capital markets for individual cases came rates approximating what US Ex-Im direct along in 1976. Confronted with the largest loans would provide. case in its history to that time (the Philippine US Ex-Im’s third attempt to access the nuclear power project), the Ford capital markets for individual cases is its Administration pushed to use the case as a current capital markets guarantee test of the feasibility of accessing the capital programme, introduced in 2009. This effort markets for an individual transaction. was stimulated by the commercial banking Although the transaction was successfully collapse and subsequent pull-back following funded through the capital markets, it the financial crisis of 2007-2008 and Basel III required major exemptions from the regulations. The major changes in this latest Department of Treasury, such as 100% cover attempt at capital market access are really and transferability of the guarantee, and it did nothing more than a) insisting that all not achieve particularly good pricing (largely institutions ‘designing’ a structure follow the due to a relatively cumbersome structure). same framework (thus maximising Given changing political administrations, the standardisation in the instrument), and b) lack of a ‘forcing’ aspect such as budget taking full advantage of the improved cutting, the difficulties encountered in Depository Trust Certificate (DTC). moving the transaction into and through the The DTC is a crucial facilitator of both a capital markets, and the need for continuing centralisation of the operations of the SPV exemptions from Treasury (which was not (necessary for efficiency) and to attain for likely to be forthcoming), no further tests individual investors a certification that they were tried for another 15 years.4 have direct access to the issuer (enabling US Ex-Im’s second attempt to access the minimum regulatory processing and costs). capital markets for individual cases was its US Ex-Im has seen major success in the original capital markets guarantee aircraft sector, as well as for large corporate ‘programme’ put in place in the early 1990s. buyers. However, complicated project finance This attempt was driven by a US government structures are still figuring out how to budget crunch greatly curtailing direct efficiently use the mechanism to access lending, and made possible by (1) Congress capital markets. permitting US Ex-Im guarantee transferability, Reflecting the fact that this time the forces and (2) Treasury allowing US Ex-im to driving the US Ex-Im attempt are provide 100% cover on principal and interest. fundamental changes in the availability and Using the just-obtained capacities US Ex-Im cost of commercial banks as funders of long- solved the basic problem of a marketable term assets, there has actually been a broad

Over the last five years US and European ECAs have accessed some $20 billion from capital markets for individual transactions. 57 Berne Union 2014: Collaboration and liquidity

3. Project finance faces real obstacles to accessing capital markets funding. In With some innovation particular, borrowers do not want to wait and experimentation, years to fix their borrowing rate (especially at the low part of rate cycles), and the capital capital markets could markets can’t handle the uncertainties during well play a major role the construction period. Possible solutions throughout the long-term exist within the current arrangement rules, but it will probably take some time to find the ECA arena within the right combination of steps which will allow next few years. this part of the ECA portfolio efficient and effective access to capital market funding. In sum, the trends look favourable today array of attempts by ECAs in Europe to for capital markets to become a standard access capital markets for individual cases. option for the funding of many long-term Both the British and French ECAs have ECA cases. However, this funding source is introduced enhanced guarantee products (so never going to become a ‘stand alone’ source, far just for aircraft products) that are being able to handle on its own the many ‘uh-ohs’ used to create marketable securities similar of MLT export finance. to what US Ex-Im’s guarantee generates. Except for those ECAs dominated by Other European ECAs (eg. EKF in Denmark) direct loan programmes, a successful are exploring (and doing) some deals that integration of the capital markets funding bring long-term investors (eg. pension funds) source into the ECA tool box will probably directly into specific transactions. require that commercial banks become the Over the last five years US and European ‘financing manager’ of a case – doing the ECAs have accessed some $20 billion from origination, structuring, and deciding which capital markets for individual transactions. source of funding to use at what time and to Future of capital markets in long- what extent. With some innovation and term export finance experimentation (but no required changes in the arrangement), capital markets could well The earlier efforts to access capital markets play a major role throughout the long-term did not have legs because either banks came ECA arena within the next few years. With charging back to undercut both cost and the right kind and level of ECA and ease of access, and/or the US Ex-Im effort commercial bank cooperation, this ‘ideal’ ECA was limited by the lack of an external driver. structure may emerge even more quickly. ■ Today, however, there is clearly a multilateral consensus emerging that the likelihood of commercial banks coming back as a cost competitor is so low that it is worth the considerable up-front effort by ECAs to Notes develop an ongoing capacity to access 1 Long term financing defined as loans with repayment capital markets for individual transactions. terms beyond 10 years. 2 Examples of special institutions include US Ex-Im in As an observer with over 40 years of the 1930s, the World Bank Group in the late 1940s, experience in accessing capital markets for and the many topic-specific European official individual cases, US Ex-Im notes the institutions set up in the 1960’s. 3 There have also been several attempts at following: “institutional” access to capital markets. An 1. Capital markets are a reliably efficient “institutional” access to capital markets differs from a source of large amounts of competitively case-specific in that a separate institution is created which finances multiple individual export finance priced funding for transactions with simple transactions, and funds itself with general structures and short disbursement periods institutional notes (not related to any specific (like aircraft). Hence, capital markets can transaction) in the capital markets. Such an effort entails significant up-front cost and a long-term already be one of the tools of possible commitment to the business. Success here has been support in an ECA’s tool box. real (e.g. PEFCO, and a variety of “inside the 2. In its most efficient form (ie. the US Ex- bank/outside the balance sheet” entities like Citi’s GOVCO), but the constraints greatly curtail the scale Im programme today), the pricing on the possible. Moreover, the financial crisis of 2009 and capital market instruments for a specific the resulting Basel III regulations appear to have transaction can regularly (and sometimes ended (or will end) the prospects of any of the bank entities 58 significantly) beat the standard arrangement 4 This transaction also created major problems as the CIRR level. project never became operative. Covering risks. Discovering new markets.

EXIAR is the national export credit agency of EXIAR’s sole shareholder is state corporation Russia, established in 2011. Our mandate is “Bank for Development and Foreign Economic extended to insurance guarantees for export Aff airs (Vnesheconombank)”. Our activities credits and trans-border investments cover. are fully backed by the Russian State.

www.exiar.ru e: [email protected] t: +7 (495) 783 11 88 f: +7 (495) 783 11 22 Berne Union 2014: Collaboration and liquidity

Collaboration between ECAs and DFIs enters a new era

By Arun Kumar Sharma, chief investment officer, global financial markets, International Finance Corporation

Export credit agencies (ECAs) and documentation, and development finance institutions (DFIs) have the availability of very different purposes, mandates and in the space in specific case of multilateral institutions, ownership deals to structures. However, there are many accommodate important areas of overlap where the pursuit different types of of different mandates and different policy financing. The desire objectives open up the possibility and often of sponsors to limit the necessity of active collaboration. the number of parties ECAs, by and large, are owned directly or in a financing has also Arun Kumar Sharma indirectly, by the national governments and often been a have as their principal focus, a contribution challenge to project level collaboration. to their domestic economies by promoting and financing exports from the home Rapid acceleration of opportunities country. DFIs typically have wider mandates However, both the need and opportunities to promote the social and economic for collaboration between the ECAs and DFIs development of their member developing are growing rapidly. A number of factors are countries by fostering inclusive and driving this trend. As the emerging markets’ sustainable growth through the provision of share in world economic activity grows with financing, advisory services and other forms higher growth and consumption rates, of development support. favourable demographics, lowering of trade The opportunities for collaboration arise in and investment barriers and increasing emerging markets where both these types of mobility of production and service locations, institutions are active and are serving the the demand for trade and investment flows same customer segment from their from these markets is creating increasing respective perspectives. In the past this opportunities and challenges for both groups collaboration opportunity has arisen mostly of institutions. in projects in developing countries which Project sizes are also getting larger which have involved the import of equipment and means that any one institution is less able to services from an ECA’s home country and at finance the entire project on its own and the same time represented a source of there is a need to find other financing development impact and have therefore partners. For both the development finance been eligible for financing support from the institutions (DFIs) as well as the ECAs, the ECAs. Such projects can be in a variety of higher volumes of project as well as trade sectors such as natural resources, energy, finance risk are giving rise to the need for infrastructure, transportation, logistics, better diversifying and distributing risk to aviation, communication, climate change, other partners with an appetite for such and so on. exposures. Collaboration between ECAs and the DFIs As Basle III recommendations are has been useful, and in some cases fairly implemented by central banks, there is active. However it has also been growing reluctance on the part of opportunistic, on a project by project basis, international commercial banks to take and has been fraught with challenges that longer term exposures making it incumbent emanate from a range of issues. Such issues on long term lenders like the ECAs and DFIs 60 include roles in transactions for each party, to fill the gap. As production gets distributed intercreditor issues, different approaches to across the globe and projects increasingly Berne Union 2014: Collaboration and liquidity

involve multi-country sourcing of equipment EXPERT ANALYSIS and services, there is a need to find new Another important step solutions. toward increasing the The increased market volatility, especially collaboration between the with respect to currency risk for long term financing is driving the need for local ECAs and DFIs is the currency financing solutions that need leveraging of the DFI partnerships with DFIs. The growing role of local financial institutions in local and global networks in emerging project finance offers yet another markets. opportunity for collaboration between the ECAs and DFIs. could go a long way in addressing the ECAs and DFIs bring different but challenges and in the process unlocking the complementary capabilities to the table. many latent synergies that the potential for ECAs have very significant risk appetite, high collaboration between these two types of credit ratings, a willingness to provide or institutions affords. guarantee long tenor financing and One of the first steps toward greater competitive financing rates. They have a collaboration is clearly the need for a better strong customer base in terms of their understanding of mutual operating practices exporter communities of their home markets. and procedures as well as of the areas of DFIs on the other hand have a very strong business priority. ECAs and DFIs often presence in emerging markets, very deep operate in the same markets and speak to local relationships, and the ability to the same customers but do not have an intervene using a wide range of financial efficient channel of communicating with instruments across the capital structure of a each other to understand their respective transaction. DFIs and ECAs share very similar value proposition and business approaches. commitments to global best practices in key Very often there are cases where matters impacting their business including opportunities that can be shared or passed environmental and social standards, anti- on to another entity are simply passed over money laundering and financing of terrorism due to lack of adequate cross institutional safeguards, ‘know your customer’ standards communication. Increasing communication and due diligence procedures. both in terms of business approaches and business opportunities is an important first Hurdles to overcome step in fostering greater collaboration. At the same time many challenges to Both ECAs and DFIs have been operating increasing collaboration remain. Each in the same markets for several years and institution is governed by its own internal have access to valuable data on various policies and approaches and the difference in subjects of common interest including trade, mandates is real. This limits the number of insurance and investment volumes. Greater transactions where common participation exchange of this data and information across across ECAs as well as DFIs adds value to all these institutions will be very helpful in parties. There is relatively less interaction, improving the effectiveness of market especially at the business operations level analysis and strategy development as these between the DFIs and the ECAs which as institutions continually adjust to fast institutional groups, tend to interact more changing political, economic and market closely amongst themselves. There are conditions across many of the emerging differences in operating procedures, credit markets in which they operate. and pricing parameters, tenor and currency preferences, and in eligibility criteria for Accessing the local networks of DFIs transactions that can be financed. Another important step toward increasing Despite all these challenges, there is a the collaboration between the ECAs and growing recognition that collaboration DFIs is the leveraging of the DFI networks in between ECAs and DFIs is too important an emerging markets. Global, regional and opportunity to ignore and that many of the bilateral DFIs have established a very challenges in this area, are surmountable extensive local network across emerging with the right level of focused effort on the markets and have local offices and staff on part of all stakeholders. There are several the ground. This could be a very useful 61 possible areas where such focused efforts resource for ECAs who wish to expand their Berne Union 2014: Collaboration and liquidity

reach in new markets in an efficient, cost Knowledge transfer and capacity building effective way as it could provide valuable of client groups such as local borrowers, local commercial contacts. Local market financial institutions and local authorities on intelligence and mutual collaboration topics relevant to promoting trade and opportunities on specific transactions could investment flows is also an important area of prove invaluable. collaboration. Different institutions have The local relationships with borrowers, different areas of interest. Expertise and state-owned agencies and local financial coordinated delivery of these knowledge institutions can also be an important transfers will improve overall market standards resource that DFIs can share with the ECAs. and efficiency and avoid duplication of effort. Most DFIs are always looking to mobilise A combined approach could potentially result additional sources of financing for their in initiatives being launched which otherwise relationship counterparts and should be would not be undertaken due to individual happy to support increased flow of finance resource constraints. from ECAs to their clients as it would ECAs and DFIs also need to look more represent an new source of cost effective closely at how they can leverage further the long-term finance. This is generally in short risk capacity and transaction expertise of supply in most emerging markets. trade and credit insurers who are more ECAs can offer to the DFIs access to their willing to diversify their product offerings domestic client base to provide solutions in beyond traditional trade and credit insurance emerging markets that they cannot provide to longer term exposures including project themselves. Local currency financing, equity finance. Some DFIs already have investments, financing of smaller programmes in place where they sell down transactions and support to local risk to trade credit insurers. Greater use of manufacturing in a variety of ways could be such programmes by ECAs will open sourced through the DFIs for ECA clients opportunities to do more business in the making the ECA value proposition more smaller markets where the DFIs can offer comprehensive while still being consistent greater levels of support. with their overall mandates. Mutual benefits abound Diversification of risk benefits Clearly, a systematic effort is needed to Both ECAs and DFIs are keen to diversify capitalise on these promising opportunities their risks. Given the nature of their business for collaboration between the ECAs and DFIs the risk profile of their emerging market for mutual benefit and for the benefit of the asset portfolios is quite similar and lends emerging market countries and customers itself to risk sharing amongst each other. By who are the common target segment. One sharing risks in large exposures to emerging such effort has been launched between the market projects or clients, both groups of Berne Union and IFC which is focusing on a institutions stand to benefit from the systematic, practical approach to address resulting risk diversification and exposure many of the possibilities discussed above. mitigation. Risk sharing amongst ECAs and The initial discussions have generated DFIs is also attractive for both as all parties considerable interest and support for this tend to have very high credit ratings which approach and it is expected that this will renders them highly desirable risk transfer result in incremental business opportunities counterparties. for all parties in the short to medium term. Policy coordination is another important This initial momentum for collaboration will area of collaboration between the ECAs and be sustainable only if it results in tangible and DFIs. Both these institution groups have demonstrated value-added for all parties. similar objectives when it comes to global Such initiatives need to be encouraged at best practices on environmental and social all levels. There is initial momentum for issues, corporate governance, know your collaboration but it will be sustainable only if customer norms, and anti-money laundering it results in tangible and demonstrated value- and combating the financing of terrorism. A added for all parties. A clear focus needs to continuous exchange of views and be maintained to ensure that the objectives incorporation of common terms in are realistic and consistent with the business documentation will be very helpful in smooth and policy goals of all stakeholders and all 62 execution of transactions involving both participants are fully committed. The benefits types of institutions. are likely to far outweigh the effort. ■ DELIVERING SMART FUNDING SOLUTIONS TO FOSTER EXPORT ACTIVITIES

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Using ECAs to secure energy supplies

Kazuhiko Bando, chairman, Nippon Export and Investment Insurance (Nexi)

When I first worked for Nippon Export and improve customer Investment Insurance (Nexi) during 2003 to service at the same 2006, seconded from the Ministry of time, even though Economy, Trade and Industry of Japan as this sometimes is a the head of planning and administration trade-off. department, Nexi was a very busy organisation. Yet, returning to Nexi as the Energy and chairman and CEO in April 2013, I realised power at the core what used to be ‘busy’ had become Among the industrial ‘overloaded’. sectors, the energy Kazuhiko Bando The obvious reason for this was the and power sector is changes that occurred as a result of two definitely one of the core areas which has financial crises; the bankruptcy of Lehman been making, and will continue to make Nexi Brothers and the eurozone crisis, had and other ECAs busy in the coming years. weakened the commercial banks and This is obvious from the United Nations’ dramatically increased the needs of ECAs. forecast that the world population will In fact, over a five-year period at Nexi, the increase from the current seven billion and underwritten amount of long-term insurance will reach 9.6 billion by 2050, and the had risen six-fold, and the number of International Energy Agency’s (IEA’s) views transactions insured had almost doubled. that energy demand will increase 1.3 times Nexi’s current workforce is at by 2030 accordingly. Energy company BP approximately 140, which I understand is one also forecasts world demand for energy will of the smallest among ECAs, especially grow by 41% by 2035, driven by growing taking into account the business volume we consumption in the booming economies of actually handle, which was more than JPY8 China and India. trillion ($78.3 billion) in 2012. IEA data shows that in 2011, nearly 1.3 How has Nexi’s headcount change since billion people worldwide lacked access to the ‘busy’ days in 2003 to 2006? The answer electricity. Due to this issue, global is almost unchanged, pursuant to the investment in the power sector is expected request of the Japanese government. to amount to up to $17 trillion through 2035. Accordingly, Nexi is making every effort to Such growth will be led by Asian economic fulfill the role, by being as effective and growth, as non-OECD Asian countries’ per speedy as possible, while also continuing to capita power consumption is only 6.1% of

As an ECA, we understand that through the original functions of our duty to support our country’s exports, our overall contribution – even partially to the energy and electricity poverty matter – is extremely important. 64 Berne Union 2014: Natural resources

today’s share of fossil fuels in the global mix, EXPERT ANALYSIS at 82%, is the same as it was 25 years ago. This should be an area in which Nexi and Because of the scarcity Japan can contribute, not only for the nation, but also for the entire world. Japan’s of domestic natural Prime Minister Shinzo Abe made the third resources, advanced growth strategy speech in 2013 and stated that: “The footsteps of resource-poor Japan technologies were are a history of taking in any sort of developed to convert innovation possible”. After the oil crisis of power facilities into high- the 1970’s, Japan has improved energy efficiency by 40%, and this improvement is a efficiency thermal power big global lead. plants in order to Our country has been proactively engaged in the global warming issue by efficiently and effectively improving energy efficiency, and with this utilise fossil fuels. superior technology, we are in a position to contribute greatly to the solutions of global warming. Japan’s industries have been accumulating know-how of energy efficiency, and it is important to implement that of North America. This growth has a them globally by integrating these huge buffer and the potential to increase. technologies. The Asian Development Bank (ADB) says Because of the scarcity of domestic that the demand for energy is projected to natural resources, advanced technologies almost double in the Asia-Pacific region by were developed to convert power facilities 2030 and that there is an urgent need for into high-efficiency thermal power plants in innovative ways to generate power in a order to efficiently and effectively utilise socially, economically, and environmentally sustainable manner. This implies that there is still a long, long way to go to balance the distribution of the global accessibility to energy and power. Japan’s industries It is fair to state that sustaining the have been accumulating stability of energy concerns, human rights, know-how of energy climate, and overall society is the common issue for the whole of humanity. The efficiency, and it is solutions of energy and power challenges important to implement should contribute to a bright future of the developing world. As an ECA, we them globally by understand that through the original integrating these functions of our duty to support our technologies. country’s exports, our overall contribution – even partially to the energy and electricity poverty matter – is extremely important. We are also aware that we should bear in mind fossil fuels. Carbon capture and storage the indirect functions of ECA’s from this technology with Japan’s major companies, aspect as well. for example, has a leading global market share in equipment for recovering carbon Ensuring environmental stability dioxide from manufactured chemicals. Japan Meanwhile, balancing the stability of energy has a number of patent-protected and environmental concerns also needs to technologies regarding renewable energy, be carefully focused. Reducing climate and as to geothermal generation based on change and limiting environmental impacts the world’s third largest geothermal from energy production and use are a global resource, Japan has been maintaining concern. IEA foresees that CO2 emissions outstanding market share for many years. from the power sector will rise from 13.0Gt in It seems Nexi will surely and steadily be 65 2011 to 15.2Gt in 2035. It also states that busy in the coming years as well. ■ Berne Union 2014: Natural resources

The rising role of ECAs in enabling liquidity

There has been a marked difference in how project markets view export credit agency (ECA) support in the wake of the 2007-08 financial crisis, writes David Godfrey, chief executive, UK Export Finance (UKEF)

Although the operations of Berne Union of failure to seek ECA- members are diversified across various backed financing. products, geographies, governance models, However in the and regulatory systems, the growing role of post 2008 world, a ECAs in facilitating large medium- to long- range of major issues term (MLT) export transactions has been have afflicted the clear for all to see in the years since the project finance Lehman Brothers collapse almost toppled the market, increasing the world’s financial systems. remit of ECAs in The subsequent period has hosted a complementing David Godfrey massive boom in MLT transaction volumes private sector underwritten or financed by ECAs, with a financing. With pressures heaping up on particular focus on the project finance banks, such as the requirements to market. Commercial banks, by contrast, have recalibrate and recapitalise, Basel III struggled to provide the project liquidity that regulations and a consequent reduction in was so prevalent in earlier years, when they commercial lending capacity, the inevitable were regularly able to lend the entirety of a result was shrinking tenors, more project’s debt requirements, often in conservative structures and a rise in the cost emerging markets. of bank funding. All project participants The new financing paradigm was perfectly witnessed a surprisingly large draining of illustrated in mid-2013, when UKEF took a commercial bank liquidity from the market, major role in a massive $12.5 billion lending especially in cases where non-US based package that was secured for the $19.3 billion banks required long-term dollars. Sadara Petrochemical Plant in Saudi Arabia. Within this context, UKEF and other ECAs This transaction involved ECAs from six have stepped up to fill the gap and support countries providing a huge $8.5 billion in their exporters by facilitating a far broader financing and guarantee facilities to the two volume of official MLT financing. As trade and strong and experienced sponsors, Saudi investment has re-established itself on a Aramco and Dow Chemical (see case study growth path, export credit has been below). especially notable for its much bigger role in project finance deals, both in terms of the Sea change quantity of deals in which it is now playing The key function of export credit in the a part, and also in the indispensability of current project financing landscape is now that role. hardly recognisable from the situation An examination of some of the major deals pertaining in early 2007, before the financial since 2008 in Australasia and the Middle East, crisis began to break apart the benign in sectors such as liquefied natural gas, financial climate which had prevailed for the reveals the mobilisation of tens of billions of previous five or so years. During this period, dollars worth of ECA facilities. Sponsors with when financial institutions could lend on their whom I have talked since taking over the own balance sheets at low costs, and the reins at UKEF tell me that not only is it project financing was very much led by now impossible to put together a large banks, ECAs were very much seen in a scheme without ECA involvement, but peripheral light, as lenders and insurers of last that it is almost seen as a badge of honour 66 resort. For large project financings, it was now to bring ECA-backed funding into almost perceived in some quarters as a sign their projects. Berne Union 2014: Natural resources

Not just liquidity signs that dollar liquidity is returning, bringing EXPERT ANALYSIS Why has the relationship between ECAs and some French and Japanese banks back into project finance sponsors proved to be such a the market, the reality is that banks are happy marriage? Liquidity is undeniably a key constrained by leverage ratios, and penalised factor, given the sheer scale and size of by some regulators for holding long-dated Sadara and other projects, and the assets. The ability of ECAs to fund directly, or insufficient volume of private sector financing to allow free transferability of their guarantee capacity. However another factor, which to support capital markets issuance will all perhaps attracts less publicity, is that ECAs become increasingly important, and in this have brought to the table a new approach to regard the outlook for ECA support looks structuring deals. very favourable. Effective collaboration is an intrinsic When I look at the pipeline of UKEF’s element here. Before 2008, it was unusual to potential deals, I see such a breadth of have more than two or three ECAs working potential business that it is difficult to together, whereas the sight of half a dozen envisage any near-term change to the trend. ECAs now cooperating and working closely In fact the strength of our project pipeline is on deals with financial and other expert stronger than many have ever known. There advisers is now commonplace. By are a healthy number of projects and collaborating with regard to the due diligence programmes that need to be funded.. and sharing collective experience, it makes for an efficient process and is a good framework for productive negotiations with The ‘new normal’ in project the sponsor side. finance is for ECAs and Particularly noteworthy is how project other international financial sponsors and their advisors are talking directly to ECAs very early in the financing institutions to be involved process. The ‘new normal’ in project finance is in term sheet negotiations for ECAs and other international financial institutions to be involved in term sheet from the outset. negotiations from the outset. Sadara showed just how helpful this can be for all sides in To help build our armoury of relevant understanding what will work best and how support products, it was announced in the to maximise the benefits of the ECA facility. March 2014 UK Budget that capacity will be Arranging banks have played their full part doubled for UKEF’s Direct Lending Facility in this, via their capability in going to (DLF), with the chargeable interest rates also sponsors early in the project process and being reduced to the lowest level permitted identifying the countries which can provide internationally. The DLF was first announced competitively structured ECA support, or in autumn 2012, with an initial £1.5 billion those with other competitive sourcing ($2.52 billion) capacity. The Export-Import advantages, such as low local content Bank of the US has shown just how attractive requirements. At UKEF, we are extremely such a tool can be, as evidenced at Sadara, competitive, in that we can support up to where Ex-Im Bank provided nearly $5 billion 80% non-UK content, which can provide a in direct lending. By widening UKEF’s range significant leverage factor for the UK supply of services and products in this and other chain to projects. While a project’s main areas, we should be able to exert a greater engineering, procurement and construction influence on sponsor decisions. (EPC) contract is always an award to be One move in this direction is our introduction coveted, our challenge is often to link in our of two International export finance advisors. companies to the first tier of contracts, where Based in Rio de Janeiro, Brazil and Istanbul, the UK’s distinct lead in areas such as Turkey, these positions were created in order to engineering and design is seen as a stamp of facilitate further engagement with project genuine quality. sponsors in their own market and represent part of a general 15% increase in headcount over Trend continuation the financial year 2013-14 to allow UKEF to Looking ahead, there is little reason to believe respond to an expected increase in business that Berne Union members will not continue levels. Another is the target of setting up an their ongoing roles in facilitating some very Export Refinancing Facility (ERF) by the end of 67 sizeable project investments. While there are April 2014, to ensure that long-term funding is Berne Union 2014: Natural resources

available to overseas buyers of UK exports contracts awarded to Jacobs, Fluor and when supported by UKEF. The ERF will provide Foster Wheeler. Other contracts awarded to an undertaking to banks making export loans of UK contractors on the project may also at least a five-year tenor that UKEF will become eligible for financing under the UKEF purchase the loan 12 months after the final draw facility or from the other financing sources down, if it has not already been refinanced (eg. available to the sponsors. in the debt capital markets). We are also For Saudi Arabia, the project is of vital consulting on whether to amend our Act of strategic importance to its downstream Parliament to allow us a more generalised ability capability. Formerly known as the Ras Tanura to support UK export business. Integrated Project, the complex at Jubail Indeed UKEF has undergone various Industrial City II in the country’s Eastern changes over recent years. Good examples Province will be the largest integrated are the move from Docklands to within the petrochemical complex ever constructed in a Treasury building at the heart of Whitehall; single phase. With initial start up expected to and the introduction of the trade finance and occur in the second half of 2015, the project insurance solutions division. We are also doing will comprise 26 process units and is better at marketing ourselves, both through expected to produce more than 3 million the auspices of our sister body, UKTI, and via tonnes per year of ten major product families a doubling of our regional export finance of chemical products and specialty plastics. advisers. The output will be used in a range of industries including energy, transportation, Case study: Landmark Saudi construction, infrastructure, packaging, chemicals project consumer, electrical, electronics, coatings, The financing put together for the Sadara adhesives and sealants sectors. Key markets Integrated Chemical project in Saudi Arabia will include the emerging growth regions of notched up a number of milestones, and Asia, the Middle East and Africa. The wide could hardly have been surpassed as a array of products is expected to provide very demonstration of how ECAs are able to inject strong long term credit fundamentals, given very large chunks of liquidity into the different end use markets for each of the creditworthy projects. products. Also the marketing expertise of To support several key contracts awarded Dow and Aramco is significant. to British exporters, UKEF provided a hefty Saudi Aramco and Dow officials have been $700 million repayment guarantee on a fulsome in their appreciation of the proactive project financing loan to the Sadara Chemical part played by ECAs in structuring the Company, a joint venture developed by The financing deal, where one of the standout Dow Chemical Company and Saudi Aramco. features was a strong partnership with the The banks comprising the lending syndicate sponsors from the outset. UKEF formed part were HSBC Bank USA, National Association, of the group of official insurers and financiers JP Morgan Chase Bank, Mizuho Corporate which substantially negotiated the term sheet Bank, Standard Chartered Bank and with the project sponsors and their advisers Sumitomo Mitsui Banking Corporation. before it was released to the commercial This marked the largest single project banks. The involvement of very able advisers finance facility ever supported by UKEF, and on both sides was a critical success factor in was also the second largest covered ECA what proved to be a very productive and facility for the project, where the sheer scale focused set of negotiations. and size of ECA involvement was eye- This highly collaborative approach typifies catching. The other participating ECAs were the structuring process that has come to Ex-Im Bank of the United States, Korea’s K- characterise most ECA-backed project Exim and K-sure, Germany’s Euler Hermes, finance deals since 2008. UKEF is one of a Spain’s FIEM and France’s Coface. The debt number of ECAs which are increasingly package for the project also encompassed proficient at sharing their experience with lending from the official Saudi financing each other to resolve financing and other institution, PIF, in addition to a ground- challenges. By blending their expertise with breaking $2 billion commercial sukuk, or the skill sets provided by the traditional array Islamic bond. of legal, financial, technical, marketing, Strong benefits will accrue to the UK environmental and other advisors, ECAs are 68 economy from the UKEF-supported loan, helping to drive best market practice for which will help finance engineering and EPC hugely complex project developments. ■ Berne Union 2014: Natural resources

Political Risk in the mining sector: EXPERT ANALYSIS understanding and mitigating the perils

By Jim Thomas, senior vice president and interim managing director, Zurich Credit & Political Risk

Oruro, Bolivia sits on the High Andean Plain companies have 180 km south-east of La Paz. As the sun rose limited ability to over this bucolic community of miners on 9 decide where to February, 2007, soldiers of the Bolivian Army undertake projects. were amassing at a nearby tin smelter. The Simply put, miners formation of approximately two-hundred have to go where the troops descended upon the smelter to seize it resources are, even if from its owner, a European mining company. it means operating in The smelter’s workers, who opposed the challenging political expropriation of the facility, stood behind the or security Jim Thomas chained gate in a futile effort to block the environments. soldiers. By midday, Bolivian President Evo For example, the Democratic Republic of Morales had arrived on the scene. He stood in the Congo has seen a number of front of a banner that read ‘Nationalised’ and expropriations and investor disputes in recent declared that the smelter was now the years, and it was ranked 181 out of 185 property of the government.1 countries in the 2013 World Bank Doing Business report.4 However, the country holds While the details of this actual event may 50% of the world’s reserves of cobalt, which appear sensational, government is a critical component of batteries used in nationalisation of mining assets is not cellphones, laptops and electric vehicles. unusual. In fact, a recent report on the mining Mining companies will increasingly look to and metals industry by Ernst & Young cited develop projects in challenging markets as resource nationalism as the biggest risk that demand for non-ferrous and precious metals, mining companies face today, ahead of other as well as rare earth elements, increases. risks such as capital costs and price volatility. Therefore, it is not only important for mining The report states: “Resource nationalism companies to be fully aware of the political continues to be the number one risk facing risks that they face, but they should also mining and metals companies as understand what causes these risks and, of governments go beyond taxation in seeking a course, how these perils can be mitigated. greater take from the sector. The uncertainty and destruction of value caused by sudden Causes of resource nationalism changes in policy by the governments of There are many theories on what causes resource-rich nations cannot be governments to pursue policies of resource understated.”2 nationalism. Some studies demonstrate that periods of high commodity prices are Operating in challenging correlated with increased expropriation of environments assets and investment disputes. The growing global demand for metals For example, a recent Chatham House means that mining companies cannot shy study on the political economy of natural away from challenging operating resources states: “The propensity of a environments. A recent United Nations study government to expropriate or intervene is forecasts an increase of as much as 1,000% in often closely linked to resource prices. The the use of metals in the coming years due to recent upsurge in disputes and expropriations rapid growth in the emerging economies of is reminiscent of earlier waves that also Asia, Africa and Latin America.3 Unlike other corresponded with periods of high resource 69 industries such as manufacturing, mining prices. Compulsory nationalisation or the Berne Union 2014: Natural resources

assumption of a controlling interest, the regional or federal government. If the project confiscation of foreign-owned assets, windfall agreements do not allocate any revenue profit taxes and similar measures can sharing to the local community, then the therefore be expected to become more project will certainly come under increased common in an era of high resource prices.”5 pressure to provide education, health and Alternatively, lower commodity prices have social programmes to the community. also led to instances of nationalisation where Corporate social responsibility commodity-dependent governments have programmes — such as educational, social sought to maintain a certain level of income and environmental initiatives — not only in the face of falling prices. This risk is create a lasting positive impact on the particularly acute when there is a precipitous community, but can also be an effective way drop in prices and governments are suddenly to mitigate project disputes. One study faced with the challenge of meeting states that the success of corporate expansive budgets in the face of dwindling responsibility programmes: “is measured in revenues.6 terms of what doesn’t happen rather than what does; the absence of local tensions, of Mitigation strategies time spent in dispute or litigation, and of not There are a number of ways to help mitigate having to absorb the costs of regulatory the wide array of political risks that are impositions which were unplanned and inherent in any mining project. unbudgeted.”7 A company that implements A clear understanding by all parties of the responsible social and environmental policies rights and obligations that are granted under and adheres to recognised standards, such as the concession agreement and associated the Equator Principles and the World Bank licences is essential. All efforts should be Environmental, Health and Safety Guidelines, made to ensure that the host government has might not only help reduce the political risks reasonable expectations of the anticipated that it faces at the project level, but it will also revenue from the project. There are many find it easier to attract lenders and political examples of investment disputes or forced risk insurers who will only participate in contract renegotiations that were socially responsible projects. precipitated by a government’s Employment opportunities are the most disappointment with the amount of royalties obvious benefit to the local community, yet that it was receiving for a project. In many of mining companies should consult with local these cases, reliance on inaccurate community leaders while staffing their production estimates and price forecasts was projects. A company can help reduce at the root of the problem. problems with the community by being Because mining concessions are usually mindful of local cultural sensitivities. For granted by a federal government ministry or example, during a mine site visit in the agency, it is critical that the local government Democratic Republic of the Congo, this and the local community are also aware of author witnessed first-hand the tension that the rights that are granted to the company can be created when part of a mine’s and that they are vested in the project. workforce believes that a certain tribe or Natural resource projects are rife with ethnicity has been favoured in the hiring sensitive issues ranging from local land rights process or assignment of specific tasks. to social, labour, and environmental considerations. A project that operates in a The threat of political violence challenging political or security environment Mining projects in challenging locations often is far more likely to be successful if the local face risks stemming from political violence, community benefits from the project. including regional conflicts, civil wars and Many investment disputes have originated localized violence specifically directed toward with grievances from the local community, the project. The impact of political violence which in turn created problems with the on a mining project can range from damage

It is not only important for mining companies to be fully aware of the political risks that they face, but they should also understand what causes these risks and, of 70 course, how these perils can be mitigated. Berne Union 2014: Natural resources

and destruction of assets to the inability to a company’s cash flow management, it can EXPERT ANALYSIS continue operations and possibly the forced also expose a company to increased taxation, abandonment of the project in its entirety. In as well as the risk of currency devaluation. recent years, a number of mining projects have experienced violence-related issues in Conclusion many countries, including the Solomon As the global demand for minerals continues Islands, Kyrgyzstan and Peru, among others. to grow, mining companies can be It is noteworthy that a number of new increasingly forced to seek revenues in deposits have been discovered in West Africa countries that present difficult political and and several large-scale mining operations are security operating environments. While coming on-line in that part of the world prudent management practices can help despite recent and continued political turmoil mitigate some risks, the nature of extractive projects and the difficult countries in which A project that operates in many of them operate result in heightened exposure to political risk for the mining a challenging political or industry. There are a variety of means to security environment is far mitigate risk in this sector, and insurance is more likely to be one of the most useful for risk managers and lenders concerned about low frequency, high successful if the local severity political risk. ■ community benefits from About the author: Jim Thomas manages the project. Zurich’s political risk and structured credit underwriting in the United States, Canada in Sierra Leone, Liberia, Cote d’Ivoire, Guinea and Latin America. In his 13 years with Zurich, and other countries in the region. The he has underwritten political risk coverage on Simandou Range in south-eastern Guinea numerous mining projects throughout the could become the largest combined iron-ore world and he is a frequent speaker on topics mine and infrastructure project ever relating to political risk mitigation strategies. developed in Africa. Income from the project could more than double the GDP of Guinea, if Notes the project can overcome significant political 1 Tin Soldiers. February 15, 2007. The Economist (www.economist.com/node/8706221) hurdles. 2 Ernst & Young. “Business Risks Facing Mining and It is also important to consider that Metals 2012 – 2013”, Pg. 11. episodes of political violence can lead to (www.ey.com/Publication/vwLUAssets/Business-risk- facing-mining-and-metals-2012-2013/$FILE/Business-ri expropriation or forced contract sk-facing-mining-and-metals-2012-2013.pdf) renegotiation, as it is not unusual for a new 3 United Nations Environment Programme. government in a politically unstable part of “Environmental Risks and Challenges of Anthropogenic Metals Flows and Cycles.” April 2013. the world to re-examine the revenue- (www.unep.org/resourcepanel/Portals/24102/PDFs/En generating projects in the country, vironmental_Challenges%20Metals- particularly when a new government is Full_Report_150dpi.pdf) 4 United States Department of State. 2013 Investment starved for cash after a long conflict. Climate Statement – Democratic Republic of the The dollar revenues from a mining project Congo. April 2013. can be an alluring target for a government (www.state.gov/e/eb/rls/othr/ics/2013/204623.htm) 5 Lee, B. et al., 2012. Resource Futures (London: Chatham that is experiencing prolonged current House) account deficits and downward pressure on http://www.chathamhouse.org/sites/default/files/public its currency. While the proceeds from a /Research/Energy,%20Environment%20and%20Develo pment/1212r_resourcesfutures.pdf. See also, Joffé, G. et mining project are usually collected in dollar- al., 2009. Expropriation of Oil and Gas Investments: denominated offshore accounts, there have Historical, Legal and Economic Perspectives in a New been instances where a host government has Age of Resource Nationalism, World Energy Law & Business, Vol. 2, No. 1, pp. 3–23. abrogated the right to sell production and 6 Young, R., Devine, R. Expropriation – A Very Real Risk. maintain project-related accounts offshore. April 6, 2009. Energy Risk (www.risk.net/energy- For example, Argentina ordered oil and risk/feature/1523570/expropriation-a-real-risk) 7 Humphreys, D., A business perspective on community gas and mining companies to cash-in all of relations in mining. Resources Policy, 2000. pg. 127-131 their project-related export revenue on the 8 Fitch downgrades Argentina Oil Companies Following local foreign-exchange market in a move to Central Bank Dollar Move. October 29, 2011. MercoPress (www.en.mercopress.com/2011/10/29/fitch- protect dwindling currency reserves.8 Apart downgrades-argentine-oil-companies-following-central 71 from the problems that such actions pose to -bank-dollar-move) Berne Union 2014: Sustainability

Sustainable export finance – a challenging task for ECAs and exporters

By Edna Schoene-Alaluf, head of Berlin liaison office at Euler Hermes AG

Think back some 30 years ago: what were the companies and ECAs main concerns of an exporter participating in involved, such failure a large dam project requiring significant can translate into resettlement actions and with considerable political, reputational effects on the ecosystem of the country? In and financial risks. most cases the project management was But not only have mainly focused on technical and financial risks the risks of of the transaction. The project management unsustainable projects would not have expected the export credit become evident, agency (ECA) to exhaustively scrutinise the today, many players Edna Schoene-Alaluf foreign project’s environmental and social are convinced that impacts, and nor did they have there is a business case for sustainability in comprehensive internal processes to address export finance. Exporting countries such as the reputational risk of their own involvement Germany and their ECAs are considered and in the undertaking of the foreign buyer. Was it acknowledged as principal supporters of the good old days then, with less bureaucratic sound projects with higher output and life- burdens from the bank financing the export span, lower operational costs through energy and the ECA backing it, less explanations efficiency and lower risks of time and cost about uncomfortable questions to the buyer overruns by environmental accidents, and no worries to become the object of an concession withdrawals and civil opposition. NGO campaign? Systematic approach: establishing Sustainability: awareness changes common guidelines dramatically When looking at eligibility of support, There is no doubt that today the world for environmental and social aspects of export finance stakeholders has dramatically supported projects have always played an changed compared to 30 years ago. To important role in the decision making process assess the sustainability of a project in the German export credit guarantee system. benefitting from ECA support for exports to However, while these aspects were looked at it has become an integral part of our entirely on a case-by-case basis for many business. Notwithstanding the undoubtedly years, in the late 1990’s, export credit agencies higher transaction efforts and costs of looked for a more systematic approach. In today’s sustainability processes, this Germany, the Interministerial Committee, the development is being embraced by most decision making body of the German scheme, players in the business. It has emerged as a established its first guiding principles for result of experience with numerous projects assessing environmental and social aspects in in emerging and developing countries with April 2001. One important target was to – out international participation, be it ECA backing of thousands of applications each year – or participation of a development bank. identify those projects in need of in-depth Over the past two decades, it has review due to potential adverse effects on increasingly been recognised by the their environment. community that infrastructure and other Secondly, there are the guidelines aimed at development projects without a concept to safeguarding a responsible assessment address possible environmental and social against a defined set of principles. Before the 72 impacts are likely to fail in their development adoption of the guiding principles, an intense goals, even generating social conflict. For the discussion with the export industry and Berne Union 2014: Sustainability

German NGOs had taken place, both parties certainly not an easy one: German exporters EXPERT ANALYSIS of which had very differing views on what the pointed out the difficulties for them to guidelines should incorporate and in convince their project sponsors in emerging particular what standards they should refer markets or developing countries to adhere to to. Even though the guidelines were standards other than the legal framework in established as governmental guidelines, they the project country. Nevertheless, in the were discussed in the German Parliament course of the discussion it became clear that which by a majority supported their passage. not in all cases could host country standards The intense and broad discussion of the give enough comfort to the German environmental guidelines for Hermes cover government to support a transaction. revealed that the Federal Export Credit Taking into account that the Federal Guarantee Scheme had evolved from being a Republic of Germany is actively involved technical insurance product for exporters to with international institutions as part of an instrument of political interest, closely European and multilateral development monitored by the public. cooperation, including the World Bank and the regional development banks, it seemed Birth of a new idea: the ‘common appropriate to use the standards of these approaches’ institutions. At OECD level, the same process In parallel to the development outlined above, of alignment with international standards international discussions on common took place. guidelines for officially supported export credits took place in the OECD with a view to Sustainability at Euler Hermes achieving equivalence among the measures In the process of time, the sustainability taken by the members and to reducing the department of Euler Hermes has grown from potential for trade distortion. one full time engineer at the turn of the The first negotiations on ‘common millennium to a department with 11 experts approaches’ for OECD export credit agencies with different academic and professional resulted in a ‘draft recommendation on backgrounds (e.g. environmental engineers, common approaches on environment and geologists, political scientists, experts in officially supported export credits’ which the social standards, economists and lawyers). vast majority of member states agreed to The team screens and reviews far more than apply on a voluntary basis in 2001. 200 transactions on average each year. Its Only in 2003, all OECD members agreed experience and know-how is considerable to a revised text. The status of the text as due to the large number and wide variety of official recommendation of the OECD council often complex projects being reviewed unfolds a high level of binding force. OECD against applicable international standards. recommendations are not legally binding, but This environmental and social due diligence is practice accords them great moral force as conducted in the context of many buyer representing the political will of member countries and industry sectors mirroring the countries and there is an expectation that diversified portfolio of German exports and members will do their utmost to fully industry landscape (e.g. from renewable implement a recommendation. Since 2003, energy such as wind, solar, geothermal power the ‘common approaches’ have been revised to chemical, steel, metal producing industries three times already (in 2005, 2007 and 2012). or infrastructure projects). For sustainability at Euler Hermes, the Germany constantly reports the highest ‘common approaches’ are certainly the number of projects to the OECD. In 2013, a centerpiece of operations. final commitment for cover was made for 60 projects which had undergone an International standards instead of environmental and social due diligence national solutions according to the ‘common approaches’. The What can be seen as the major changes variety of projects is significant not only in triggered by the German environmental terms of sectors or buyer countries. While guidelines and the OECD ‘common most projects have limited and manageable approaches’? Certainly one of the ground- environmental and social impacts, we do see breaking developments was the change from some major infrastructure projects with very host country standards to ‘international challenging features requiring a high level of standards’ as reference for the environmental project management skills, engagement, hard 73 and social assessment. This change was work and political sensitivity. Berne Union 2014: Sustainability

The scope of sustainability grows can vary significantly between sectors and In the early days of the ‘common host countries. For many projects, publicly approaches’, the focus of attention and thus available information such as environmental the know-how was clearly on environmental studies disclosed on the project’s website, impacts of covered projects. With growing press releases, NGO statements, etc is limited. experience of ECAs and an ever increasing Usually, the exporter or the financing banks magnitude of projects, the focus has as contractual partner of the ECAs are extended to social issues with sometimes responsible for providing the necessary much more complex challenges. This has information. Sometimes therefore, the increasingly required site-visits by the project sustainability requirements of ECAs are manager in the sustainability department extremely challenging for exporters. It is instead of mere desk-reviews, or even the important not to cross the border line of utilisation of experts to assess and monitor feasibility. compliance with very sophisticated international standards. Global standards: A consistent Today’s understanding of a sustainable message export credit scheme even goes far beyond. In addition, the objective of contributing Euler Hermes sustainability activities includes towards sustainable development through efforts to support environmentally friendly ECA support is depending on a level playing industries, international exchange and field for officially supported export credits. If negotiations on the further development of there is no consistent message to public and OECD and guidelines, bribery prevention and private buyers worldwide that publicly anti-corruption processes and a supported export finance is subject to communication and transparency concept international environmental and social including regular stakeholder dialogues with standards, sustainable development in the NGOs, business associations, exporters and buyer countries is disfavoured. Only globally banks on sustainability aspects of exports credits. Certainly one of the The public interest in the German scheme is constantly high with around 200 external ground-breaking formal requests in the last four years from developments was the Parliament, media and NGOs. Euler Hermes change from host country undertakes considerable transparency efforts standards to ‘international to act in a transparent way. However, public interest needs to be balanced with business standards’ as reference for confidentiality interests. The complexity of the environmental and sustainable export finance continues to social assessment. increase. Future challenges presently under discussion include further integration of accepted standards could send the project-related human rights, aspects into the appropriate message to project sponsors due diligence and the question on how worldwide that their projects would only greenhouse gas emissions should be taken receive ECA-backed favourable financing if into account and reported. those standards were applied and implemented. The border zone The importance of global standards, From the exporters’ standpoint the most accepted by all exporting nations and not challenging aspects of the environmental and limited to the OECD, is today more obvious social due diligence are directly related to the than ever before, taking into account the role of the exporter within a project. Depending growing share of export companies from on the type of transaction, the exporter and non-OECD countries in all markets. This thus the ECA, have a varying degree of necessity has been confirmed by Berne Union influence on the buyer and the overall social members in the medium to long-term and environmental performance of the project. operational guidelines to the guiding Depending on the level of social and principles. Those were adopted as early as in environmental risks and the level of complexity 2008 and acknowledge the need for all Berne of these risks, differing informational needs of Union members to move in the direction of 74 the ECAs have to be met. best practice in sustainable export finance in The main environmental and social issues due course. ■ Berne Union 2014: Sustainability

ECAs and their vital role in EXPERT ANALYSIS renewables financing

By Anette Eberhard, chief executive officer of EKF

The world’s ECAs have been and remain a €10 billion ($13.9 vital element when piecing together funding billion). for renewable energy. Denmark's export Such a large credit agency, EKF, is an active partner with a concentration portfolio that is currently completely naturally represents a dominated by wind turbines. challenge, but on “As far as renewables are concerned, most closer inspection the markets are emerging markets. Obviously, risk is appropriately some are more emerging than others, but diversified. Thus, most even in the most mature markets we are of the wind farms for Anette Eberhard constantly facing new challenges. For which EKF has issued instance, we are currently devoting guarantees are in OECD countries with strong considerable resources to Cape Wind, which economies such as Australia, New Zealand, will be the first ever US offshore wind farm,” Germany, the Netherlands and Belgium. says Jørgen Kragh, head of project finance Naturally, this benefits a sector that relies at EKF. largely on public-sector subsidies. The projects and their remaining useful lives also play a role. EKF’s wind farm Today, the Danish state’s guarantees typically run for 15–18 years, yet export lending scheme the risk is normally highest in the initial phases, including the construction phase. In (ELO), which EKF subsequent phases, it is often possible to administers, is a funding reinsure the entire risk or parts of it – an option EKF chooses with increasing source just as important as frequency. Today, EKF has reinsured 12% of its the banks. total portfolio and is experiencing increasing interest from ECAs and the private market in For years, EKF has been an important reinsuring risk associated with wind turbines. partner in ensuring financing solutions for Finally, it makes a considerable difference renewable energy, mainly wind turbines. Over whether the wind turbines are onshore or the past three decades, the Danish wind offshore. The latter is considered a less well- turbine industry has established itself as the tested technology subject to increased global leader. Today about 30,000 employees integral risk. work in Denmark at leading companies such as Vestas, Siemens Wind Power and the Offshore: growing in size and countless subcontractors and advisors complexity specialising in everything from foundations to Another important distinction is between transmission solutions. balance-sheet financing and project The wind turbine industry started financing. Project financing of offshore wind attracting serious attention in EKF’s farms, in particular, is an area where EKF has financial statements almost 10 years ago, and clearly left its mark. In 2006, EKF covered since 2009 growth has been positively 25% of the senior debt in the first-ever explosive. Wind turbine guarantees offshore project financing: Q7 (later renamed accounted for an impressive 64% of new Princess Amalia Wind Farm) off the coast of issues in 2013, and at the end of the year the Netherlands. This loan has now been paid 75 amounted to 59% of EKF’s total exposure of off, and the guarantee has lapsed with no Berne Union 2014: Sustainability

problems at all, and to date EKF has not Berne Union task force on risk sharing experienced any losses on offshore wind between ECAs and international financial farms. institutions such as the IMF and EIB. “We have financed five offshore projects Kragh notes: “We will try to systematise since the first one in 2006, and I expect we and prioritise the experiences ECAs have with will close two more either this year or in the co-financing and risk sharing with IFIs while first half of next year,” says Kragh. focusing on project finance. “Finally, we have concluded agreements with two large Danish pension funds, This year EKF will head a PensionDanmark and PFA, which are ready with DKK20 billion ($3.7 billion) in funding, Berne Union task force on and we will continue our efforts to encourage risk sharing between ECAs more institutional investors to step forward.” and international financial EKF also played a very active role in developing and improving the sector institutions such as the understanding on export credits for IMF and EIB. renewable energy which was agreed to in 2012. “Our work on ensuring financing for renewables spans from specific solutions in The importance of ECAs for offshore individual projects to broad collaboration in project financing of wind turbines can hardly the EU and OECD with other countries’ ECAs be overstated. Without their participation, a and ministries on international rules such as long list of projects would never have been the consensus agreement and the sector possible. agreements. Danish export companies have a “Over the years, EKF itself has taken an strong position within green ecotechnologies, increasingly large share of the risk, but we so we are almost obliged to,” comments have also shared risk with other ECAs. For Kragh. example, in the Northwind project in the Belgian part of the North Sea, we joined The five-year forecast forces with our Norwegian colleagues at GIEK The outlook for the coming years involves not and Belgian colleagues at ONDD (now known least new and emerging markets. South as Delcredere Ducroire). There is enough risk America and Central America, where EKF has for everyone,” remarks Kragh. so far participated in nine projects, are This corresponds well with the trend of regions already well under way, and there is wind projects becoming larger and more plenty to indicate that the next breakthrough complex. Wind financing has always involved will occur in Africa. ‘club deals’, but the clubs are getting bigger. Therefore, EKF was involved in March this Today, a range of partners are required to year when the Lake Turkana Wind Power work together if the projects are to achieve announced that financing was in place for a their goals. 300MW wind farm that will be the largest “I sense that the banks are to some extent private investment in the history of Kenya. returning to the market after the financial According to the plan, the park will begin crisis – and that also applies to long loan operation in early 2016 and will, in due course, periods. However, bank financing alone supply almost 20% of Kenya’s total capacity. cannot satisfy demand. We are therefore South Africa also has ambitious plans and seeing more alternative funding sources than is currently developing a large number of just five years ago,” states Kragh. projects – in some of which EKF expects to If you consider EKF’s activities, the figures participate. clearly confirm that alternative funding Looking a few years further ahead, Kragh sources play a vital role. Today, the Danish has high hopes for the Asian market: “Asia state’s export lending scheme (ELO), which has lots of countries in risk categories 3 and EKF administers, is a funding source just as 4. Classic ECA territory, in other words. In important as the banks. International financial fact, I recently met a group of investors from institutions (IFIs) such as EIB and KfW also just such an Asian country, so maybe the account for a large portion though they were future will arrive faster than expected? From 76 far less involved just five or six years ago. my experience, in renewables that is almost Accordingly, this year EKF will head a always the case.” ■

Berne Union 2014: Region and sector focus

Providing support for SMEs

An increasing amount of attention has been focused on SMEs in recent years, as their role in supporting national economies has been emphasised. How have Berne Union members worked with this particular group? What are the challenges that SMEs are facing and how have ECAs specifically attempted to combat these issues? And what strategies and initiatives has the Berne Union adopted in order to better understand and support SMEs? Vinco David, Atradius, SME specialist meeting chair and Dan Mancuso, EDC, SME working group chair provide some insight and answers.

Berne Union members’ support for SME  What do members Small and medium-sized enterprises (SME) see as SME are a key driver of many national economies. challenges? However this segment faces challenges in From discussions growing and competing internationally. In an with the group, it was effort to better understand the growing quickly realised that needs of SMEs, in May 2013 the Berne Union the members had a (BU) identified this as a priority segment for wide differentiation in further research. how they addressed The then president of the Berne Union, Dan Mancuso the above questions. Johan Schrijver recognised the increasing For the purpose of importance of SME businesses and asked the further work the group Berne Union Management Committee and decided to define membership for their support to establish an SMEs as companies SME Working Group. This initiative was well with less than €50 received as many members noted that million ($69.4 million) supporting SME business was becoming a in revenue and/or 250 new priority for their organisations and employees. increasingly of common interest to ECAs. The following are Following the BU’s 2013 Spring Meeting in the high level insights New York, seven organisations volunteered to the group obtained Vinco David participate in the SME Working Group from the survey. (group) that would explore the issues facing When asking members how they support companies and members and report back to SMEs today some common themes emerged the broader membership at the fall BU but also a wide range of responses. Below are Annual General Meeting (AGM) in September the member survey responses to this set of 2013. questions: The group began working in June 2013  Over half the members use a different SME and it was clear from the initial call that definition and it varies significantly across members all had a different approach to this the BU; segment of business. The group decided that  70% of members have, or are developing, it would be best to start by understanding an SME support scheme; what the BU members were doing for SMEs  75% support SMEs due to policy or with a goal of using this intelligence to mandate; determine next steps. The group launched a  Over 90% support SMEs through BU member wide survey which was insurance, while only one third through completed by almost all members and asked financing, with a close split between the following questions, among others: offering these solutions directly and/or  How do members define SME? through partners;  Do members have special schemes to  Majority of members see their support SMEs? If so how? SME business growing but less than 78  What challenges do members have in half have special SME teams/ supporting SMEs? and, departments; Berne Union 2014: Region and sector focus

 Two-thirds have special SME products with organisations in supporting SMEs: EXPERT ANALYSIS difference being in process, coverage and  Marketing – getting SMEs to know what risk appetite. support is available; From the above the group gleaned that  Access to information; most members are being asked to support  Simplified processes and administrative this segment and have started to develop burden, and assisting SMEs with these special products and approaches. That said, procedures; and when asked what they saw as the top  Attracting banks to participate in SME challenges SMEs face in accessing foreign support schemes. markets, BU members identified the following The above list highlights that one of the in order of priority: biggest challenges for members is to get  Obtaining financing (either for their buyers SMEs to understand how and what they offer or to support their own growth); in order to support them. Another challenge  Understanding market opportunities and is delivering solutions efficiently and conditions; effectively through partners, such as banks  Complexity of market regulation, taxation, and (other) government agencies. legal etc; One of the last questions members were  Willingness to take risks with going asked was to identify the top SME needs that abroad; and were not being addressed:  Cost of doing business including double  Lack of awareness of existing support taxation, trade agreements, etc. available to them; As the above list highlights, making and  Access to new markets; taking the decision to expand internationally  Help in prospecting in new markets requires a much broader range of risks than including introduction to key new buyers most BU members are able to address today. and supply chains; and, While BU members are in a position to  Access to capital to support growth. support a key area of concern (ie. access to Based on the findings in the survey the financing), this support is required much later, group determined that there was a need to once the company decides to expand further explore how the members internationally. could extend support to this important Many early stage issues include attracting segment. To this end, at last fall’s BU AGM, or developing sales, understanding tax and the survey findings were presented. The legal implications, etc. and most of these are results generated a lot of interest from not areas where members have solutions and the members to go one step further. In thus require further exploration. response to this interest, the BU held, in What was also encountered through the March of this year, a Specialist Meeting which survey was the reality that ‘challenges’ are was attended by 40 participants to share not limited to SMEs and in fact, many existing solutions and discuss ideas to further members face challenges in supporting this support SMEs. segment of business. For those members A catalogue has been put together, supporting SMEs, they identified the available to all BU members, with a following as their top challenges within their comprehensive overview of all solutions

As regards to marketing, a number of ideas were raised, including setting up representation across countries, the use of social media and professional telemarketing. Marketing should not only target the exporters themselves, but also their local banks. Often these banks do not know about the support ECAs can offer, as this expertise is usually concentrated at the head offices of banks. 79 Berne Union 2014: Region and sector focus

SME related challenges as ranked by Berne Union members* financing themselves – and that is the larger part of the ECAs – banks remain necessary to provide working capital and export finance. But it is exactly these banks that over the last few years have become more reserved in providing that financing. This is partly due to new banking regulation (such as Basel III and ‘Know Your Customer’ requirements). Another important reason, however, is the relatively high transaction costs banks are facing for the financing of small transactions. Various ideas were raised to increase the banks’ involvement, such as 100% cover or placing ‘ECA ambassadors’ within banks. However, the cost issue is one that is not just with banks. It is also something that

*80% of Berne Union members responded to the SME survey which consisted of affects ECAs as the transaction costs of SME pre-defined choices. business are relatively high. Underwriting a $1 million transaction, for example, can sometimes be more of a challenge than a $100 million transaction, as SME exporters SME unaddressed needs as ranked by Berne Union tend to have small corporate buyers, and it members* typically requires more time to obtain buyer information from small buyers. This is why ECAs continue their efforts to simplify the underwriting process. It was further concluded that online tools are useful for streamlining and easing the administrative burden for SMEs. This could be applied to the application process, status reports and policy administration. It was recognised, however, that face-to-face contact is also important, certainly for less experienced SMEs. As regards to marketing, a number of ideas were raised, including setting up representation across countries, the use of social media and professional telemarketing. Marketing should not only target the *80% of Berne Union members responded to the SME survey which consisted of exporters themselves, but also their local pre-defined choices. banks. Often these banks do not know about the support ECAs can offer, as this expertise is usually concentrated at the head offices of banks. currently in place by all participants. That said, when the specialists group The Specialists’ Meetings highlighted that discussed the areas that members identified some members have identified interesting as the unaddressed needs of SMEs, it became value added solutions for SMEs which include clear that addressing these issues may a wide range of insurance, financing and require a broader mandate of individual guarantee solutions with many schemes member organisations and recognition that tweaked to address the unique demands of many of these needs do not fit the traditional this segment through simplified structures, business solutions. If members are to support processes and increased risk appetite. areas such as market access and prospecting, The specialists group concluded that for members will need to take a fresh look at any meaningful support to SMEs the issue of current offerings and explore more creative 80 financing SME business needs to be ways to leverage each other in supporting addressed. For those members not offering SMEs. ■ Berne Union 2014: Region and sector focus

The key role of K-sure in the EXPERT ANALYSIS resurgent shipbuilding industry

By Kim Young-hak, president of K-sure

With six of the world’s top 10 shipyards embattled in a located in the country, Korea stands at the fiercely competitive forefront of the global shipbuilding market. In environment. 2013 alone, Korea won 16.58 million cgt The shipbuilding (compensated gross tons) shipbuilding industry slump was orders, which accounts for 33% of the global also partly due to the total at 50.12 million cgt. This makes the difficulty for shipping shipbuilding industry the 5th largest export companies to secure driver of Korea, following semiconductors, ship financing as petrochemicals, steel, and automobiles. At European banks, $37.1 billion, the industry was responsible for Kim Young-hak which had been the 6.6% of the country’s total exports of leading ship finance providers, reduced their $559.7 billion. lending as a result of the European debt In 2013, the global shipbuilding industry crisis and the implementation of Basel III that faired significantly well compared to the tightened capital requirements for banks. For previous year. Globally, ship orders jumped example, Commerzbank of Germany, which 96.9%, painting a seemingly rosy picture for used the shipbuilding and shipping industries, to be the third largest ship financier in the which had been sluggish since 2008. world before the crisis, stopped its ship Nonetheless, shipbuilding orders and vessel financing altogether, whereas some French prices were still lagging behind the 2007 banks sold off huge portions of their ship levels. Moreover, it is difficult to say that a finance assets. complete turnaround can be seen in the shipping industry. As such, it was too early to New practices say that the shipbuilding industry was on its As a result, a new practice is now adopted in way to complete recovery, despite the fact the ship financing field to mitigate funding that orders have been mounting. issues: the tacit clause of “the financial In the meantime, Korean shipyards have arrangements preceding the contact” is maximised their vessels’ navigation mobilised to ease financing where the performance and come up with eco-friendly shipowner arranges for financing in advance ships by improving fuel efficiency to before actually entering into the shipbuilding overcome these difficulties. These efforts contract. have paid off, with Korean shipyards still We at K-sure took the initiative to cover remaining as attractive contract ship financing by maintaining a close counterparties of shipping companies relationship with the shipping company, the

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%↑ 81 * Assuming that 70% of the ship price as demand for ship finance Berne Union 2014: Region and sector focus

Korean shipyard, and the financing banks – alternative source of ship funding. The from the beginning all the way down to the programme was designed by benchmarking actual contract. Our efforts materialised in bond programmes used for aircraft exports, the $3.9 billion figure in ship finance and any bond issued under this programme coverage for shipping companies in 2013. is covered 100% unconditionally and This largest cover since the start of the irrevocably. This 100% coverage was granted global financial crisis was the biggest to protect those investors of the bonds contributing factor for shipping companies to secure financing, with the contributing ratio at 14%. As such, the foremost benefit of our cover Last year, we made is the credit enhancing function. For an innovative example, the MLT (medium- to long-term) export credit insurance (buyer credit) advancement to attract programme is one of our ship finance more funding into the product lines that aims to encourage commercial banks to extend MLT loans shipbuilding industry: with a tenor of up to 12 years in we introduced the which we facilitate shipping companies to ‘capital market bond’ secure large funds as our cover protects these loans. programme. With our cover, we expect to boost the commercial banks’ ship financing capacity with an increasing demand of shipowners for covered under this programme and to large, high-end, fuel-efficient vessels such as promote the programme’s marketability. In LNG and offshore ships. To facilitate turn, we boost the shipowners’ ability to financing, we offer quality coverage for large place more shipbuilding orders by reducing ships with GIEK of Norway and other ECAs, their financing costs. along with leading ship finance banks such The shipbuilding and shipping industries as DNB, Crédit Agricole-CIB, BNP Paribas, are basically cyclical due to the conservative ING, Citi, KfW, DVB, and Nordea for example. nature of financing by commercial banks in In 2013 for example, we covered one FPSO which excessive investment is seen during (floating production, storage and offloading) the booming periods but under investment in for Teekay Corporation of Canada, two semi- lean times. Unlike commercial banks, we at submersible rigs for Stena of Sweden, and K-sure, as a financial institution, feel a sense three drill ships for Seadrill of the UK, all of responsibility over market stabilisation: to jointly with GIEK of Norway. help boost financing during a crunch as the ‘last resort’ and to alleviate an overheated Market innovations market during a boom. Last year, we made an innovative Although both the shipbuilding and advancement to attract more funding into shipping industries are expected to the shipbuilding industry: we introduced the recover into 2014, vessel orders and prices ‘capital market bond’ programme in which are still lagging significantly behind those this alternative product enables shipowners expected. As such, we know that our to utilise abundant funds from capital increased cover is still needed for shipping markets for ship financing via issuing companies and shipbuilders to be rolling as corporate bonds by inviting public usual. Thus, we plan to support $5.7 billion participation or private equity. in ship finance to fill the funding gap in This new platform proposes a new and financial markets. ■

With our cover, we expect to boost the commercial banks’ ship financing capacity with an increasing demand of shipowners for large, high-end, fuel-efficient vessels such as LNG and offshore ships. 82 Berne Union 2014: Region and sector focus

ECAs and satellite financing EXPERT ANALYSIS

Coface’s support in the space sector experienced dramatic growth in 2008 – linked to the financial crisis – and since then there has been a steady stream of business. Régine Schapiro, head of the energy, telecom and space unit at Coface examines these developments.

The financial crisis in 2008 led to a dramatic services being used increase of the Coface portfolio in the space for all the various sector. Since 2008, Coface’s portfolio has applications. expanded significantly in the space sector in French exporters connection with increasing requirements for procure the full range satellites due partly to a period of renewal of of satellite (payloads fleets, including constellations. and spacecraft) and In this changing environment, Coface has launch service had to meet the increasing demand for solutions from all the financing to support the sector’s growth. types of operators. Régine Schapiro Before 2008, the number of applications was For the record, the about two to five per year. In 2009, these spacecraft is the vehicle, the transponders applications reached a total of 17. are in the payloads – and the lease of the The Coface portfolio covers a large range transponders generates cash flow. of operators: global and regional in FFS, These following exporters, Airbus Defence constellations and a wide range of financial and Space (ex Astrium), Arianespace and structures from investment grade to project Thales Alenia Space, are the result of finance (SES, Hispasat , RSCC, Gazprom European cooperation in research, Space, Nilesat, Arabsat, Globalstar, Iridium, manufacturing and services. European and O3b, for example). cooperation in the space sector requires Liquidity shortage has been a concern for European cooperation between ECAs. In this both the bigger national and smaller regional regard, Coface has used and improved the operators, but the withdrawal of the market cooperation agreements with the UK and appetite has been particularly severe for new German agencies. entrants to the market. Consequently, export The space sector is attractive but a very credit agency (ECA) support has been competitive environment and significant sought by the sellers and the buyers as a technical and market risks have to be counter cyclical remedy to maintain trade in considered. Trends in the sector are positive the space sector, in order to pool resources, with a strong market, revenue growth and and to increase the financing appetite of the new needs of capacity. commercial banks. The track record in this We must also highlight the consolidation sector has been good. in the sector, the competition between the operators and between the technologies, A specific and competitive sector for example fibre and cable. The effect of French manufacturers and launch services these factors may be amplified by the time providers operate on a worldwide basis, frame to set up the project. Furthermore dealing with developed and developing the orbital slots are limited and their use countries, with their satellites and launch highly controlled, this element increases

Trends in the space sector are positive with a strong market, revenue growth and new needs of capacity. 83 Berne Union 2014: Region and sector focus

competition and can be a factor of mergers. There are a large range of buyers: global, regional or national operators, established or European cooperation new entrants in the market. They operate in the space sector different types of satellites: on geostationary orbit or a lower one for a constellation. requires European The mission of the satellite influences the cooperation between design, weight and the amount of the project. The scale of applications is extensive, ECAs. and as such the capacity to lease offered by the operators in various fields: broadcast of TV, telecom services, enterprise networks, project: among others, the lifetime of the broadband access – is correspondingly existing fleet, satellite of replacement or new varied. The TV field requires a very large one, existing footprints, and backlog. capacity. There are various types of The assignment of the proceeds of launch bandwidths impacting the price of insurance is a basic requirement to mitigate the leases. the risk.

Assessment of the risk Conclusion We have to face challenging issues In this continuously evolving sector, constant surrounding the assessment of risk and the adaptation will be required to meet the mitigation of risk with an adapted security needs of clients and to monitor the risks. package. The sector is challenging by nature Various parameters will have to be owing to technical and technological risks. considered and a lot of extensive changes We have to assess the different aspects of can be expected. In the space sector and the risk and to mitigate them to improve the more generally in the telecommunication financing sustainability. We have also to pool sector, the diversification and progress of support of ECAs accordingly to the technologies combines with very fast European character of the suppliers. development and potential redundancy of With a thorough study of the entire equipment. It means one can always be on project, the risk assessment has to be based constantly moving ground. on the characteristics of the sector in order On the one hand, the sector of the to obtain the best pricing for the capacity of operators can evolve substantially: we may the satellite involved. see, for example, both mergers and the In addition to the analysis of financial impact of technological developments with documents, a combination of elements also increased competition, although this will not has to be considered, mainly: regulatory risk prevent overall growth expectations (orbital slot, authorisation, licence etc), decreasing over the next few years. And last technical feasibility including ground but not least, international competition is equipment, technological viability, reliability also going to grow between the and competiveness of the used technology, manufacturers and the launch services space insurance, financial risk, and the providers. In this context, we can anticipate marketing study and strategy. that the need of satellite financings The security package has to be settled supported by ECAs will be steady or even according to the sustainability of this wide more significant, as companies look for range of risks in the specific context of the an edge. ■

ECA support has been sought by the sellers and the buyers as a counter cyclical remedy to maintain trade in the space sector, in order to pool resources, and to increase the financing appetite of the commercial banks. The track record in this sector has been good. 84 Berne Union 2014: Region and sector focus

ECAs and the challenge of EXPERT ANALYSIS Islamic finance

By Topi Vesteri, executive vice president, Finnvera, and chairman of the board, Finnish Export Credit

State-backed export credit agencies (ECAs), credits, Sweden’s members of Berne Union’s medium- and EKN and Finland’s long-term committee, are quick in Finnvera pioneered responding to changing market needs. Over using private sector the past 15 years, there are a number of good re-insurance to level examples of ECAs meeting the requirements off risk of market developments – eg. looking at concentrations in ‘national interest’ (wider economic benefits their state-backed to the national economy) instead of, or in export guarantee addition to, ‘national content’ (‘made by’ portfolios, and were Topi Vesteri versus ‘made in’), cover for local currency among the first ECAs financing, cover for capital markets to introduce ‘national interest’ as exporters of transactions, exposure and portfolio swaps, smaller countries cannot produce everything use of credit derivatives and private re- in their native countries. Being able to source insurance. abroad is a matter of logistics and Recently, several ECAs’ product palettes competitiveness and helps to increase high have been extended to include new export value-added research and development jobs credit financing schemes such as at home. securitisation/funding guarantees and even Islamic finance slowly but surely entered funding from pension funds. Driven by the ECA radar more than 10 years ago – it exporters’ and their customers’ needs and by may not be the most voluminous financing ECA’s own portfolio concentration scheme of ECAs but it can certainly be challenges, smaller ECAs have in many cases crucial from the buyer’s/borrower’s been pioneers in adopting these new perspective. innovations. ECA re-insurance was started between the Steady growth pattern Nordic ECAs. Denmark’s EKF pioneered Islamic financing has been steadily growing. political risk exposure swaps and pension There already are several banks using Islamic insurance company funding for export financing in the UK, and the first such bank is being established in the eurozone in Luxembourg. Dubai is considering establishing a fully Sharia-compliant ECA. As an Islamic financing centre Dubai is facing The financing bank can be serious competition from Kuala Lumpur. Other financing centres such as Dublin, a regular international Luxembourg, Jakarta and Bahrain have bank providing export already developed, or are developing, their Islamic financing capabilities to meet the credits – the credit terms demand of the world’s 1.3 billion muslims. and conditions just need And, an increasing number of Western ECAs to fulfil Islamic finance have closed Islamic buyer financing transactions. principles. In 2008, Finnvera was one of the first ECAs to cover export credit according to Islamic finance principles. To address the 85 requirement of a Sharia-compliant structure, Berne Union 2014: Region and sector focus

murabaha financing was adopted to finance financing can be used for local costs and Wärtsilä Finland Oy’s 50MW captive power ECA premium. In this scheme, the financing plant to Al Qatrana PSC in the Kingdom of bank and purchaser sign a deferred Jordan. payment-based commodity trade through More recently, in 2013 Finnvera and its commodity brokers. Instead of tangible subsidiary Finnish Export Credit supported machinery and equipment, the underlying and financed in less than three months a asset is a tradable commodity such as Sharia $325 million, 10-year Murabaha financing to compliant metal. leading telecoms provider Etihad Etisalat Company (Mobily) in the Kingdom of Saudi Arabia, to support Nokia Solutions and Networks’ telecom equipment deliveries. Sweden’s EKN covered a similar deal All it takes to cover an supporting exports of Ericsson’s network expansion equipment. The lending was Islamic finance transaction structured on a corporate risk basis and is a bit of flexibility, arranged by Deutsche Bank and Crédit expertise in structured Agricole CIB. finance – and top tier Less mystique, more normality borrowers. What has enabled these successful Islamic finance transactions? While Islamic finance is unconventional in export credit agency circles, there is little mystique behind it. After all, Islamic banking shares the same purpose Use of Sharia law and Islamic finance has as conventional banking: to make money for certain challenges in terms of understanding the banks by lending out capital. its implications and ensuring that the credit In Islamic banking, banks typically use profile meets the requirements of the OECD Murabaha in asset financing. Murabaha is export credit consensus. Restructuring simply a financing tool whereby a financing experiences of Islamic transactions are bank purchases an asset from an equipment limited, and collecting overdue interest is supplier against certain cost price, and then something one does not wish to test as collecting interest under Sharia law is not permitted. If overdue charges are collected, they should be donated to charity. Therefore, borrowers under Islamic structures must ECA-covered Islamic meet higher credit standards than under conventional ECA structures. structures can provide The future of Islamic publicly supported longer tenors than export credit finance is intriguing, and ECAs what is available in can certainly play an important role in this field. ECA-covered Islamic structures can the local financing provide longer tenors than what is available markets. in the local financing markets. Our landmark deal back in 2008 inspired us to set up a training workshop here in Helsinki for our Nordic and German colleagues who have also been at the sells it to the purchaser with immediate forefront of adopting innovative financing transfer of title but deferred payment of a structures. In fact, Euler Hermes of Germany sale price. Given that collection of interest, or and EKN of Sweden were also involved in the riba, is prohibited, the sale price consists of above transactions to support their the cost price plus a mark-up or profit. The respective exporters. This illustrates the financing bank can be a regular international ECAs’ capacity to adapt to market bank providing export credits – the credit specificities. All it takes to cover an Islamic terms and conditions just need to fulfil finance transaction is a bit of flexibility, 86 Islamic finance principles. expertise in structured finance – and top tier Furthermore, commodity-type Murabaha borrowers. ■ Berne Union 2014: Region and sector focus

ICIEC at 20: Two decades of EXPERT ANALYSIS making business transactions less risky and more competitive

ICIEC aiming high after two decades of services

The Islamic Corporation for the Insurance of were made so that ICIEC domestic and Investment and Export Credit (ICIEC), the international sales came under one policy; and insurance arm of the AAA rated Islamic cover was allowed, on exceptional basis, for Development Bank Group (IDB) based in capital equipment, strategic goods, and Jeddah, Saudi Arabia, has completed this essential commodities from non-MCs in 2010. year its 20 years of services in supporting All these changes, necessitated by the trade and investment in its 41 member corporation’s experience, resulted in a rapid countries (MCs). ICIEC came into being in rise in insured business volume which reached 1994 after the Committee for Economic and $3.36 billion by the end of 2013. Commercial Cooperation (COMCEC) of the The capital resources of ICIEC witnessed Organisation of Islamic Cooperation (OIC)’s similar development. Initially, the authorised recommendation to establish a multilateral capital of the corporation was $140 million, of export and investment insurance institution. which IDB subscribed to $70 million which ICIEC started operations in 1995, with the makes 50%. In 2008, the authorised capital initial objective of increasing the scope of was raised to $240 million. The increase was trade transactions among the MCs of the OIC, fully subscribed by IDB. In 2012, the facilitating intra-investments among them, authorised capital of the corporation was and providing reinsurance facilities to export again raised to $620 million in order to meet credit agencies (ECAs) in MCs. However, over the expanding demand for the services of the the years, the corporation’s mandate corporation. Currently, ICIEC’s subscribed underwent significant changes by amending capital is $355 million. its articles of agreement to enable it to The membership of the corporation is expand its services to insure exports from open to all members of the OIC. This rose ICIEC’s member countries worldwide, and from 15 member countries as of end of 1996 insure investments from anywhere into to the current 41 countries. Of these, 17 are member countries. Arab countries, 15 African, and 9 Asian/other Also, with more competition coming from countries. ICIEC’s possible maximum major international credit insurance providers, membership is 57 countries – the other changes in the articles of agreement membership of the OIC.

“ICIEC, with the support of its board of governors and board of directors, has evolved into a recognised and respected credit and political risk insurer, after two decades of impressive achievements.”

Dr. Abdel-Rahman El-Tayeb Taha, the Chief Executive Officer of ICIEC. 87

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Increasing the product mix The product was launched in 2014. In terms of product mix, ICIEC started its The corporation’s business was limited in operations with only three products, the the first five years or so; that is before it started Comprehensive Short Term Policy (CSTP), to cover exports from member to non-member Bank Master Policy (BMP), and Supplemental countries. This period also marked the start Medium Term Policy (SMTP). In 1998, a fourth of FII activity. From 2004 onwards, the product for Foreign Investment Insurance (FII) corporation’s business growth has been steady. was added to the list. The first product was In 2007, the corporation exceeded $1 billion designed for the traditional whole-turnover in business insured for the first time. A drop- short term export credit operations while the off in business was seen in 2009, which was a second for Islamic trade finance transactions, direct result of the global financial crisis. the third for project finance related However, volumes started increasing again transactions, and the fourth for investment from 2010 onwards, with annual business inflows into member countries. The latter insured reaching above $3 billion during 2011- covers equity investments, financing facilities, 2013. Overall, the corporation has insured $18 and guarantees. billion of business in the last 20 years, 78% of During 2000-2005, the corporation added which has been for short-term trade credit the Documentary Credit Insurance Policy and the rest for medium-term structured (DCIP), and the Specific Transaction Policy finance and investment insurance. (STP). Both products would later become the With these achievements, ICIEC’s name has mainstays of the ICEIC’s business volumes become well known in the industry. In 2002, and premium income. Specifically, the DCIP ICIEC joined the Prague Club (PC), and in has proved to be very popular among banks 2008 joined the Berne Union (BU), the and financial institutions in member countries leading international organisation for the and regional financial centers. export credit and investment insurance Since the beginning of the current decade, industry. This enabled ICIEC to benefit from ICIEC launched four new products, including the experience of other union members and the Specific Transaction Policy, Contract place it among the world’s top export credit Frustration Policy, the Partnership and investment insurers. Both the Berne Reinsurance Policy, and the most innovative Union and Prague Club serve as excellent Sukuk insurance policy, Sovereign Sukuk information and knowledge sharing platforms Policy. The innovative Sukuk insurance for the technical aspects of the business. product, which is the first of its kind in the market. The policy is designed to insure the Expanding levels of cooperation risk of non-payment. This eases access to Being a multilateral institution, it was natural Sharia’ compliant financing from the capital for ICIEC to develop close working relations markets to finance developmental projects. with the World Bank’s Multilateral Investment

88 Dr. Ahmed Mohamed Ali, IDB Group President & Chairman of ICIEC's Board of Directors (left) and Dr. Abdel-Rahman El-Tayeb Taha, CEO, ICIEC (right).

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Guarantee Agency (MIGA), and the other two and political risk insurance institution EXPERT ANALYSIS regional multilateral credit insurance capable of sustaining its business in the agencies; the Arab Investment Guarantee and market, and in providing impactful services Export Credit Insurance Corporation to its MCs and eligible clients all over (Dhaman), and the African Trade Insurance the world. Agency (ATI). Over a 20 year period ICIEC has been true Moreover, ICIEC is the co-founder of AMAN to its vision and mission as a world class Union, together with Dhaman. The union is multilateral insurer, playing a major role in the the first organisation gathering investment facilitation of trade and investments for and export credit agencies in the Arab and member countries and a preferred partner Islamic world under one umbrella. It aims at for companies seeking access to new enhancing cooperation among Arab and markets. It has been able to support Islamic export credit institutions and thousands of exporters venturing into new encouraging the development of the markets. It has also worked with individual investment and export credit insurance and corporate investors as well as financiers industry in its MCs. The union currently has of projects in member countries. In total, 17 members from more than 15 countries, ICIEC has facilitated over $22 billion in trade including ICIEC and Dhaman. transactions and $4.3 billion in foreign direct Indeed, ICIEC’s recognition in the market investments in member countries. was confirmed in 2007 by Moody’s Aa3 With the introduction of new and innovative rating, the corporation succeeded in products like the Non-Honoring of Sovereign maintaining this rating for seven consecutive Financial Obligations (which is already years – a period during which the global popular) and the Sukuk Insurance Policy, financial crisis battered leading firms in ICIEC’s client base is growing at a rapid pace. international credit and political risk In the next 20 years, ICIEC will be insurance. internationally recognised as the strategic In 2010, ICIEC inaugurated its first partner of choice in facilitating trade representative office in Dubai at the transactions, project finance and investments International Financial Centre (DIFC), with the for its member countries. ICIEC will continue objective of being a fully-fledged provider of to maintain its unique feature as the only ICEIC’s Shariah-complaint export credit and multilateral insurer that provides Shariah political risk insurance products to banks and compliant insurance and reinsurance corporates operating in Dubai and products; and if similar institutions appear in neighbouring countries. The opening of this the industry landscape, ICIEC will certainly be office comes at a time when the activities of the leading one in the field of Shariah- the corporation have been experiencing compliant export credit and investment sustained growth, surpassing the estimates of insurance, and its role in industry associations its previous five-year plan (2004-2009), in will be further strengthened. addition to the growing demand for its ICIEC’s current and potential customers services, particularly from GCC investors can always reach the corporation at the interested in investing in Africa and other headquarters in Jeddah, or at representatives member countries. in Dubai and Dakar. Alternatively, the ICIEC ICIEC has succeeded in building the team are happy to serve you at your location critical core operating functions of a credit via electronic mail or telephone. ■

Contact us: Dubai Office Owais Diyan [email protected] Jeddah Dir. +971-43779408 Yasser Alaki: Cell +971-567288091 [email protected] Dir. +96612-6467597 Dakar Office Cell +966504664484 Moustapha Sow Jamel eddine Naga [email protected] [email protected] Dir. +221-338891144 Ext. 5131 Dir. +96612-6467608 Cell +221 77 637 9814 89 Cell +966504664484 Website: www.iciec.com

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Trade credit insurance in the MENA region

Karim Nasrallah, managing director, LCI

Within the Middle East North Africa (MENA) At the same time, region, it was only on the back of the countries such as international financial crisis in 2008 that a Egypt, Lebanon and strong awareness was created for trade Jordan used to be credit insurance as a protection against perceived as being companies' failure to pay. Adding to the less risky but with a financial instability and the lack of liquidity in history of economic the markets, the ‘Arab Spring’ has also or political problems. brought another surge in demand for credit The major risk protection, including political risks. international short- Karim Nasrallah It is a fact that most of the Arab States’ term credit insurance regimes do not have the status of fully- and reinsurance markets were covering risks fledged democracies. This leaves a fertile but on a selective and highly conditional ground for protests and numerous basis with relatively high risk premiums. It is consecutive historic events that had a against this type of background that buyers domino effect on the region. and sellers have had to maneuver with very Historically, trade credit insurance little visibility and therefore limited scope for penetration has been good in Europe and expansion. Asia but it is still under-developed in the With these tough insurance conditions Middle East and the Levant regions affecting the availability of trade credit (estimated at less than 5% of the insurable insurance and, considering that most of the market, according to LCI). trade flows are within the region, local For many years, countries such as Iraq, companies generally adopted credit Libya, Sudan, Syria and Yemen have been management systems that required deemed to be off-cover for commercial risks payments to be secured with more due to local situations and/or international traditional banking instruments such as sanctions from most of the major letters of credit, postdated cheques and international short-term credit insurance and promissory notes. reinsurance markets. However, with regard to medium-term political risks and investment Tapping local markets risks, these markets were mainly falling Within the Middle East, two multilateral within the scope of the national or agencies were set up by governments to multilateral agencies that had vested promote inter-regional trade and investment. interests or mandatory requirements to Dhaman (1974) and the Islamic Corporation insure risks in these countries. for the Insurance of Investment and Export

The ECAs along with local private insurers and regional multilaterals have shown strong appetite for the regional risks because they are ultimately closer to those risks and have a better understanding of the language and culture in the MENA region. 90 Berne Union 2014: Region and sector focus

Credit (ICIEC, 1994) were originally on companies have dissuaded many EXPERT ANALYSIS established to cover exports respectively international institutions from taking or between Arab country members and covering credit risks. Market knowledge and between Islamic country members. Today proximity are therefore the name of the however, their scope has widened to cover game, and interesting rating models based not only exports to non-member countries on non-financial criteria have been but, also some types of domestic developed in the area allowing risk coverage transactions. in a relatively accurate manner with a proven It is only recently that companies started track record. to realise that there were local and regional private insurers and export credit agencies (ECAS) offering the services that catered for Market knowledge and these companies' needs – ie. open account credit terms. proximity are therefore During the surge of the Gulf economies in the name of the game, and the 1990s and early 2000s, three dominating European/international private credit insurers interesting rating models (Euler Hermes, Atradius and Coface) based on non-financial established offices in Dubai to service the criteria have been region. The Lebanese Credit Insurer (LCI) was also established in Lebanon in 2001 as developed in the area the only local and regional specialised private allowing risk coverage trade credit insurance company. Furthermore, governmental export credit in a relatively accurate agencies (ECAs) were created and are active manner with a proven in countries such as Dubai, Egypt, Jordan, track record. Oman, Qatar, Saudi Arabia and Sudan. They were established with a specific mission of supporting their national exporters but, in many cases, this mission has also been extended to include elements of domestic There is a strong potential of development trade as well. for local banks and other providers of trade The ECAs along with local private insurers finance services in the MENA region as the and regional multilaterals have shown strong legal environment is relatively acceptable appetite for the regional risks because they and some markets remain untapped. are ultimately closer to those risks and have From a credit insurance perspective, trade a better understanding of the language and credit insurers, whether international or local, the culture in the MENA region. lt is for these heavily rely on international reinsurers major reasons that these insurers have (mainly European but also operating in the succeeded where the major international US). These reinsurers are in turn under credit insurers have failed to gain significant pressure from western governments and market penetration in any of the MENA from a regulatory perspective to reduce and countries. even stop coverage on certain markets. As Liquidity has become very scarce in the regional instability seems to still be in a markets such as Egypt and Jordan, causing ‘work in progress’ mode, the coming future delays in payments and increasing requests will be very interesting to watch and for rescheduling of invoices and/or uncertainty will almost certainly still prevail. promissory notes due. The usage of invoice The situation today is similar to what discounting (with credit insured invoices) is happened in the early nineties where we saw on the increase as an alternative means of the collapse of the old systems in Eastern financing to traditional trade finance Europe. Many countries have completely products. Factoring was hardly known in the changed, some others have been broken up Middle East just a few years back but is now into smaller countries and some had very widely accepted, yet not widely offered. minor problems. Instability is not the only obstacle to the With a history repeating itself scenario, growth of new trade finance and protection the longer term will maybe bring prosperity tools. The lack of transparency and the in a region where non-oil trade is growing 91 virtual non-existence of financial information steadily. ■ Berne Union 2014: Region and sector focus

Africa rising: a look at the opportunities for business growth on the booming continent in the next 80 years

By George Otieno, chief executive officer, the African Trade Insurance Agency

Africa 80 years ago was a much different small scale place. In fact, when the Berne Union was enterprises (SMEs) launched, Africa was largely under colonial must necessarily be at rule. A few decades later, with independence the heart. They firmly seized, most struggled to control represent the severe poverty rates and warring factions. An lifeblood of most institution such as the African Trade African economies Insurance Agency (ATI) was not even on the contributing upwards radar of African governments. of 60% – 70% of the Today, the picture has transformed from a GDP in many George Otieno despairing continent to one that is hopeful. In countries. Addressing short, Africa is now booming. This is a fact their challenges then becomes a key driver that is both visible – by the numerous cranes behind unlocking business potential on the dotting the landscapes in most urban cities – continent. and tangible, through regional growth rates Banks serve as a complementary chapter that the IMF estimates will reach 6% this year in the SME story. In a 2012 McKinsey report up from 5% in 2013, making it the second on Banking Practice of Micro-, Small and fastest growing economy in the world, behind Medium-Sized Enterprises (MSMEs) in only developing Asia. Emerging Markets, it notes that 60% of The Economist notes that over the past 10 global banking revenue in the next decade years real income has increased by more than will come from emerging markets, 30%, in contrast to the previous 20 years representing a $350 billion opportunity. when it shrank by 10%. The rate of foreign Current estimates put the SME funding gap direct investment (FDI) inflows rounds out at $80 billion across Africa, representing a the picture, jumping from $15 billion in 2002 natural opportunity for banks. to $37 billion in 2006 and $46 billion in 2012 Local banks and international banks with (compared to a similar level in 2013). local presence have responded with some These figures reflect a dividend of peace innovative options to tap into this under- that countries are embracing. This is served market. Tackling the issue of risk has evidenced by the rapid growth of democracy. been a key component that many banks When compared to the end of the Cold War could not absorb themselves. Most small when only three African countries (out of 53 scale enterprises on the continent lack at that time) had democracies – to the financial know-how. present, that number has risen to about 25, Insurance plays a big role in this loop but it with 22 countries holding peaceful elections is often seen by the SME sector as an added in 2012. cost that they simply cannot shoulder. The lending process for most SMEs is Abundant opportunities within Africa onerous with collateral requirements that Against the backdrop of this incredible restricts their cash flow and impedes their growth story, there are some noteworthy business cycle. As an African insurer, ATI has trends that could serve as a guide to insurers a unique vantage point. We understand the interested in taking advantage of the challenges and, in this instance, we were able 92 abundant opportunities within Africa. to help. We see education as an important To truly tell the story of African growth, aspect of our work. In this case we work Berne Union 2014: Region and sector focus

closely with associations and other platforms With 20 million customers divided among EXPERT ANALYSIS to educate companies about the value of seven mobile operators, analysts estimate trade credit insurance. that there are an additional 400 million While we continue to reach out to potential customers, which clearly represents individual companies, we felt we could have an untapped opportunity for many, including more impact by partnering with banks, which insurers. had the ability to reach across whole sectors. The year 2011 marked a milestone for the This approach provided the impetus behind continent. This is the year where experts the creation of a product that may very well claimed Africa reached the one billion be the first in the world. Banks and insurance population mark, proving that size matters. companies are not likely bed fellows in most While under half of African countries have yet developed regions but in our African context, to reach the middle income level (defined by the partnership is proving to be a good fit. the World Bank as an income of at least To help banks overcome the risk hurdle, we $1,000 per person per year), by 2025 the were able to structure a product that can bank anticipates that most African countries cover their credit risk on a portfolio basis. As will have reached this level. In this context, a result, banks now represent well over 50% age also matters, and with the youngest of our client base. Similarly, for international population of any region in the world, and a insurers, this segment could potentially rapidly growing middle class, Africa is seen as provide an entry point into African markets. a desirable destination for many products. The demand is definitely there. This factor is not lost on global manufacturers. With infrastructure Investors overcome the challenges development high on the agenda of most Perhaps because of its many challenges, governments and a financing gap of $90 Africa has proven itself to be one of the most billion annually needed to modernise the innovative continents in the world. Nearly a continent’s roads and utilities, there is great decade ago, the telecommunications industry demand for building products. The world’s blurred the lines between it and the banking largest steel manufacturer, which is one of sector. At that time, when banks were ATI’s clients, spotted this demand and they ignoring the millions of unbanked consumers are now making inroads into a sizeable region at the bottom of the pyramid, Kenya’s mobile in Africa. The company, like many, started operator, Safaricom, created a mobile cautiously by entering one market and once banking system that has been globally they established a reliable network of praised for its innovation and replicated since. partners and had a firm grasp of the Today, mobile phone subscriptions are environment, they were able to branch out estimated to have risen to 475 million from within two years to multiple countries. 90 million in sub-Saharan Africa within seven Some of the world’s most recognised years. The sharp rise in mobile phone use brands are choosing to establish across Africa has put a strain on operators to manufacturing bases in Africa. H&M, a create reliable networks that span vast areas. multinational Swedish retail-clothing firm, is This challenge, like so many others on the already sourcing material from Ethiopia with continent, has provided an opportunity. a factory expected to soon follow there and Companies like Goldman Sachs have entered in Kenya. While General Electric, the the booming mobile phone market American conglomerate, is building a $250 contributing to a $500 million capital raising million plant in Nigeria to make electrical by a Nigerian company, which is the equipment. continent’s largest mobile infrastructure Manufacturers are not the only company. international companies to join the wave. As in the banking sector, insurance Contractors delivering services such as road capacity will be key to the and water engineers to suppliers of medical telecommunications sector’s continued equipment are also tapping into the available growth. In East and Southern Africa, ATI has opportunities. been supporting a Japanese This is another notable trend we have telecommunications equipment supplier to detected. And once on the ground, these bring their goods to the continent. On one of companies often require some form of trade these transactions, we partnered with credit insurance, and in some instances, a Belgium’s Ducroire in a bid to help the combination of political risk insurance. The 93 industry in its aggressive expansion plans. challenge they tend to face is accessing cover Berne Union 2014: Region and sector focus

at affordable rates when their national export scramble to keep pace with demand for credit agency (ECA) may not be able to products that are relatively new in African provide cover due to the political or uncertain markets such as trade credit and political risk business climate. insurance. We have been able to provide support to Africa is also looking inward to find some of these international firms. In these solutions to finance their infrastructure instances, our network of international priorities, which includes expanding and insurance partners coupled with our S&P modernising energy infrastructure. To raise ‘A/Stable’ rating has helped to strengthen the funds for these critical needs, the continent level of trust that these clients have in us. as a whole issued a record $10 billion in US Here we have been able to partner to bring dollar-denominated sovereign bonds in 2013, goods and services into our markets with up from $1 billion a decade earlier. international insurers such as the Italian- In the energy sector, where the demand based ECA, SACE. This segment represents for reliable energy sources by most countries another avenue of opportunity for has been given renewed urgency, ATI is international insurers whether individually or lending support through a recently formed in partnership with other insurance partnership with the European Investment companies, such as ATI. Bank that is expected to lead to the creation of an Africa-based entity that will issue The growing internal market guarantees to investors in the renewable As the world begins to seek out opportunities energy sector. on the continent at unprecedented rates and On the insurance front, we have also the traditional trading partners in the West supported many energy sector transactions tackle their own economic challenges, Africa with partners such as Norway’s GIEK, where is itself beginning to turn inward. The we have been able to add 400MW of continent is beginning to make more of its electricity to Tanzania’s national grid. And own goods and to sell to itself. with the Saudi-based ICIEC, where together Regional integration has increased through we covered a rural electrification project initiatives from some key trading blocs expanding electricity to six districts in including the East African Community (EAC), Rwanda. the Common Market of East and Southern Energy will no doubt remain an important Africa (COMESA), the Southern African sector and a source of opportunity for Development Community (SADC) and the companies willing to take up the challenge. Economic Community of Western African Currently close to 600 million people out of a States (ECOWAS). Initiatives from these blocs total population of 1 billion do not have have seen a drastic improvement to the flow access to electricity in Africa. In an attempt of people and goods that includes tariff and to strengthen their economies and to protect quota-free trade. One of the most ambitious their citizens against the harmful effects of initiatives is the Cape-to-Cairo free trade carcinogenic energy options such as zone, also known as the Tripartite Free Trade kerosene and charcoal, African governments Area, encompassing 26 countries, 525 million are stepping up to the plate with urgency to people and $1 trillion in output. tackle this issue. These new regulations are already yielding Within insurance, we have partnered on results. With the reduction of non-tariff multiple transactions with insurers, where we barriers and the introduction of one-stop have added over half a billion dollars to the border posts in the East African region, insurance capacity in our member countries goods are flowing more rapidly at reduced producing tangible results across many costs and trade among these countries sectors. These partnerships are prime increased by 22% in 2012 growing from $4.5 examples of ATI’s raison d’être. We exist, in billion in 2011 to 5.5 billion in 2012. part, to facilitate the entry of such capacity – While Africa on the whole has a long way both financial and insurance, into our African to go – intra-African trade makes up less than member countries. 10% of the continent’s total commerce – While ATI may have been around for only a governments are showing the political will small part of the first 80 years of the Berne necessary to tear down the barriers to Union’s existence, we look forward to forging spurring regional trade and to attracting new partnerships in a booming Africa with 94 foreign companies. Here too capacity will Berne Union its members and other cohorts, prove a challenge to local insurers as they well into the next 80. ■ Berne Union 2014: Region and sector focus

Export credit agencies and banks EXPERT ANALYSIS

By Geetha Muralidhar, executive director, ECGC

The role of international trade and its impact All ECAs in on the global economy has been revisited business in the last anew since the global economic crisis. This fifty years have seen article examines the impact of international many good and bad trade in recent years and the specific role times. Their prime that export credit agencies (ECAs) have objective continues to played. Within this, it looks at the be to take risk away responsibilities banks have, as well as the role from exporters and all stakeholders have in identifying and bankers, as was mitigating risks. Finally, it considers the evident when the Geetha Muralidhar specific Indian environment, as well as latter became risk examining the rest of the world more broadly. averse after the financial crisis. ECAs also have to play a counter cyclical role especially Background in recovery stage, post a slowdown of an International trade is believed to be the economy. saviour for the world at large in the aftermath of the financial crisis. Trade has the potential The role of the banks to unify or harmonise the differences of Exporters procure raw materials and other various nations. The positive impact of world inputs, manufacture and then export. Those trade can be facilitated and augmented by dealing on open account terms with the financing. In fact it will not be out of place to importers have to struggle for working assume that as much as 90% of total trade capital with their liquidity getting entwined transactions involve a form of credit, with the related outstanding receivables. The insurance or guarantee. Businesses that gap between expenses incurred and the operate internationally rely heavily on banks realisation of payments needs to be bridged as transaction processors and lenders. The by short-term credit by banks. They may be lending risks can be mitigated by designing in the form of pre-export financing, an export credit insurance programme which receivables financing or trade loans. normally insures trade receivables. Similarly, cash flow deficit arises when All countries which have succeeded in there is an increased procurement of bulk exporting in recent times invariably have had materials and capital purchases for a project a significant contribution from their export while payments are being received from the credit agencies (ECA). ECAs are moderate project authority only on certified work done when compared to commercial banks who partially and the rest getting deferred. The extend export credit on short-term business deficit between estimated expenditures with market determined interest rates, and against revenues also needs to be financed by they are not as liberal as multilateral banks. Securities commonly obtained in the institutions who extend long-term credits above instances are a charge on the current through grants or on low rates. assets, i.e. receivables and on the stock which Typically, an ECA is a kind of hybrid will be goods and materials in case of pre- institution that has a promotional role while export financing. The credit insurance cover remaining a profitable entity, albeit can be invoked to get the compensation marginally. An ECA may insure an exporter or much before any of the securities, including a banker or even guarantee the bank that is the collateral which can be encashed thus extending the loan to the exporter. Various making the cover very handy. facilities that may be extended as a means of Banks will have to ensure that their credit support to banks are – pre-shipment insurance is tailored for covering their guarantees, post-shipment insurance, cover financing facilities which can be complicated, to bridge cash flow deficit, cover for buyers’ extended across borders involving several 95 credit and for lines of credit. risks like country, credit, legal and the like. Berne Union 2014: Region and sector focus

Risk mitigation Indian scenario Out of the three pillars of Basel II, ie. credit It is pertinent to observe that the partnership risk, operational risk and market risk, focus on between banks and ECA date back to the credit risk has become significant following 1960s in India. In Western countries this the 2008 crisis and so are the ways of development was initiated and intensified mitigating them with products like credit post the global financial crisis as banks insurance cover. Credit risk relates to the started contracting their balance sheets in possibility that loans will not be repaid or order to comply with prudential norms by delays are experienced in repayments. holding back on credits including export Credit risk is the kind of low probability credits. Export Credit Guarantee Corporation and high impact risk, and banks’ pricing may of India Limited (ECGC) has been a pioneer in not be supportive of the level of risks as it is operating the export credit insurance for mainly driven by funding costs. This could banks for covering exporters’ default in the also be because of a lack of adequate data context of pre-shipment or pre-export regarding their own lending experience in financing, and for post shipment financing defaults and recoveries when it comes to which includes receivables purchase or international business. discount with recourse to the exporter customer. Pre-shipment credits are disbursed against stocks and post shipment credits The role played by ECAs since the 2008 against bills (receivables) as the common securities for the facilities extended to the global financial crisis in building exporters. stronger partnerships with banks in A seamless cover for the whole cycle – ie, various ways is commendable. pre-sales onwards up to post sales realisation, is offered to the banking system in India. The cover could be issued on a whole turnover Management of risk involves quantifying, basis for the full portfolio or for individual monitoring, controlling, etc. Banks normally accounts. Surety cover insurance is available do not have the time and resources to study to banks which issue various types of and review potential issues like delays, guarantees for advance payment, defaults and disputes. Balance sheet and performance, retention etc, to beneficiaries profit & loss statements can be inadequate on behalf of exporter clients. Cover for cash and many a time profit results may not reveal flow deficit financing and overseas lending the weakness in business. Credit insurance are also made available to the financing practitioners will also peruse the cash flow banks by ECGC while supporting medium statement to determine the likelihood of and long-term project exports. debtors honouring future obligations. It is ECGC insures almost 65% of the export advisable to offload the credit risk to the credit disbursed in the country as all the entity which is most capable to handle it, and government-owned banks and many private that will be the credit insurer. This will ensure sector banks insure their complete export steering away from balance sheet risk credit portfolio on a whole turnover basis. analysis to transaction-based, real-time risk Not only has this vertical been an old, assessment. established and time-tested one, but also the ECAs provide the assurances that local major contributor to the premium income of and multinational banks need. They are the the organisation. key to unlocking capital for large risk inherent projects. The role of ECAs in the small and Rest of the world medium-sized enterprise (SME) sector has There are different national frameworks for also become more vital, as the banks always export credit financing. Various governments chase high profile corporates rather than arrange to provide through their respective SMEs who are unable to provide adequate ECAs, either guarantees or insurance (or collateral. ECA cover should be simple to both) to ensure that their exporters obtain operate in this sector in order to provide the necessary finance to compete with their sustainable SME financing. Thus credit counterparts from other countries. Some of insurers and banks complement each other in them are: Euler Hermes cover for export supporting exports, as banks transfer the risk loans refinanced by KfW, SACE’s financial 96 of trade debt in a commercial credit guarantees for funding to banks or for direct extended to their exporter customers. funding to borrowers, Coface’s refinancing Berne Union 2014: Region and sector focus

guarantees or securitisation guarantees Other issues EXPERT ANALYSIS which are callable on first demand, and Some of the queries and apprehensions Atradius’s export credit guarantee scheme. among the various industry players are as Agencies like MEXIM, Ducroire, EGAP and follows: EKF operate cover to banks in the form of – Can credit insurance, being a risk mitigator, insurance. Some others like NEXI, K-sure and help banks to get capital relief? Sinosure offer both insurance and guarantees – Can the ECA’s insurance policy be viewed and sometimes perhaps a combination of as an unconditional on demand guarantee? both. Post 2008, similar arrangements for – Can the ECA cover be considered as a exports on a short-term basis have also been state institution’s security? put in place. – Can loans with pure ECA cover be made Banks with liquidity issues arrange for a eligible as a buffer in the context of refinancing guarantee from an investor or liquidity cover ratio? even the central bank of the country as in the ECA business is generally not classified as case of USA, based on the insurance cover a distinct asset class. Hence, all the above extended by the ECA to cover the non- issues are constantly being debated and payment of the debtors to the bank. As pursued by the industry with the regulators regards repo eligibility for pure ECA cover, US and supervising authorities. In fact, it is Ex-Im’s cover can even be discounted with argued that ECA-covered loans must be the Federal Reserve. Coface also offers bestowed with considerable relief in capital export credit insurance to the lending banks provisioning to pave the road to recovery of which will be the pre-requisite for an the world economy. If credit conversion unconditional guarantee to an investor on factor (CCF) changes from 100% to say 20% 100% of the refinancing contract up to the for export loans, five times more export credit amount of the loan. can be extended to enable consequent The condition of indemnification is expansion of business. addressed by transferring the rights to claim The downside to all these initiatives could compensation under the insurance to the be a potential for misuse of ECAs in the benefit of the refinancing institution. SMEs volatile economies of today. This could fester guaranteed by Coface will be supported with weak institutional, regulatory or either through supplier credit or through supervisory structures in a country. In the buyer credit by the banks. In Germany, banks case of India, it is pertinent to note that ECGC can sell ECA-covered loans to KfW and KfW comes under the ambit of the insurance benefits out of the securitisation guarantee regulator and is subject to all compliances for refinancing. without any exception. In one of the surveys conducted by the Berne Union, it was noted that more than 25 Conclusion ECAs were covering trade finance The role played by ECAs since the 2008 instruments wherein the insured was the global financial crisis in building stronger bank itself. It is particularly observed that the partnerships with banks in various ways is cover of ECAs has been aptly tailored to suit commendable. Both institutions complement the specific needs of banks in each country. each other in supporting international trade Based on the comfort drawn from this cover, and in exports of large infrastructure projects. banks are exhorted to liberally support the It is of concern to note that sharp declines in exporters in respective countries. trade credit have an adverse consequence disrupting a country’s trade and growth, exacerbating a crisis. Scarcity of trade credit Credit insurers and may frustrate the potential stimulus to a banks complement each country’s exports. To a specific question in a forum of other in supporting exporters recently as to whether there is a exports, as banks transfer role for banks in export finance any longer, almost 80% of the audience voted in favour the risk of trade debt in of banks. So, the industry remains a a commercial credit banking business and will continue to be so extended to their exporter with ECA support as there is a natural fit between banks and ECAs in a symbiotic 97 customers. relationship. ■ Berne Union 2014: Region and sector focus

Export credit for OECD-based borrowers: a new era for ECAs Simon Sayer, head of structured trade and export finance, EMEA, Deutsche Bank, examines a trend that is here to stay

Since the establishment of the Berne Union in purely by the changes 1934 – with the aim of facilitating cross- in the financial border trade, by establishing common export environment, and credit principles – the role of export credit catalysed by the fact agencies (ECAs) has made a distinct shift. that ECAs are all the Indeed, no longer just a means of supporting more important as exports to developing ‘riskier’ markets, export OECD countries credit is now being used, within OECD across the globe seek markets, as a corporate financing tool. to ramp up exports to ECAs in their primary function of drive their economies Simon Sayer supporting trade by taking on risk and out of recession. payment uncertainty, in return for a premium – have long-been considered a vital Export finance is here to stay component of export flows into developing That said, the reasons that sparked this trend markets, in light of such markets’ inherent are not the same as the reasons it can now risk. But the nature of their role is now be viewed as a more permanent feature of changing – with ECA cover now being used the landscape. Indeed, market conditions by a sizable and increasing number of OECD- have improved, yet export credit remains of based borrowers. interest – even increasingly so – to OECD- Indeed, export credit is now viewed not based borrowers. Why? just as a trade-facilitator, but as an important The most immediate answer can be found addition in corporate treasurers’ armoury of in the evolving regulatory environment – in financing tools. To understand the changes at particular, the Basel III accord and its impact hand – and what they mean for ECAs, banks on the size of banks’ balance sheets, and the and borrowers alike – we must first look at the nature of their activities. As balance-sheets origins of this trend; which can be found, as have been squeezed to accommodate Basel with so many recent market developments, in III’s capital requirements, this has lead to the global financial crisis of 2008. other forms of bank liquidity drying up – The severity, scale and impact of the inducing borrowers who are looking to raise financial crisis have been well-documented, finance to turn to their trade flows instead. and it is no exaggeration to call it a ‘game- Furthermore, as banks assess the viability changer’. And in its wake, OECD-based and prioritisation of various business lines in corporates seeking financing – those looking light of the new regulatory environment, it is to export to other, previously ‘risk-free’, trade finance that has emerged as key. OECD countries – have been affected by two Indeed, many banks are determined to clear factors. First, a substantial reduction in remain active in the trade finance space appetite from the private bank market; and because it is based on the ‘real economy’ second, a sharp rise in the volatility of the (thereby creating social and economic value), debt capital market – impacting its reliability. is a better asset class in terms of risk allocation, These two elements have created a market and – with ECA-supported lending in particular gap, which ECA financing – both reliable and – is a very efficient use of capital and risk- available over longer time periods – has been weighted assets. So while the crisis temporarily brought in to fill. affected banks’ appetite, bringing ECAs into This is not to say there were not occasional the spotlight, it is the permanent effects of instances before the crisis of OECD Basel III that mean ECAs will continue to be borrowers using ECA facilities. Certainly, no viewed as an important alternative source of reason existed to prevent OECD use of long-term credit support and funding. export credit as a financing tool. But such Secondly, in the wake of the crisis, it has 98 occurrences were rare, and nothing like the become starkly apparent that emerging scale of the trend now – a trend sparked economies are not the only markets to incur Berne Union 2014: Region and sector focus

risk. Developed markets – previously perceived This immediately raises issues of EXPERT ANALYSIS as safe havens, offering assured payment – are transparency around the entirety of the by no means immune. And while the financial pricing process – in particular, how to environment has now improved, it is unlikely estimate the price at which corporates could the market will return to viewing OECD raise funds elsewhere. A number of factors markets as effectively “risk-free”. can provide guidance in this respect – from Finally, corporate treasurers are bond issuance to the price of revolving credit questioning their funding strategies – seeking facilities and credit default swaps – but the greater diversification of funding sources to process remains far from transparent. ensure access to reliable and sustainable Compounding this issue is the challenge of financing in times of calm and crisis alike. maintaining the agreed ‘level playing field’ even as it comes under stress – and is Changes and challenges distorted by – the export drives of OECD For both ECAs and banks, the emergence – governments. With so many key economies and persistence – of this OECD trend has looking to export their way out of recession – necessitated a change in mindset. For ECAs – the USA in particular pushing through more used to offering their support to ambitious export plans – the ability to corporates who might otherwise struggle to collectively uphold the intentions of the inter- export – the increasing demand for export government ‘gentlemen’s agreement’ is credit from OECD-based borrowers for harder than ever. financing purposes has been a significant shift from their core purpose, and perhaps A promising future the original thinking of the Berne Union. That While question marks remain, there is no said, ECAs recognise their duty to help keep doubt that the use of export credit as a the wheels of trade turning, in whatever form financing tool for OECD-based corporates is that may take; so any initial reluctance to set not only to stay, but to grow. For meet the growing demand from wealthier borrowers, ECA finance is reliable, stable and OECD-based borrowers – those corporates suitable for longer-dated lending, and has that demonstrably have other funding proven its worth during the global financial options – has since faded. crisis, when numerous other sources of Banks have also had to adapt – in liquidity dried up. particular, with regard to how ECA finance is So demand will certainly be sustained. And marketed to clients. For example, at Deutsche while some banks, in the wake of the global Bank, we now include the product as part of financial crisis, have had to pull back from our wider offering to investment-grade developing and developed markets alike, OECD-based clients. Such changes bring an others that are well-positioned to support educative aspect; relationship managers must this trend – that is, with the global footprint be well-versed in the use and nuances of ECA necessary to assist at both ends of intra- financing for corporates. And, more widely, OECD trade – will be able to realise the the established mindset that such products greater opportunities it brings. are only suitable for emerging markets must For Deutsche Bank, for example, be addressed. connecting clients across OECD markets on Last, but by no means least, technical both sides of an export finance contract is a challenges regarding pricing have yet to be perfect use of resources, as it meets two sets overcome. Under the terms of the OECD of client objectives in one trade; something ‘gentlemen’s agreement’ – an informal but we’ve been able to achieve with increased well-respected consensus – countries are regularity post-crisis, and which has made separated into eight distinct risk categories, the tools of the export financier even more with OECD economies deemed to be relevant to the corporate treasurer. ‘category 0’. In this category – and Although the original founders of the comprising the key concern, as ECAs become Berne Union may be surprised to see the more involved in intra-OECD trade – ECAs scale of ECA participation within developed must not undercut the commercial market. (rather than emerging) markets today – and This means that ECA finance pricing – the use of ECA finance as a corporate combining fees, risk margins and premiums – treasurer tool – this development is ultimately cannot undercut the rate at which the positive, and undoubtedly supports the borrower could secure financing in the Union’s original intention of keeping the 99 commercial market. wheels of trade turning.■ Berne Union 2014 Berne Union 2014

4 Directory Berne Union 2014

Contents

AIG USA 103 Members of the Prague Club ASEI Indonesia 103 AOFI Serbia 128 ASHRA Israel 104 BAEZ Bulgaria 128 ATI ✦ Multilateral 104 BECI Botswana 129 ATRADIUS Netherlands 105 DHAMAN Multilateral 129 CESCE Spain 105 ECGA O Oman 130 COFACE France 106 ECGE E Egypt 130 COSEC Portugal 106 ECIE United Arab Emirates 131 CREDENDO GROUP Belgium 107 ECIO Greece 131 ECGC India 107 EGFI Iran 132 ECIC SA ✦ South Africa 108 EXIAR Russia 132 ECICS Singapore 108 EXIM R Romania 133 EDC Canada 109 EXIMGARANT Belarus 133 EFIC Australia 109 HBOR Croatia 134 EGAP ✦ Czech Republic 110 IGA Bosnia and Herzegovina 134 EH GERMANY (State) Germany 110 JLGC Jordan 135 EH GERMANY (Private) Germany 111 KAZEXPORTGARANT Kazakhstan 135 EKF Denmark 111 KREDEX Estonia 136 EKN Sweden 112 LCI Lebanon 136 EXIM HUNGARY ✦ Hungary 112 LGA Latvia 137 EXIM J Jamaica 113 MBDP Macedonia 137 EXIMBANKA SR ✦ Slovak Republic 113 NAIFE Sudan 138 FCIA USA 114 NZECO New Zealand 138 FINNVERA Finland 114 SEP Saudi Arabia 139 GIEK Norway 115 TASDEER Qatar 139 HISCOX Bermuda 115 UKREXIMBANK Ukraine 140 HKEC Hong Kong 116 UZBEKINVEST Uzbekistan 140 ICIEC ✦ Multilateral 116 KSURE Korea 117 KUKE ✦ Poland 117 MEXIM Malaysia 118 MIGA Multilateral 118 NEXI Japan 119 ODL Luxembourg 119 OeKB Austria 120 OPIC USA 120 PwC Germany 121 SACE Italy 121 SBCE Brazil 122 SERV Switzerland 122 SID ✦ Slovenia 123 SINOSURE China 123 SLECIC Sri Lanka 124 SOVEREIGN RISK Bermuda 124 TEBC Chinese Taipei 125 THAI EXIMBANK ✦ Thailand 125 TURK EXIM Turkey 126 UK EXPORT FINANCE UK 126 US EXIMBANK USA 127 ZURICH USA 127 102 ✦ Members of The Prague Club Berne Union 2014

USA INDONESIA DIRECTORY AIG ASEI Global Trade & Political Risk Insurance PT. Asuransi Ekspor Indonesia (Persero)

AIG has underwritten political risk insurance since 1978 and trade ASEI is a state-owned company, established in November 1985 with credit insurance since 1982. AIG issuing companies are rated A+. the main purposes to promote national non-oil and gas export, to protect Indonesian exporters against political and commercial risks General information relevant to international trade, and to facilitate trade from and AIG within Indonesia which would help the development and growth of 75 Water St the nation’s economy. New York, NY 10038 United States To support the demands of the Indonesian market, ASEI provides +1 212 770 7000 various types of insurance products which include export and www.aig.com domestic credit insurance, counter bank credit guarantees, import insurance to Indonesian exporters/importers, domestic sellers/ History buyers and banks. ASEI is also deeply involved in the bonding Founded: 1978 sector as it is licensed to issue advance payment bonds, bid bonds, Ownership: American International Group performance bonds, maintenance bonds and custom bonds. The service of network of ASEI comprises 19 branches and 6 marketing Senior management offices established in all of the major industrial cities across John Hegeman, Senior Vice-President Indonesia. [email protected] General information Edward Brittenham, Senior Vice-President ASEI Neil Ross, Senior Vice-President Menara Kadin Indonesia Building 21st and 22nd floor [email protected] Jln H. R. Rasuna Said Blok X-5 Kav. 2-3 Ray Antes, Vice-President Jakarta, 12950 [email protected] Indonesia +62 21 5790 3535 Harry Palumbo, Vice-President www.asei.co.id [email protected] [email protected] Paul Kunzer, Vice-President [email protected] Carolyne Spackman, Vice- President History William Clark, Vice-President Founded: 1985 [email protected] Ownership: 100% state-owned

Contact person(s) Senior management Carolyne Spackman, Vice-President Zaafril Razief Amir, CEO/President Director, [email protected] [email protected] Marthin F. Simarmata, Finance Director Major facilities Indra Noor, Operations Director ✓ Trade credit insurance: Coverage against non-payment of short-term trade receivables, both export and domestic. Contact person(s) Tailored policies are available to meet the needs of large Miguel Kosasih, Reinsurance, Claims and Recovery Manager, corporation, middle-market firms, and banks. Export Credit Insurance Division, [email protected] ✓ Investment insurance: Confiscation, expropriation, Febrida Dwi Putriani, Marketing Manager, Export Credit Insurance nationalisation, currency inconvertibility and political violence Division, [email protected] for both equity investors and financial institutions. ✓ Political risk insurance: Contract frustration, wrongful calling of Agung Budi Setiawan, Marketing Manager, Export Credit guarantees and a wide range of customised covers for Insurance Division, [email protected] importers and exporters. Major facilities ✓ Export & Domestic Credit Insurance (post-shipment & pre-shipment financing) ✓ Counter Bank Credit Guarantees ✓ Surety Bonds ✓ General Insurance

103 Berne Union 2014

ISRAEL MULTILATERAL ASHRA ATI ✦ The Israel Foreign Trade Risks Insurance The African Trade Insurance Agency Corporation Ltd

ASHRA (formerly IFTRIC) is a governmental corporation, ATI was founded in 2001 by African states to cover the trade and established in October 1957 to promote Israeli exports and to investment risks of companies doing business in Africa. ATI protect the exporters against political and commercial risks related provides Political Risk, Surety Bonds, Trade Credit Insurance and to international activities. ASHRA covers MLT credit risks and Political Violence and Terrorism & Sabotage cover. As of 2013, ATI provides investment insurance. As the official export credit insurer, has supported over US$13 billion in trade and investments across ASHRA covers non-marketable risks. The company’s policies are Africa in sectors such as agribusiness, energy, exports, housing, backed by the full faith and credit of the Israeli government. infrastructure manufacturing, mining and telecommunications. ATI is the #1 ranked insurer in Africa with the 2013 renewal of its General information Long Term ‘A/Stable’ rating for Financial Strength and ASHRA Counterparty Credit by Standard & Poor’s. 65 Menachem Begin Rd, POB 20208 Tel-Aviv, 61201 General information Israel ATI +972 3 5631700 Kenya Re Towers, 5th Floor www.ashra.gov.il Upperhill off Ragati Road P.O. Box 10620 [email protected] Nairobi, GPO 00100 Kenya History +254 20 272 6999 Founded: 1957 www.ati-aca.org Ownership: 100% state-owned [email protected] Senior management History David Klein, Acting CEO, [email protected], +972 3 563 1715 Founded: 2001 Adi Gross, Chief Underwriting Officer, [email protected] Ownership: ATI is currently owned by the following African +972 3 563 1772 member countries and public/private sector organisations: Benin, Burundi, Democratic Republic of Congo, Kenya, Madagascar, Malawi, Rwanda, Tanzania, Uganda, Zambia, African Development Contact person(s) Bank, African Reinsurance Corporation, Atradius Group, SACE, Adi Gross, Chief Underwriting Officer, [email protected] The Common Market of Eastern and Southern Africa (COMESA), +972 3 563 1772 The Eastern and Southern African Trade and Development Bank David Klein, Acting CEO, [email protected] (PTA Bank), The PTA Re Insurance Company (ZepRe) +972 3 563 1715 Maria Kofman, Head of Underwriting and Insurance Division, Senior management [email protected], + 972 3 563 1783 Jef Vincent, Chief Underwriting Officer, [email protected] Toavina Ramamonjiarisoa, Chief Financial Officer, [email protected] Major facilities ✓ Export credit insurance: medium and long-term (over one Cyprien Sakubu, Chief Investor Relations Manager, year) export credit insurance against political and commercial [email protected] risks. Major insurance facilities: supplier’s and buyer’s credit Contact person(s) coverage; credit lines; forfaiting and letters of credit insurance; George O. Otieno, CEO, [email protected] bonds insurance. Sheila Ongas, Communications Assistant ✓ Investment insurance cover offered: conversion/transfer risks; [email protected] war and civil war risks; expropriation/confiscation risks; breach of contract by the host government. Sherry Kennedy, Sr. Communications Officer [email protected]

Major facilities ✓ We offer two main insurance products that cover political and trade credit risks. Foreign direct investment risks fall under our political risk insurance. We also offer reinsurance coverage to insurance companies operating in or supporting business into or out of our African member states. Political trade credit risks that are covered by our insurance policies include: expropriation, arbitral award default, transfer restriction, mobile assets, war, civil disturbance or civil commotion, unfair calling of bonds, embargo, comprehensive non-payment, terrorism, sabotage, political violence.

✦ Member of The Prague Club

104 Berne Union 2014

NETHERLANDS SPAIN DIRECTORY ATRADIUS CESCE Atradius N.V. CESCE Credit Insurance

ATRADIUS provides trade credit insurance, surety and collections CESCE was founded in 1970 to primarily operate in the field of services through 160 offices worldwide, and has a presence in 45 export credit insurance for the account of the state, as an countries. Its products help protect companies from payment risks instrument to foster Spanish exports. After deregulation in 1990, associated with selling produces and services on credit. CESCE started to actively compete for its own account on the open export credit and domestic credit insurance markets. The company General information is currently present in Spain, Portugal and Latin America Atradius Credit Insurance N.V. (Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela). David Ricardostraat 1 CESCE specializes in the comprehensive management of Amsterdam, 1066 JS commercial risk and integrates INFORMA D&B, S.A. (the financial Netherlands and commercial information provider) and CTI, S.A. (the provider +31 20 553 9111 of IT services). [email protected] General information History CESCE Founded: 1925 C/ Velázquez, 74 Ownership: Grupo CyC 64.23%; Madrid, 28001 Grupo Catalana Occidente 35.77% Spain +34 91 423 48 05 Senior management www.cesce.es Isidoro Unda, Chairman and Chief Executive Officer; [email protected] Chief Financial Officer [email protected] David Capdevila, Chief Market Officer History Andreas Tesch, Chief Market Officer Founded: 1970 Chris van Lint, Chief Risk Officer Ownership: CESCE is a limited company. 50,25% of its shares are held by the Spanish state, while the remainder is in the hands of Contact person(s) Spain’s main banking and insurance groups, among them Christine Gerryn, Executive Director, Santander, BBVA, Banco Sabadell and Banco Popular. [email protected], +31 20 553 2260 Senior management Beatriz Reguero, Chief Operating Officer, State Account Business Major facilities [email protected] ✓ (Export) credit insurance: These services are designed to protect companies against the risk of non-payment by Luis-Antonio Ibanez, Chief Operating Officer, Private Business domestic and foreign customers. We also act as ECA for the [email protected] Dutch government (ATRADIUS Dutch State Business). ✓ Global policy: This can be adapted for the specific structure Contact person(s) and requirements of multinationals – umbrella cover with Carmen Muñoz, Country Risk and Debt Management common terms for the group but with individual, localised Department, [email protected] policies for country subsidiaries. ✓ Bonding: Offered in France, Italy, Spain and the Nordic Major facilities countries. Bonding products can protect companies against ✓ Export Credit Insurance: Commercial and political cover for the failure of a supplier to meet agreed to performance export markets and commercial cover for domestic markets; standards. ✓ pre and post-shipment risks for both short-term and Debt collections: ATRADIUS has a global network of debt medium/long-term transactions. collection professionals, with offices throughout Europe and ✓ Investment Insurance: Conversion/transfer, war and civil war, North America. ✓ breach of undertakings by host government, expropriation/ Reinsurance: The credit insurance and bonding business of confiscation. Bonds and guarantees: unfair calling, fair calling primary insurers in many markets across the world is of bonds, cover to banks, bonds/guarantees issued. supported by the underwriting and reinsurance of premiums through Atradius Reinsurance Ltd.

105 Berne Union 2014

FRANCE PORTUGAL COFACE COSEC Coface Cosec – Companhia De Seguro De Créditos, SA

Founded in 1946, Coface is a private company, subsidiary of Natixis. Companhia de Seguro de Créditos, SA (COSEC) began operating Coface, an expert in commercial risks at the service of companies, in 1969 as a limited company with the state as a major shareholder. supports the development of businesses in their own territory and From November 1992, COSEC has been a private company and its internationally. It offers credit insurance solutions that aim to shares are held by one of the largest banks in the Portuguese protect them against the risk of financial default of their customers. financial sector, and the world leader company of the credit Coface supports its clients upstream in evaluating and preventing insurance market. Besides providing export credit insurance, risks, so that they can make the best decisions at the most domestic credit insurance and bond insurance on its own account, opportune moment. To do this, Coface offers them full, detailed COSEC also covers,on behalf of the state, export credit insurance analysis of country, sectoral and credit risk. Coface relies on its (supplier’s and buyer’s credit), bonds and Portuguese investment powerful international network to offer credit insurance in 97 insurance. countries. General information Since 1946, Coface has been managing state guarantees on behalf COSEC of and with the guarantee of the French state, in the aim of Av. da República, 58 promoting and supporting French exports on the medium and long Lisbon, 1069-057 term and foreign investments. Coface offers a wide range of Portugal insurance products to cover risks that cannot be covered in the +351 21 791 3700 private sector, thereby benefitting companies carrying out market www.cosec.pt surveys, marketing products or services or investment abroad. [email protected] [email protected] General information COFACE History 12, cours Michelet Founded: 1969 La Défense 10 Puteaux Ownership: The BPI Group 50% and Euler Hermes Group 50% Paris La Défense Cedex, 92800 France Senior management +33 1 49 02 20 00 Jose Miguel Gomes da Costa, President and Chief Executive www.coface.com Officer, [email protected] [email protected] [email protected] Berta Dias da Cunha, Executive Member of the Board [email protected] History Thierry Etheve, Executive Member of the Board Founded: 1946 [email protected] Ownership: Natixis

Senior management Contact person(s) Jean-Marc Pillu Maria José Melo, Director, International Dept., [email protected], +351 21 791 3826 Contact person(s) Anna Robert, [email protected] Major facilities ✓ Export credit insurance: Export credit insurance short-term Major facilities cover: commercial and political risks, pre-shipment and credit ✓ Credit insurance cover. ✓ 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 war cover, breach of contract by the host government cover. ✓ Bonds and guarantees: Cover offered: bid bond performance bond, retention bond, advance payment bond, customs and tax authorities bonds, bonds/guarantees issued.

106 Berne Union 2014

BELGIUM INDIA DIRECTORY CREDENDO GROUP ECGC Crendendo Group Export Credit Guarantee Corporation of India Ltd

Credendo Group Export Credit Guarantee Corporation of India Limited (ECGC), was Credendo Group (formerly known as ONDD Group) is the new incorporated in the year 1957 under the Companies Act, 1956, to identity of a European trade insurance group present throughout the facilitate and strengthen India’s exports by insuring the credit risk continent and active in all segments of trade credit insurance, faced by Indian exporters/banks on lending to exporters. The providing a range of products that cover risks worldwide. The group company is 100% owned by Government of India. The company is includes Delcredere, Ducroire, Credimundi (the new name of the managed by a board of directors comprising nominees of the entity insuring short-term business), KUPEG, INGO-ONDD, Garant Government of India, Reserve Bank of India, commercial banks, and Trade Credit. In 2012 the Credendo Group covered 40 billion insurance companies and eminent persons from the exporting euros in international trade and issued 380 million euros in premiums. community. Delcredere, Ducroire The Paid up capital of the company is currently Rs.11 billion Delcredere, Ducroire is the official Belgian export credit agency. (approximately USD 200 million) vs. the authorized capital of Rs.50 Backed by the state, its mission is to promote international trade billion (approximately USD 850 million). relations, providing companies and banks trade credit insurance against medium-term and long-term political and commercial risks General information worldwide. This business mainly relates to capital goods, ECGC contracted works, industrial projects and services. Delcredere, Express Towers Ducroire’s solidity is underlined by its AA rating from Standard & 10th Floor, Nariman Point Poor’s and cover capacity of 27 billion euros. As part of the Mumbai, 400021 Credendo Group, Delcredere, Ducroire shares the group Maharashtra philosophy: to be smarter about risk and closer to clients. India Credimundi +91 22 6659 0500/6659 0776 Credimundi (formerly known as Ducroire, Delcredere SA.NV) has a www.ecgc.in mission to provide companies within the European Union highly [email protected] customised cover against political and commercial risks related to [email protected] short-term trade credit and current trade transactions, principally in open account terms. It also issues legal and contractual bonds. History Apart from its main office in Brussels, Credimundi is present with Founded: 1957 branch offices in London, Paris, Wiesbaden and Milan. As part of Ownership: Company with 100% shareholding of the Government the Credendo Group, Credimundi shares the group philosophy: to of India be smarter about risk and closer to clients. Senior management General information Narayanaswamy Shankar, Chairman and Managing Director, Credendo Group [email protected], +91 22 66590514/515/516 rue Montoyerstraat 3 Geetha Muralidhar, Executive Director, Brussels, 1000, Belgium [email protected], +91 22 66590519/520 +32 2 788 88 00 www.credendogroup.com Sandeep Mukherjee, General Manager, [email protected] [email protected], +91 22 66138401 History Manoj Kumar, General Manager Founded: 1921 [email protected], +91 22 66590721 Ownership: 100% state-owned Rohit Pandya, General Manager [email protected], +91 22 66590526 Senior management Dirk Terweduwe, CEO V Dharmarajan, General Manager [email protected], +91 22 66590717 Frank Vanwingh, Deputy CEO R Padmavathy, General Manager Contact person(s) [email protected], +91 22 66590713 Nabil Jijakli, Secretary General, [email protected] M Senthilnathan, General Manager Major facilities [email protected], +91 22 66590725 ✓ Insurance products: Ashok Phadtare, General Manager – Supplier, buyer credits and project finance insurance [email protected], +91 22 66590523 – Unfair calling of bonds to be issued under the insured contracts Contact person(s) – Cover can be provided in all leading OECD currencies. Rohit Pandya, General Manager Occasionally, non-OECD currencies are eligible for cover [email protected], +91 22 66590526 – Investment insurance ✓ Other products: Anand Singh, Assistant General Manager – Guarantees [email protected], +91 22 66138426 – Forfaiting Ranvir Kishore, Assistant Manager ✓ Risks covered: [email protected], +91 22 66138431/25 – Pre-shipment risks – Non-payment risks ✓ Major facilities Causes of loss covered: ✓ – Political (and similar) risks Export credit insurance to exporters ✓ Export credit insurance to banks – Risks on private or public buyers/banks ✓ ✓ Amounts covered: Overseas investment insurance – Principal and interest amounts, including interests on arrears during waiting period. Delcredere, Ducroire has a flexible 107 attitude towards foreign content. Berne Union 2014

SOUTH AFRICA SINGAPORE ECIC SA ✦ ECICS Export Credit Insurance Corporation of ECICS Limited South Africa SOC Ltd

ECIC SA was established in 2001 in terms of the Export Credit and ECICS Limited, a wholly-owned subsidiary of IFS Capital Limited Foreign Investments Insurance Act, 1957, as amended. It is a (IFS), provides a wide range of risk management solutions through registered insurer and a public company with limited liability. The its offer of domestic and exports credit insurance policies, bonds government of South Africa, through the Department of Trade and and guarantees business in Singapore. As a pioneer in this area with Industry is the sole shareholder. ECIC SA has been mandated by over 30 years of risk management experience, ECICS is well- government to enter into contracts of insurance with, or for the equipped to assist Singapore companies and branches of foreign benefit of persons carrying on business in South Africa in the companies. course of trade with countries outside South Africa, primarily for medium/ long-term export credit and investment insurance. General information ECICS General information 7 Temasek Boulevard, #10-03 Suntec Tower One ECIC SA 038987 Block C7, Eco Origins Office Park Singapore 349 Witch Hazel Ave +65 6337 4779 Highveld Ext 79, Centurion www.ecics.com.sg Pretoria, 0157 [email protected] South Africa [email protected] +27 12 471 3800 www.ecic.co.za History Founded: 1975 History Ownership: IFS Capital Limited – 100% Founded: 2001 Ownership: ECIC is fully owned by the South African Government Senior management Lua Too Swee, CEO Senior management [email protected], +65 – 63030189 Motshewandi J Lesejane Terence Teo, Head, Business Development, Non-executive Chairman of the ECIC SA Board [email protected], +65 – 63030198 Mandisi Nkuhlu, Acting Chief Officer Richard Ong, Head, Finance Lindelani Mphapuli, General Counsel [email protected], +65 – 63030183 Sedzani Mudau, Chief Financial Officer Ruth Wee, Head, Risk Management Lesego Mosupye, Chief Risk Officer [email protected], +65 – 63030172

Contact person(s) Contact person(s) Chris Thirion, Head, Planning & Portfolio Management Hoefai Wong, Risk Management [email protected] [email protected], +65 – 63030173 Alan Low, Risk Management Major facilities [email protected], +65 – 63030175 ✓ Export credit insurance: Underwrites loans (buyer and supplier credit as well as project finance facilities) over the Major facilities medium/longterm, against commercial and political events of ✓ Credit insurance default, breach of contract, currency inconvertibility and ✓ Comprehensive short-term policies (export/domestic) transfer risk etc. ✓ Bonds & guarantees ✓ Investment insurance: Cover offered to investors (equity, – Performance bond shareholder loans as well as commercial loans) against – Foreign worker bond expropriation, confiscation, nationalisation, war, armed – Advance payment bond hostilities, civil war, rebellion, revolution or similar disturbances, – Qualifying certificate bond currency inconvertibility and transfer risk. – Bid and tender guarantee – deferred ✓ Performance bond insurance: Cover performance bonds issued – Payment bond on behalf of exporters participating in exports of capital goods – Maintenance bond and/or services. – Account payment bond – Customs bond – Tenancy/rental bond ✦ Member of The Prague Club

108 Berne Union 2014

CANADA AUSTRALIA DIRECTORY EDC EFIC Export Development Canada The Export Finance and Insurance Corporation

EDC is Canada’s export credit agency, established to support and EFIC provides finance and insurance solutions to help Australian develop, directly and indirectly, Canada’s export trade, as well as companies exporting and/or investing offshore to overcome Canadian capacity to engage in that trade and to respond to financial barriers. We offerways to unlock export finance and/or international business opportunities. EDC is financially self- facilitate overseas investments where their banks and/or insurers sustaining and operates on commercial principles. In addition to are unable to provide all the support they need. being a direct lender and insurer, EDC acts as a catalyst to leverage private capital and establishes partnerships both domestically and General information abroad. EFIC Level 10, 22 Pitt Street General information Sydney, NSW 2000 Export Development Canada (EDC) Australia 150 Slater St., Ottawa +612 8273 5333 Ontario, K1A 1K3 www.efic.gov.au Canada info@efic.gov.au +1 613 598 2500 berneunion@efic.gov.au www.edc.ca [email protected] History Founded: 1957 History Ownership: Wholly owned and guaranteed by the Founded: 1944 Commonwealth of Australia Ownership: EDC is fully owned by the Government of Canada Senior management Senior management Andrew Mohl, Chairman of the Board, amohl@efic.gov.au Kevin Warn-Schindel, Chairman of the Board Andrew Hunter, Managing Director Benoit Daignault, President and Chief Executive Officer ahunter@efic.gov.au, +61 2 8273 5250 Peter Field, Exc Director, Business Origination & Portfolio Mgt, Contact person(s) pfield@efic.gov.au, +61 2 8273 5459 [email protected] John Pacey, Chief Credit Officer jpacey@efic.gov.au, +61 2 8273 5275 Major facilities ✓ Insurance: Credit insurance for export transactions, including Stuart Neilson, Chief Financial Officer policies issued to financial institutions to cover foreign bank sneilson@efic.gov.au, +61 2 8273 5423 payment obligations and purchased receivables. Contract Andrew Watson, Executive Director, SME insurance for capital goods, service contracts and projects: awatson@efic.gov.au, +61 2 8273 5457 Political risk insurance for equity investments, assets and debt, as well as comprehensive insurance policies issued to financial Contact person(s) institutions for payment default on sovereign or quasi- Chang Foo, Head of Product Management & Risk Transfer sovereign debt obligations. cfoo@efic.gov.au, +61 2 8273 5431 ✓ Financing: Flexible financing solutions including buyer credits, supplier credits, bank guarantees, equity products and financing to support foreign direct investment. Major facilities ✓ Bonding: Guarantee and insurance products to support ✓ Export finance and insurance: Direct loans; unconditional performance bonding and surety bonds as well as foreign guarantees and indemnities to financial institutions including exchange facilities. specialist foreign exchange companies; medium-term payment insurance covering commercial and political risks; pre- shipment finance; lines of credit. ✓ Project financing: Limited-recourse lending/guarantee in support of Australian exports to, or Australian sponsored investments in overseas projects. ✓ Political risk insurance: Cover to investors, financiers (loan and commodity hedge providers) and contractors – CITB, war damage and PV, expropriation/confiscation, forced abandonment, deprivation, selective discrimination and arbitration award default. ✓ Bonds, sureties and guarantees: Cover against unfair calling of bonds; issuer of contract or surety bonds, including for the US market.

109 Berne Union 2014

CZECH REPUBLIC GERMANY EGAP ✦ EH GERMANY (State) Export Guarantee and Insurance Corporation Euler Hermes Aktiengesellschaft

Export Guarantee and Insurance Corporation is a joint-stock Euler Hermes Aktiengesellschaft (EH GERMANY – State), as a new company. The offered export credit insurance with state support is company officially registered in early February 2014, has taken over in full compliance with the arrangement on officially supported all state account activities of Euler Hermes Deutschland AG. The export credits, EU law and with BU understandings. new company is treated as a partial legal successor of Euler Hermes Deutschland AG. EGAP still holds a 34% share in a subsidiary – Commercial Credit Insurance Company EGAP (KUPEG) – offering short-term credit Since 1949 EH GERMANY (State) and PricewaterhouseCoopers AG insurance on commercial terms without any state support. A 66% have been entrusted by the German Federal Ministry of Economics share is held by Credimundi (formerly Ducroire – Delcredere and Energy with administering the Official Export Guarantee SA.NV) (Belgium). Scheme, for which purpose the two companies entered into a consortium under the lead management of EH GERMANY (State). General information EGAP The company handles short-term and medium/long-term export Vodickova 34/701 credit guarantees, whole-turnover policies and pre-shipment risk Prague, 11121 cover. Czech Republic +420 222841111 General information www.egap.cz EH GERMANY (State) [email protected] Euler Hermes Aktiengesellschaft Gasstrasse 27 History 22761 Hamburg Founded: 1992 Germany Ownership: EGAP is fully owned by the state. Shareholder’s rights +49 40 8834 9000 are exercised by Ministry of Finance (40% of votes), Ministry of +49 40 8834 9141 Industry and Trade (36%), Ministry of Agriculture (12%) and www.agaportal.de/en/aga Ministry of Foreign Affairs (12%). [email protected]

Senior management History Prochazka Jan, CEO, [email protected], +420 222 842 000 Founded: 1917 Ownership: 100% Euler Hermes S.A., Paris Somol Miroslav, Deputy CEO; International Relations and Compliance Section, [email protected], +420 222 842 100 Senior management Ralf Meurer, Chairman of the Board of Management Contact person(s) Dr Hans Janus, Member of the Board of Management responsible Hikelova Hana, Director & Spokesperson; for the Federal Export Credit Guarantees PR and Communication Department [email protected], +420 222 842 015 Contact person(s) Hannelore B. Bergs, BU Matters, Issues in General Major facilities ✓ Insurance with state support against commercial and political Uwe Stumpenhusen, BU Matters, IT and Reporting risks ✓ Export credit insurance (buyer and supplier credits) Major facilities ✓ Insurance of supplier credits financed by a bank ✓ Export Credit Insurance: ✓ Insurance of export contract-related bonds (advance payment – Political and commercial risks cover for short-term and bonds, bid bonds and performance bonds) against unfair and medium-/long-term transactions; fair calling – Special facilities available ✓ Manufacturing risks insurance ✓ Bonds and Guarantees: ✓ Pre-export financing insurance – Cover against unfair and fair calling ✓ Insurance of a confirmed letter of credit ✓ Debt Collection ✓ Investment insurance ✓ Insurance of a credit for financing of investments ✓ Insurance of market prospection

✦ Member of The Prague Club

110 Berne Union 2014

GERMANY DENMARK EH GERMANY EKF DIRECTORY Euler Hermes Deutschland AG Eksport Kredit Fonden

The company is market leader in Germany and Member of the Euler EKF is the official Danish export credit agency. It is an independent Hermes Group, Paris, the world market leader in credit insurance. entity under the Danish Ministry of Business and Growth. EKF offers EH GERMANY (Private) is owned by Allianz Group as ultimate insurance cover for companies – national or foreign – that take risks shareholder and has subsidiaries in Austria and Switzerland. The on exports and investments containing a Danish economic interest. company offers risk transfer solutions for their clients to support Goods, capital goods, turn-key projects, services and investments their business development in domestic and export markets. The are covered by the guarantees. EKF offers both political and products of EH GERMANY (Private) secure the financial stability of commercial risk cover. the customers. General information General information Eksport Kredit Fonden (EKF) EH GERMANY (Private) Lautrupsgade 11 Euler Hermes Deutschland AG Copenhagen, 2100 Friedensallee 254 Denmark Hamburg, 22763 +45 35 46 26 00 Germany www.ekf.dk +49 40 8834 0 [email protected] www.eulerhermes.de [email protected] History Founded: 1922 History Ownership: 100% state-owned agency with the Danish Ministry of Founded: 1917 Business and Growth as the guardian authority Ownership: 100% Euler Hermes S.A., Paris Senior management Senior management Anette Eberhard, CEO, [email protected] Ralf Meurer, Chairman of the Board of Management Jan Vassard, Deputy CEO, [email protected] Ulrich Nöthel, Member of the Board of Management responsible Søren Møller, Deputy CEO, [email protected] for Credit Insurance, Bonding and Fidelity Insurance Morten Sørensen, Senior Director, Large Corporates, [email protected] Thomas Krings, Member of the Board of Management responsible risk underwriting and claims Kim Richter, Senior Director, SME & Cleantech, [email protected]

Contact person(s) Contact person(s) Uwe Kniehs, Head of Communications Mariane Søndergaard-Jensen, Director International Relations, [email protected] Major facilities ✓ Credit Insurance Major facilities ✓ Bonding/Surety Business ✓ Export credit insurance: Political and commercial risk cover via ✓ Fidelity Insurance supplier and buyer credit facilities, lines of credit and shopping ✓ Risk Management lines. ✓ Debt Collection ✓ 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.

111 Berne Union 2014

SWEDEN HUNGARY EKN EXIM HUNGARY ✦ Exportkreditnämnden Hungarian Export-Import Bank Plc. Hungarian Export Credit Insurance Plc.

EKN supports Swedish exports and the internationalisation of The Hungarian Export-Import Bank Plc. (Eximbank) – together with Swedish business. We do this by offering exporting companies and the Hungarian Export Credit Insurance Plc. (MEHIB) – was banks guarantees for payment and financing. established through the de-merger of Export Guarantee Insurance Ltd. in accordance with Act XLII of 1994, with the basic objective General information of facilitating the sale of Hungarian goods and services in foreign Exportkreditnämnden (EKN) markets. Since 23 May 2012, Eximbank and MEHIB operate within Box 3064 an integrated framework and carry out their duties with a shared Stockholm, SE-103 61 organisation and corporate identity, under the name of EXIM. Sweden +46 8 788 00 00 Both companies are solely owned by the State of Hungary, and www.ekn.se since 23 May 2012 the owner’s rights have been exercised on behalf [email protected] of the State of Hungary by the Minister for the National Economy. Eximbank’s share capital is HUF 10.1 billion, and the Hungarian State undertakes a payment guarantee in respect of all its borrowings. History Founded: 1933 MEHIB’s share capital is HUF 4.25 billion. Ownership: 100% governmental agency General information EXIM HUNGARY Senior management Karin Apelman, Director General Nagymezö utca 46-48 [email protected], +46 8 788 00 00 Budapest, H-1065 Hungary Helén Seemann, Director, Large Corporates +361 374 9200 [email protected] , +46 8 788 01 05 www.exim.hu Carl-Johan Karlsson, Director, Small and Medium sized [email protected] Enterprises, [email protected], +46 8 788 01 46 [email protected] Stefan Karlsson, Director, Risk Advisory & CSR, [email protected], +46 788 00 02 History Founded: 1994 Patrick Nimander, Director, Finance Ownership: Hungarian State directly 100% [email protected], +46 8 788 01 35 Senior management Contact person(s) Roland Nátrán, CEO Karl-Oskar Olming, Head of CSR & International Relations [email protected], +36 1 374 9100 [email protected], +46 8 788 00 05 Viktor Nagy, Deputy CEO, Business Operations [email protected], +36 1 374 9100 Major facilities László Lengyel, Director, International Relations and Analysis ✓ Export credit insurance: [email protected], +36 1 374 9100 – Cover for commercial and political risks. – Short-term pre-shipment and credit cover. – Medium/long-term pre-shipment cover and supplier and Contact person(s) buyer credit facilities. László Várnai, International Policy Advisor ✓ Project finance: [email protected], +36 1 374 9100 – Project finance transactions underwritten within EKN’s normal Zsuzsanna Bugár, International Relations Advisor guarantee facility. [email protected], +36 1 374 9100 ✓ Bonds and guarantees: – Cover for exporter against unfair calling. Major facilities – Counter guarantee for issuer of bond against exporter risk. ✓ Short-term insurance: policy with cover for commercial and – Guarantee for confirmed LC. political risks including pre-shipment credit period. Cover for ✓ Investment insurance: purchased debts. – Conversion and transfer cover, war and civil war cover, ✓ Medium and long-term insurance: political and commercial expropriation/confiscation cover. risks; pre-shipment and credit period; bond insurance, supplier ✓ Other products: credit, buyer credit; lease transactions, tied aid insurance. – Bill of exchange guarantee ✓ Investment Insurance: Cover also for investments abroad – Working capital guarantee for SMEs against political risks.

✦ Member of The Prague Club

112 Berne Union 2014

JAMAICA SLOVAK REPUBLIC EXIM J EXIMBANKA SR ✦ DIRECTORY National Export Import Bank of Export-Import Bank of the Slovak Republic Jamaica Limited

EXIM J is an independent public sector trade financing institution, Export-Import Bank of the Slovak Republic is the official export which provides trade credit insurance, ST foreign currency credit agency of Slovakia established by the Act No. 80/1997 Coll. financing through foreign lines of credit and a range of ST and MT as amended. Its main goal is to increase the competitiveness of local currency financing programmes to the productive sector, with Slovak exporters at the international market via providing a wide emphasis on the exporting sector. range of export credit and investment insurance, insurance and other related financial services. General information EXIM J (National Export Import Bank of Jamaica Limited) General information 11 Oxford Road EXIMBANKA SR (Export-Import Bank of the Slovak Republic) Kingston 5 Grösslingova 1 Jamaica Bratislava, 813 50 +1 876 960 9690 Slovak Republic www.eximbankja.com +4212 59398 408 [email protected] www.eximbanka.sk [email protected] History Founded: 1986 History Ownership: 100% government of Jamaica Founded: 1997 Ownership: 100% sovereign Senior management The Hon. William Clarke, Chairman Senior management Lisa Bell, Managing Director Igor Lichnovský Chairman of the Bank Board and CEO Contact person(s) [email protected] Shernett Manning, Chief Officer, Operations and Insurance Pavel Mockovčiak, Member of the Bank Board and Deputy CEO [email protected] for Banking Division Audrey Morris, Risk Management and Compliance Officer [email protected] [email protected] Milan Horváth, Member of the Bank Board and Deputy CEO for Insurance Division Major facilities [email protected] ✓ Trade credit insurance: The bank provides the Jamaican Rudolf Sihlovec, Member of the Bank Board and Deputy CEO for productive sector with ST insurance protection against non- Finance and Economic Division payment by foreign and local buyers. The trade credit [email protected] insurance policy covers both commercial and political risks, to a maximum of 85% and 90% respectively. ✓ Export financing: The bank offers ST working capital financing Contact person(s) to the exporting sector through pre and post-shipment Silvia Gavorníková, Director of International Relations facilities. MT loan facilities are also offered to the tourism [email protected], +421 2 59398 408 sector, a major earner of foreign exchange, for facilities upgrading, and to the exporting sector for retooling and Major facilities upgrading. ✓ Insurance products: ✓ Import financing: Foreign currency loans are granted to – ST cover against commercial and political risks: export and facilitate the procurement of imported raw material, equipment domestic receivables. and machinery for the productive sector. – Insurance of export guarantees, production risk, confirmed irrevocable 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

113 Berne Union 2014

USA FINLAND FCIA FINNVERA FCIA Management Company, Inc Finnvera Plc

FCIA Management Company, Inc. (FCIA) and its associated Specialised financing company Finnvera has two roles in the organisation, the Foreign Credit Insurance Association, have Finnish economy: it is the official Finnish export credit guarantee provided trade credit and political risk insurance since 1961. FCIA, a agency (ECA) offering a full range of export credit guarantee whollyowned subsidiary of Great American Insurance Company products to promote exports and internationalisation of (GAIC) since 1991, underwrites and services Great American’s broad enterprises, and a domestic risk financier promoting the activities line of trade credit and political risk insurance products, offering of small and medium-sized companies. Finnvera’s subsidiary FEC both cancellable and non-cancellable limit policy options. GAIC is offers interest rate equalisation at CIRR rates, and can fund export the insurer on policies underwritten by FCIA and is rated A+ by S&P. credits arranged by commercial banks. All services are available through Finnvera’s Export Financing Unit. General information FCIA General information 125 Park Avenue, 14th floor Finnvera New York, NY 10017 PO Box 1010 United States Eteläesplanadi 8 +1 212 885 1500 Helsinki, 00101 www.fcia.com Finland [email protected] +354 204 6011 www.finnvera.fi History bu-finnvera@finnvera.fi Founded: 1961 (Foreign Credit Insurance Association) Ownership: Great American Insurance Company History Founded: 1963 Senior management Ownership: 100% state-owned Lindley M Franklin, President & CEO Philip J Lally, Executive Vice-President, [email protected] Senior management Pauli Heikkilä, Chief Executive Officer Carol G McEvoy, Senior Vice-President – General Counsel Topi Vesteri, Executive Vice-President, Export Financing Kenneth J Cavanagh, Senior Vice-President Pekka Karkovirta, Vice-President, International Relations, Pekka.Karkovirta@finnvera.fi Contact person(s) Lindley M Franklin, President & CEO Tuukka Andersén, Vice-President, Head of Underwriting, tuukka.andersen@finnvera.fi Nasrin D Nourizadeh, Vice-President – Business Development [email protected] Raija Rissanen, Vice-President, Research, raija.rissanen@finnvera.fi

Contact person(s) Major facilities Pekka Karkovirta, Vice-President, International Relations, ✓ Trade Credit Insurance for Companies: Insurance against non- Pekka.Karkovirta@finnvera.fi payment of accounts receivable. Coverage for multiple buyers or single buyers, export and/or domestic sales, pre-shipment and post-shipment risks, short term and medium term tenors. Major facilities ✓ Trade Financing Insurance for Financial Institutions: Coverage ✓ Export credit insurance: for confirmation of LCs issued by foreign banks, – Cover for credit and pre-credit risks against commercial and import/export/pre-export financings, purchased receivables political risks and trade payables financings. – Short-term credit insurance ✓ Political Risk Insurance: Coverage for contract frustration, – Medium and long term insurance for supplier and buyer credit wrongful calling of advance payment and other bonds and transactions including project finance investor losses on foreign assets caused by confiscation, ✓ Investment insurance: Cover provided against political risks expropriation, nationalisation, political violence and other perils ✓ Bonds and guarantees: Counter security for banks on behalf of customised to meet transaction requirements. Policy periods exporter (fair calling of the bond) and risk insurance for up to seven years. exporter (unfair calling of the bond or calling of the bond due to political reasons) ✓ Interest rate equalisation and financing of export credits via Finnish Export Credit Ltd (FEC)

114 Berne Union 2014

NORWAY BERMUDA GIEK HISCOX DIRECTORY Garantiinstituttet for eksportkreditt Hiscox

GIEK promotes exports of Norwegian goods and services, and Hiscox, headquartered in Bermuda is a specialist insurer, Norwegian investments abroad. GIEK issues guarantees and underwriting a particular range of personal and commercial risks. insurances on behalf of the Norwegian government. Our focus gives us two significant and distinctive advantages. First, we can often insure risks other companies find too complex or General information unusual to cover; second, we can tailor policies very closely to the GIEK individual customer’s requirements. This combination of selectivity Mailing and exceptional expertise has, over the course of a century, driven PO Box 1763 Vika, 0122 Oslo us from a single underwriter based at Lloyd’s into a FTSE 250 company with offices in 11 countries and customers around the Visiting world. Dronning Mauds gate 15 Oslo, 0122 General information Norway HISCOX +47 22 87 62 00 1 Great St Helens www.giek.no London, EC3A 6HX [email protected] United Kingdom [email protected] +44 (0)20 7448 6617 www.hiscox.com History Founded: 1929 History Ownership: GIEK is an independent governmental enterprise. Founded: 1901 Ownership: Public Limited Company Senior management Wenche Nistad, CEO, [email protected] Senior management Øyvind Ajer, Director Underwriting, Deputy CEO, [email protected] Robert Childs, Chairman Johna E. Mowinckel, Director, Market Analysis and International Bronek Masojada, Chief Executive Relations, [email protected], Stuart Bridges, Group Finance Director Ulla Wangestad, Legal Director, [email protected] Richard Watson, Chief Underwriting Officer Elizabeth Lee Marinelli, Director, Credit and Risk Management, Russell Merrett, Managing Director, Active Underwriter [email protected] Syndicate 33 Cay Bakkehaug, CFO, [email protected] Contact person(s) Victoria Padfield, Political Risk Underwriter, Contact person(s) [email protected] victoria.padfi[email protected] +47 22876200 Major facilities We offer insurance protection for trade finance, commodity Major facilities ✓ Cover for credit and pre-credit risks finance, export finance and other structured credit transactions. ✓ Investment insurance Cover can be tailor made to add pre-shipment perils and the ✓ Counter guarantees for bonds unfair calling of on demand bonds. We also cover investment ✓ Working capital scheme for ships and devices at sea insurance and political violence including war and terrorism. ✓ Short-term credit insurance is carried out by our subsidiary: GIEK Kredittforsikring AS tel: +47 46 87 20 00 visiting Rådhusgata 25 0158 Oslo Norway fax: +47 22 83 73 58 [email protected] www.giekkreditt.no

115 Berne Union 2014

HONG KONG MULTILATERAL HKEC ICIEC ✦ Hong Kong Export Credit Insurance The Islamic Corporation for the Insurance of Corporation Investment and Export Credit

The Hong Kong Export Credit Insurance Corporation (HKEC) was ICIEC, Aa3 rated is a member of the IDB Group. Established in created by statute in 1966 to protect Hong Kong exporters against August 1994 as an international institution with full juridical non-payment risks arising from commercial and political events. Its personality, ICIEC’s objective is to increase the scope of trade contingent liability under contracts of insurance is guaranteed by transactions from OIC member countries, and to facilitate foreign the Government of the Hong Kong Special Administrative Region, direct investment into these countries by providing export credit with the statutory maximum liability currently standing at and investment insurance/ reinsurance facilities to its customers in HK$40bn. member countries. HKEC provides a wide range of insurance facilities covering export General information of goods and services on credit periods up to 180 days. HKEC also ICIEC provides tailor-made facilities to cater for the varying needs of PO Box 15722 different export sectors. For export of capital goods, HKEC may Jeddah, 21454 offer medium and long-term cover for credit periods up to five Saudi Arabia years or beyond. +966 2 644 5666 www.iciec.com General information [email protected] HKEC 2/F, Tower 1, South Seas Centre History 75 Mody Road, Tsimshatsui East Founded: 1994 Kowloon Ownership: The authorised capital of ICIEC is US$620mn, Hong Kong subscribed by the Islamic Development Bank (IDB) and 40 +852 2723 3883 member countries of the Organisation of the Islamic Conference www.hkecic.com (OIC). [email protected] Senior management History Dr Ahmed Mohamed Ali, Chairman of the Board Founded: 1966 Ownership: A statutory corporation under the Government of the Dr Abdel-Rahman El -Tayeb Taha, Chief Executive Officer Hong Kong Special Administrative Region Khemais El-Gazzah, Chief Operating Officer , [email protected] Muhammad Azam Arif, Director, Accounts and Finance Senior management Ralph Lai, Commissioner, [email protected] Adil A. Babiker, Director Legal Affairs Cynthia Chin, General Manager Contact person(s) Walter Tse, Deputy General Manager Eng. Yasser Alaki, Acting Director, Business Development Dept., Amy Wai, Deputy General Manager [email protected] Iyria Fan, Deputy General Manager Mourad Mizouri, Acting Head of Customer Relations Division, [email protected] Contact person(s) Jamel Eddine Naga, Head of Promotion & International Relations Amy Wai, Deputy General Manager Unit, [email protected]

Major facilities Major facilities ✓ Export credit insurance (supplier credit) ICIEC provides the following facilities in accordance with the ✓ Short-term (up to one year) / Medium and long-term (over principles of shariah: one year) cover: commercial and political risks; pre-shipment ✓ Export credit insurance: ICIEC offers services to exporters and and post-shipment cover. banks in ICIEC member countries for both short-term and medium-term (up to seven years) covering commercial and political risks. ✓ Foreign investment insurance: ICIEC offers cover to investors and financiers of the projects from anywhere in the world to invest into ICIEC member countries. ✓ Reinsurance services: ICIEC offers reinsurance services to ECAs and commercial insurance companies in ICIEC member countries and can also participate with international ECAs.

✦ Member of The Prague Club

116 Berne Union 2014

KOREA POLAND KSURE KUKE ✦ DIRECTORY Korea Trade Insurance Corporation Export Credit Insurance Joint Stock Company

Korea Trade Insurance Corporation (K-sure) was established in July Export Credit Insurance Corporation Joint Stock Company (KUKE 1992 as the official export credit agency of Korea pursuant to the S.A.) is the official export credit agency of the Republic of Poland, Export Insurance Act of 1968 with the mission to support exports, which, on the basis of the Act on export insurance guaranteed by thereby contribute to the national economy. Under the supervisory the State Treasury, administers officially supported export authority of the Ministry of Knowledge Economy, K-sure protects insurance scheme. KUKE S.A.’s mission is to support exporters and Korean business in their export and overseas investment activities institutions financing supplies of Polish goods and services, by through its export credit insurance, overseas investment insurance, providing insurance and guarantees that allow Polish exporters to credit guarantees and various other programmes and services. win foreign markets and to provide efficient and tailor-made service for them. KUKE S.A. also provides standard cover for short- General information term export and domestic receivables on the company’s own KSURE account. 14, Jongno, Jongno-gu Seoul, 110-729 General information Korea KUKE +82 2 399 6800/6801 39 Sienna Street www.ksure.or.kr Warsaw, 00-121 Poland History +48 22 35 68 300 Founded: 1992 www.kuke.com.pl Ownership: 100% state-owned [email protected]

Senior management History Kim Young-hak, Chairman & President Founded: 1991 Son Tae-ho, Auditor Ownership: The State Treasury represented by the Minister of Finance – 87.85%, State Economy Bank – 12.15% Kwon Moon-hong, Vice President Senior management Contact person(s) Dariusz Poniewierka, President, [email protected] Baek Seung-taek, Head of International Relations Jan Czerepok, Vice-President [email protected] Aleksandra Hanzel, Vice-President Park Sung-hyun, Manager, [email protected]

Contact person(s) Major facilities Agnieszka Zoltowska, Chief Expert, [email protected] ✓ Export credit insurance: Short-term (up to two-years) cover, Medium and long-term (over two years) ✓ Working capital guarantee Major facilities ✓ Investment insurance: Cover offered: transfer; war ✓ Export credit insurance expropriation breach of contract. ✓ Short-term cover: marketable and non-marketable risk ✓ Bonds and guarantees: Bid Bond; AP Bond; P Bond etc. ✓ Medium and long-term cover: supplier credit and buyer credit facilities ✓ Investment insurance ✓ Bonds and guarantees ✓ Domestic credit insurance

117 Berne Union 2014

MALAYSIA MULTILATERAL MEXIM MIGA Export-Import Bank of Malaysia Berhad Multilateral Investment Guarantee Agency

Eximbank of Malaysia provides insurance, guarantee and financing MIGA, a member of the World Bank Group, was established to facilities to Malaysian exporters and investors as well as foreign promote foreign direct investment into emerging economies to buyers of Malaysian products and services. Eximbank of Malaysia improve people’s lives and reduce poverty. MIGA encourages has various financing programmes providing short- to long-term investment by providing investors and lenders protection against credit to help promote Malaysian exports. non-commercial risks through its political risk insurance. MIGA has issued over US$27bn in guarantee coverage in more than General information MEXIM 100 developing member countries. MIGA can cover equity Export-Import Bank of Malaysia Berhad Aras 1, Exim Bank Jalan investments, shareholder loans, shareholder loan guaranties, and Sultan Ismail P.O.Box 13028 non-shareholder loans. Investment projects must be financially and Kuala Lumpur, 50250 economically viable and meet MIGA’s social and environmental Malaysia performance standards. +603 26012000 www.exim.com.my General information [email protected] MIGA World Bank Group, 1818 H Street Washington D.C., 20433 History Founded: 1977 (MECIB) United States Ownership: 100% owned by the Ministry of Finance +1 202 458 2538 www.miga.org [email protected] Senior management Datuk Mohd Hashim b Hassan, Chairman, [email protected] History Dato' Adissadikin Ali, MD/CEO, [email protected] Founded: 1988 Mr Wan Zalizan Wan Jusof, Chief Operating Officer, Ownership: MIGA is owned by 179 member countries. [email protected] Ms Norzilah Mohammed, Chief Risk Officer, Senior management [email protected] Izumi Kobayashi, Executive Vice President Mr Chairil Mohd Tamil, Chief Business Officer, Michel Wormser, Vice-President and Chief Operating Officer [email protected] Ana-Mita Betancourt, Director and General Counsel, Legal Affairs Mr Aminuddin Bashah, Chief Credit Officer and Claims [email protected] Kevin Lu, Regional Director, Asia Pacific Ms Norlela Sulaiman, Chief Financial Officer, Edith Quintrell, Director of Operations, [email protected] [email protected] Lakshmi Shyam-Sunder, Director of Finance and Risk Management Contact person(s) Ravi Vish, Director and Chief Economist, Economics and Policy Mr Hairul Nizam, Vice President, [email protected] Marcus Williams, Chief, Strategy, Communications & Partnerships Ms Zabedah Giw, Assist Vice President, [email protected] Ms Lee Kim Tuan, Senior Manager, [email protected] Contact person(s) Marc Roex, Head Reinsurance, [email protected] Major facilities ✓ Export credit insurance: Major facilities – Short-term (up to one-year) cover: Commercial and political Through its investment guarantees, MIGA offers protection for risks; pre-shipment cover; credit and domestic cover. cross-border investments against the following non-commercial – Medium/long-term (over one year): Supplier and buyer credit risks: facilities; line of credit. ✓ transfer restriction; expropriation; ✓ Project finance: Special project finance facility. ✓ war and civil disturbance; breach of contract; and ✓ Investment insurance: Cover: conversion/transfer cover; war ✓ non-honoring of sovereign financial obligations. and civil disturbance; expropriation/confiscation; breach of contract by host government. ✓ Bonds and guarantees: Cover: conversion/transfer cover; war and civil disturbance; expropriation/confiscation; breach of contract by host government.

118 Berne Union 2014

JAPAN LUXEMBOURG NEXI ODL DIRECTORY Nippon Export and Investment Insurance Luxembourg Export Credit Agency

Nippon Export and Investment Insurance (NEXI) is an incorporated The ODL, Luxembourg’s one-stop shop for exporters, is designed administrative agency formed on April 1, 2001 under the Trade and to support Luxembourg exporters while trading internationally, Investment Insurance Act. mainly by providing credit insurance schemes for exports, imports and investments abroad. NEXI was launched as a successor to the trade and investment insurance administered by the Japanese government, although as Since the co-operation agreement of April 29, 2002 between the the authority the government (Ministry of Economy, Trade and ODL and the Luxembourg Government, establishing the COPEL Industry) retains ultimate responsibility. (Comité pour la promotion des exportations luxembourgeoises), the ODL supports Luxembourg exports by means of a partial NEXI commits itself to contributing to the economy and society of contribution in the promotion, exhibition and export training Japan through efficient and effective insurance business expenses. operations. NEXI does this by responding precisely to customers’ needs with a quick perception of market changes and by Furthermore, the ODL performs its assignment of supporting underwriting the risks inherent in international transactions that Luxembourg exports in participating in external trade instruments cannot be adequately protected by conventional insurance. such as « Luxembourg for Business ».

General information General information Nippon Export Investment Insurance (NEXI) ODL Chiyoda First Building, East Wing 3rd Floor Mailing Address: 3-8-1, Nishi- Kanda 7, rue Alcide de Gasperi Chiyoda-ku 7L-2981 Tokyo, 101-8359 Luxembourg Japan +813 3512 7665 Visiting Address: www.nexi.go.jp 7, rue Alcide de Gasperi [email protected] L-1615 Luxembourg History +35 2 42 39 39 320 Founded: 2001 www.odl.lu Ownership: 100% state-owned [email protected]

Senior management History Kazuhiko Bando, Chairman and CEO, [email protected] Founded: 1961 Keiji Wada, Vice Chairman, [email protected] Ownership: The ODL is an autonomous public institution

Fuminori Inagaki, Vice Chairman, [email protected] Senior management Etienne Reuter, President Contact person(s) etienne.reuter@fi.etat.lu, +35 224782605 Manami Hori, Assistant Director, Strategic Planning Group [email protected] Contact person(s) Simone Joachim, Secretary General Major facilities [email protected], +35 2423939342 ✓ Export credit insurance: Insurance for export, intermediary trade, and technical cooperation, Insurance for export of Major facilities licences, Insurance for loans (buyer’s credit) ✓ Export credit insurance (short, medium and long-term) ✓ Insurance for project finance: Special project financing ✓ Foreign investment insurance facilities. ✓ Investment insurance and untied loan insurance: Cover offered: Other activities: conversion/transfer cover; war and civil war cover; ✓ Promotion of Luxembourg exports by financial supports expropriation/confiscation cover; force majeure events cover; through the COPEL (Committee for the promotion of breach of contract cover. Luxembourg exports) on behalf of the Ministry for Foreign ✓ Bonds and guarantees: Cover against unfair calling. Trade.

119 Berne Union 2014

AUSTRIA USA OeKB OPIC Oesterreichische Kontrollbank Overseas Private Investment Corporation Aktiengesesllschaft

OeKB is a joint stock company providing export-related services OPIC accomplishes its mission by assisting US investors through and carrying out capital market activities. In the field of export four principal activities designed to promote overseas investment credit and investment insurance, OeKB operates on the and reduce the associated risks: insuring investments against a government’s account as agent of the Republic of Austria, covering broad range of political risks; financing business through loans and non-marketable risks only. loan guarantees; financing private investment funds; and advocating the interests of the American business community. The refinancing facilities offered to financial institutions are operated on OeKB’s own account. ST credit insurance (up to 24 General information months) is carried out by the private credit insurers OeKB Overseas Private Investment Corporation (OPIC) Versicherung AG and PRISMA Versicherungs-AG (both 51% 1100 New York Avenue, NW subsidiaries of OeKB). OeKB also holds a majority stake in Washington, DC 20527-0001 Österreichischer Exportfonds GmbH and 100% of Oesterreichische United States Entwicklungsbank AG (OeEB) which acts as the official +1 202 336 8400 development bank of Austria, mandated by the Austrian www.opic.gov Government. History General information Founded: 1971 OeKB Ownership: 100% state-owned. The Corporation is governed by a Am Hof 4 15-member Board of Directors, of whom eight are appointed from Vienna, A-1011 the private sector and seven from the Federal government. Austria +43 1 531 27 0 Senior management www.oekb.at Elizabeth L. Littlefield, President & CEO [email protected] Elizabeth.Littlefi[email protected], +1 202-336-8400 John E. Morton, Chief of Staff History Founded: 1946 [email protected], +1 202-336-8400 Ownership: Commercial banks Paula Tufro, Deputy Chief of Staff [email protected], +1 202-336-8400 Senior management Barbara K. Day, Acting Vice President & General Counsel Rudolf Scholten [email protected], +1 202-336-8400 Member of the Board of Executive Directors [email protected] Allan Villabroza, Vice President and Chief Financial Officer [email protected], +1 202-336-8400 Angelika Sommer-Hemetsberger Member of the Board of Executive Directors James C. Polan, Vice President, SME Finance [email protected] [email protected], +1 202-336-8400 Sylvia Doritsch-Isepp, Director, Head of International Relations William R. Pearce, Acting Vice President, Investment Funds and Services Department [email protected], +1 202-336-8400 [email protected] John F. Moran, Vice President, Insurance Ferdinand Schipfer, Director, Head of Project Underwriting [email protected], +1 202-336-8400 Department Margaret L. Kuhlow, Vice President, Investment Policy [email protected] [email protected], +1 202-336-8400 Judith D. Pryor, Vice President, External Affairs Contact person(s) [email protected], +1 202-336-8400 Sylvia Doritsch-Isepp, Director, Head of International Relations and Services Department Contact person(s) [email protected] Diane Ferrier, BUAdmin [email protected], +1 202-336-8596 Major facilities John F. Moran, Vice President, Insurance ✓ Export credit insurance for capital goods: Multiple or single [email protected], +1 202-336-8674 transactions; supplier and buyer credits; commercial and political risks; pre-shipment and credit risks. Steven L. Johnston, Managing Director, Political & Sovereign Risk ✓ Project finance: Special project finance facility. [email protected], +1 202-336-8778 ✓ Investment insurance: Cover offered against risk of Cindy Shepard, Assistant General Counsel, Insurance expropriation/confiscation; war and civil war as well as non- [email protected], +1 202-336-8435 conversion/non-transfer. JoAnn Young, Office Manager ✓ Bonds and guarantees: Cover against unfair calling. [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/confiscation cover (including non-payment of arbitral award), denial of justice, breach of contract and non-honoring of a sovereign guaranty. ✓ Bonds and guarantees: Cover against unfair calling and 120 disputes Berne Union 2014

ITALY GERMANY DIRECTORY PwC SACE PricewaterhouseCoopers AG Sace

Since 1959, PricewaterhouseCoopers AG Wirtschaftsprüfungs - Founded in 1977, SACE holds more than 30 years of experience in gesellschaft, together with Euler Hermes Aktiengesellschaft, has the field of export credits. In 2004, it was converted into a private been entrusted by the German Federal Ministry for Economic joint-stock company, wholly-owned by the Italian Ministry of Affairs and Energy with administering the federal government’s Economy and Finance (MEF). In 2012, CDP became SACE’s sole Overseas Investment Insurance Scheme. For this purpose the two shareholder. companies entered into a consortium under the lead management of PwC. PwC is one of the leading auditing and consultancy SACE’s main mission is to promote Italian exports and investments, companies in Germany and an independent member of the as well as to contribute to the internationalisation of the Italian international PwC network. economy and projects of strategic importance for the country. Today, SACE offers a complete range of insurance and financial General information products in over 180 countries. It is part of an insurance and Pricewaterhouse Coopers AG (PwC) financial group active in export credit, credit insurance, investment New-York-Ring 13 protection, financial guarantees, sureties and factoring. Hamburg, 22297 Germany General information +49 40 8834 9451 SACE www.agaportal.de Piazza Poli 37/42 [email protected] Rome, 00187 Italy History +39 06 67 361 Founded: 1922 www.sace.it Ownership: Senior Management (Partners), 100% [email protected]

Senior management History Prof. Dr. Norbert Winkeljohann, Chairman Founded: 1977 Ownership: Cassa Depositi e Prestiti (CDP) Dr. Andreas Klasen, Partner Senior management Contact person(s) Alessandro Castellano, Chief Executive Officer Dr. Andreas Klasen, Partner Raoul Ascari, Chief Operating Officer [email protected] +49 40 8834-9500 Roberto Taricco, Chief Financial Officer Nicole Haubold, Senior Consultant [email protected] Contact person(s) +49 40 8834-9462 Michal Ron, Head of International Relations and Network

Major facilities Major facilities ✓ Investment insurance: conversion/transfer cover, war/civil war ✓ Export credit insurance: Pre-shipment and credit cover for cover, expropriation/confiscation cover and breach of host political and commercial risks to protect companies against country commitments the risk of non-payment of foreign counterparties. ✓ Project finance: Structured and project finance facilities. Political risk insurance and investment protection: Cover against losses due to political risk for overseas investments of Italian 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 payment bonds etc.) or through direct issuance. ✓ Financial guarantee: Financial guarantee products support the internationalisation of Italian companies and banks (e.g. direct investment abroad, M&A, working capital, cross-border “bank to bank” financing and SMEs portfolio) as well as transactions of strategic relevance to the Italian economy.

121 Berne Union 2014

BRAZIL SWITZERLAND SBCE SERV Brazilian Export Credit Insurance Agency Swiss Export Risk Insurance

SBCE offers a modern instrument aimed at supporting Brazil in the SERV extends insurance coverage to Switzerland’s exporters from international market. We provide constant analysis of importers, all industries and to financial institutions. In addition to consumer worldwide collection, indemnification and loan guarantees. In MLT and capital goods exports, it also insures various services, such as transactions, the policies are characterised by maturities that construction and engineering projects and licence and know-how exceed two years and, in general, are related to projects involving agreements. As an institution of the Swiss Confederation under capital goods, services and other specific contracts. Brazilian public law, SERV’s activities focus exclusively on areas of the credit Federal resources cover these transactions, through the FGE – insurance market that are not served by private insurers or only to Fundo de Garantia à Exportação (Export Guarantee Fund). SBCE a limited degree. SERV’s main objective is to create and preserve acts on behalf of the state, responding for all the technical analysis Swiss jobs and to help Switzerland’s export industry to compete and management of policies. successfully around the world.

General information General information SBCE SERV Av. Rio Branco, nº1, 9º B Zeltweg 63 Rio de Janeiro, CEP: 20090-003 Zurich, 8032 Brazil Switzerland +55 21 2510 5000 +41 58 551 5555 www.sbce.com.br www.serv-ch.com [email protected] [email protected]

History History Founded: 1997 Founded: 2007 Ownership: Coface, Banco do Brasil, BNDES. Ownership: Institution of the Swiss Confederation under public law Senior management Vitor Sawczuk, Head of Business Underwriting Senior management [email protected] Herbert Wight, Director, [email protected] Rodrigo Albanesi, Head of Risk Management and Pricing, Claudio Franzetti, Head of Finance & Risk Management / Deputy [email protected] Director, [email protected] Jeanine Sá, Head of Legal Department [email protected] Contact person(s) Christoph Bossart, Head of International Relations & Projects, [email protected], +41 58 551 5547 Contact person(s) Pedro Carriço, International Relations Verena Uztinger, Senior Relationship Manager, [email protected] [email protected], +41 58 551 5515

Major facilities Major facilities ✓ Export credit insurance: ✓ Export credit insurance – supplier or buyer credit cover – MLT cover: commercial and political risks ✓ Letter of credit confirmation insurance – Percentage of cover for commercial risks: up to 95%. In the ✓ Pre-shipment risk insurance case of commercial risk transactions which hold a bank ✓ Working capital insurance guarantee issued by acceptable financial institution, the ✓ Contract bond insurance and counter-guarantee percentage of cover may rise to up to 100%. Percentage of ✓ Refinancing guarantee cover for political risks: up to 100%. ✓ Project finance cover – Supplier and buyer credit cover – Structured and project finance

122 Berne Union 2014

SLOVENIA CHINA SID ✦ SINOSURE DIRECTORY SID Inc, Ljubljana China Export & Credit Insurance Corporation

SID Bank is the legal successor of Slovene Export Corporation and China Export & Credit Insurance Corporation (SINOSURE) is a operates as an export and development bank and as a national state-funded policy-oriented insurance company with independent export credit agency (ECA) performing insurance against non- status of legal person, established for promoting China’s foreign marketable risks. By assisting clients in all phases of business trade and economic co-operation. SINOSURE’s service network transactions, supporting development projects, ensuring safety in comprises 24 business offices nationwide and an overseas internationalisation of operations and providing all modern financial representative office in London, UK. services in one place, SID Bank encourages Slovene companies to exploit the opportunities of opening up in the international General information economic environment. Sinosure North Wing SID Bank subsidiaries are SID – First Credit Insurance Company Inc., Fortune Times Building Ljubljana, offering short-term credit insurance against marketable No 11 Fenghuiyuan risks, Pro Kolekt, a debt collection agency, and Prvi Faktor providing Xicheng District, factoring services. Beijing, 100033 China General information +86 10 6658 2288 SID www.sinosure.com.cn Ulica Josipine Turnograjske 6 [email protected] Ljubljana, SI-1000 Slovenia History +386 1 200 7500 Founded: 2001 www.sid.si Ownership: State-owned [email protected] Senior management History Wang Yi, Chairman Founded: 1992 Ownership: 100% state-owned Luo Xi, President, [email protected] Chen Zuofu, Chairman of Board of Supervisors Senior management Liu Yongxin, Vice President Sibil Svilan, President of the Management Board & CEO Nie Qingshan, Vice President Jožef Bradeško, Member of the Management Board Zhang Weidong, Vice President Zha Weimin, Assistant President Contact person(s) Vida Zabukovec, Company Secretary Yin Yanhui, Assistant President [email protected] Xie Zhibin, Assistant President

Major facilities Contact person(s) ✓ Export credit insurance: ST/MLT commercial and non- Sun Yifeng, Division Manager, Berne Union Division commercial non-marketable risks, pre/post-shipment cover International Department, [email protected] ✓ Investment insurance: Conversion/transfer risk, expropriation/confiscation risk, war/civil unrests, breach of Zhu Lei, Berne Union Division, International Department contract, denial of justice, catastrophic risk, commercial risk [email protected] ✓ Cover of bonds Li Yifan, Berne Union Division, International Department ✓ Financing: Supplier/buyer credits and credit lines; financing [email protected] exports, SMEs, environmental protection, research, sustainable Wan Haoyun, Berne Union Division, International Department development projects, etc. [email protected]

✦ Member of The Prague Club Major facilities ✓ Export credit insurance ✓ Investment insurance ✓ Domestic trade credit insurance ✓ Bond and guarantee ✓ Debt collection service ✓ Credit rating service

123 Berne Union 2014

SRI LANKA BERMUDA SLECIC SOVEREIGN RISK Sri Lank Export Credit Insurance Corporation Sovereign Risk Insurance Limited

The Sri Lanka Export Credit Insurance Corporation (SLECIC) was Sovereign Risk Insurance Ltd is one of the world’s leading providers established by Act No 15 of 1978 and commenced operations on of medium/long-term political risk insurance and sovereign credit February 8, 1979. The main objective of SLECIC is to provide insurance for commercial banks, investment banks, capital markets support services of export credit insurance and guarantees for the and equity investors. Sovereign is also very active in supporting development of exports from Sri Lanka. SLECIC’s comprehensive ECAs and multilateral agencies with coinsurance and reinsurance. export credit solutions help exporters to compete in more than 100 countries including high-risk and emerging markets. General information Sovereign Risk Insurance Ltd General information 17 Woodbourne Avenue SLECIC Hamilton, HM 08 Level 4, DHPL Building Bermuda Export Guarantee House, No 42 +1 441 296-4279 Nawam Mawatha www.sovereignbermuda.com Colombo 2 [email protected] Sri Lanka +94 11 5378161 65 or History +94 11 4883561 64 Founded: 1997 www.slecic.lk Ownership: ACE Bermuda Insurance Ltd (AA- S&P; Aa3 Moody’s; [email protected] AA Fitch), a wholly-owned subsidiary of ACE Limited (AA- S&P; [email protected] AA Fitch)

History Senior management Founded: 1978 Price Lowenstein, President & CEO Ownership: Government-backed export credit agency [email protected] Christina Westholm-Schroder, Vice-President & Chief Underwriter, Senior management [email protected] Mr Priyantha Mendis Devaradura, Chairman & Managing Director Barker Keith, Vice-President & Corporate Counsel [email protected] Contact person(s) Dilruk Ranasinghe, General Manager Natalie Luthi, Vice-President & Senior Underwriter [email protected] Major facilities Nila Davda, Vice-President & Senior Underwriter ✓ Export credit insurance (seller’s risk): Short-term (up to 180 [email protected] days) cover against commercial and political risks. Whole Sophie Demeyer, Vice-President & Senior Underwriter turnover and specific insurance policies. Tailor-made insurance [email protected] policies where cover available for export of services, entrepot trade and consignment stocks as well. Justin Willmott, Vice-President Underwriter ✓ Export credit guarantees: Whole turnover credit guarantees [email protected] (WTG) that underwrite the entire short-term export finance Allison Petty, Asst V.P. & Underwriter portfolios of commercial banks. Individual export production [email protected] credit guarantees and pre and post-shipment credit guarantees to enable exporters to obtain working capital from banks. Credit guarantees to banks that enable migrant workers Contact person(s) Christina Westholm-Schroder, Chief Underwriter, to obtain pre-departure loans from banks (APARA). [email protected] ✓ Export performance guarantees: Counter-guarantees to banks +1 441 298-8055 on account of exporters covering bid bonds, performance bonds etc. Demand guarantees to the International Chamber of Commerce of Sri Lanka (ICC) covering the ATA Carnet Major facilities System. Demand counter-guarantees to banks on account of ✓ Investment Insurance: Currency inconvertibility, non-transfer freight forwarders covering their commitments to airlines. and expropriation of funds, political violence, expropriatory ✓ Other services: Providing financial status reports to actions (direct and creeping), breach of contract, wrongful commercial banks (Bizinfo).Debt collection service. calling of on-demand guarantees, license/concession cancellation, embargo and other customized political risks. Maximum line per project: US$80mn; maximum tenor: 15 years. ✓ Sovereign and Sub-Sovereign Non-Payment: Non-payment by sovereign and sub-sovereign borrowers, and non-honoring of sovereign and sub-sovereign guarantees. Maximum line per project: US$80mn; maximum tenor: 15 years.

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CHINESE TAIPEI THAILAND TEBC THAI EXIMBANK ✦ DIRECTORY Taipei Export-Import Bank of China Export-Import Bank of Thailand

TEBC is the official export credit agency of Chinese Taipei. The Export-Import Bank of Thailand (THAI EXIMBANK) is a financial bank’s mission is to promote economic development and enhance institution wholly-owned by the Royal Thai Government under the international co-operation. TEBC’s operations are, amongst others, supervision of the Ministry of Finance. The bank’s main objective is to assist local firms in expanding external trade, and to engage in to serve the financial needs of Thai exporters, Thai investments overseas investments. It does not compete with commercial banks overseas, and other businesses earning or saving foreign exchange. in providing financial services. TEBC offers financial solutions to THAI EXIMBANK provides financial services customary to facilitate the export of capital goods and services, overseas commercial bank practices, except for accepting deposits from the investments, etc. These financial solutions include export credit general public. insurance and overseas investment insurance since 1979. These insurance services are used to protect exporters against General information commercial and political risks. TEBC has also offered loans or THAI EXIMBANK guarantees on short-term, medium and long-term basis. 1193 Exim Building, Phaholyothin Rd Phayathai General information Bangkok, 10400 TEBC Thailand Head Office, 8th Floor +662 271 3700, +662 278 0047, +662 617 2111 No 3, Nanhai Road www.exim.go.th Chinese Taipei [email protected] China +886 2 2321 0511 History www.eximbank.com.tw Founded: 1993 [email protected] Ownership: Royal Thai Government 100%

History Senior management Founded: 1979 Kanit Sukonthaman, President Ownership: 100% government-owned

Senior management Contact person(s) Yen Chrystal Shih, Chair of the Board of Directors Jarupat Panitying, First Vice-President, Export Credit Insurance Robert RF Chu, President Department, [email protected] Shui-Yung Lin, Executive Vice-President Worawara Bunnag, Vice-President, Export Credit Insurance Department Jack Huang, Executive Vice-President Chattip Virasa, Assistant Vice-President, Export Credit Insurance Johnson C.C. Liao, SVP and General Manager Department Export Credit Insurance Department

Major facilities Contact person(s) ✓ Financial services similar to those offered by commercial Tzuu-Wang Hu, VP and Deputy General Manager banks: Export Credit Insurance Department – Revolving credits for exports – Negotiation of export bills Major facilities – Term loan for business expansion ✓ Export credit insurance: Short-term (up to one-year)/medium ✓ Other specialised financial facilities to support Thai exporters and long-term cover: Commercial and political risks. or investors investing abroad: ✓ Investment insurance: Conversion/transfer cover; war and civil – Export credit insurance war cover; expropriation/confiscation cover. – Short-term (less than 180 days) ✓ Export finance: As direct lender; short-term, medium and long- – Medium and long-term (up to five years) term export finance. – Investment insurance ✓ Guarantees: Bid bonds; performance bonds; bonds/guarantees – Merchant marine financing issued.

✦ Member of The Prague Club

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TURKEY UNITED KINGDOM TURK EXIM UKEF Export Credit Bank of Turkey UK Export Finance

Turk Eximbank was founded in 1987 by the restructuring of the UK Export Finance is the UK’s export credit agency. As a State Investment Bank (SIB). Today, Turk Eximbank is the only government department (formally named the Export Credits official export credit agency of Turkey, leading the country’s export Guarantee Department) that operates under an act of parliament, drive. The Board members and the CEO are appointed by the it complements the private market by providing government government. The political risk losses that Turk Eximbank may incur assistance to exporters and investors, principally in the form of under its credit, guarantee and insurance programmes are insurance policies and guarantees on bank loans. compensated by the government. General information Commercial risks are covered for Turk Eximbank’s own account and UK Export Finance both commercial and political risks are partially reinsured 1 Horse Guards Road concerning short-term credit insurance business. London, SW1A 2HQ United Kingdom General information +44 20 7512 7000 TURK EXIMBANK www.gov.uk/government/organisations/uk-export-finance Saray Mah. Üntel Sok. No:19 [email protected] Ümraniye / İSTANBUL, 34768 Turkey History +90 (216) 666 55 00 Founded: 1919 www.eximbank.gov.tr Ownership: UK government

History Senior management Founded: 1987 David Godfrey, Chief Executive Ownership: 100% owned by the Treasury of the Republic of [email protected] Turkey

Senior management Contact person(s) Hayrettin Kaplan, General Manager Simon Foister, Senior International Policy Advisor, [email protected] [email protected] Frank Gough, International and Strategy Manager, [email protected] Contact person(s) Enis Gültekin, Deputy General Manager [email protected] Major facilities ✓ Buyer credit facility ✓ Supplier credit financing facility Major facilities ✓ Export Credit Insurance: Short-term (up to one year) cover: ✓ Lines of credit commercial and political risks; pre and post shipment cover. ✓ Project financing ✓ Medium and long-term (over one year) cover: commercial and ✓ Export insurance policy political risks; pre and post shipment cover. ✓ Bond insurance policy ✓ Domestic Credit Insurance: Short-term (up to one year): ✓ Overseas investment insurance commercial risks, post shipment cover. ✓ Letter of credit guarantee scheme ✓ Project Loans: Project loans extended to various countries for ✓ Bond support scheme capital goods exports and turn-key contracts of Turkish ✓ Export working capital scheme companies. Domestic Investment Loans for export-oriented ✓ Foreign exchange credit support scheme. projects ✓ Export Finance: As direct lender; pre-shipment finance; working capital facility, various special-purpose facilities and foreign exchange earning services. ✓ Bonds and Guarantees: Bonds/guarantees issued. Unfair calling of bond insurance cover is available.

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USA USA US EXIMBANK ZURICH DIRECTORY Export-Import Bank of the United States Zurich Surety, Credit & Political Risk

The official ECA of the United States supports US jobs by financing Zurich Credit & Political Risk is a global political risk and credit the export of US goods and services. The bank does not compete insurance business based in Washington DC, with offices in New with the private sector but assumes commercial and political risks York, Miami, London, Singapore, Beijing, Hong Kong, Tokyo, Sydney, that the private sector is unable or unwilling to accept. US Ex-Im Paris, Barcelona, Frankfurt, and Zurich. Zurich collaborates with a Bank also helps to level the playing field for US exporters by wide range of organisations, including export credit agencies, providing export credits that are comparable to financing offered international banks and private insurers, to structure deals in all by foreign governments. Historically, 80% or more of US Ex-Im business sectors. To date, Zurich has written policies covering risks Bank’s authorisations have been for small businesses. in more than 150 countries.

General information General information Export-Import Bank of the United States Zurich 811 Vermont Avenue, NW 1201 F Street, NW Washington, 20571 Washington, DC 20004 United States United States +1 202 565 3946 / 800-565-3946 +1 202 628 2216 www.exim.gov www.zurichna.com/politicalrisk [email protected] History History Founded: 1997 Founded: 1934 Ownership: Zurich Financial Services Group Ownership: 100% federal government-owned independent agency Senior management Daniel Riordan, CEO Zurich Global Corporate in North America, Senior management [email protected], 212 553 3313 Fred Hochberg, President and Chairman James Thomas, Senior Vice President & Acting Managing Director, [email protected], 202 585 3123 Contact person(s) Jim Cruse, Senior Vice President, Policy and Planning, Nuria Gorog, Senior Vice President & Regional Manager [email protected] Continental Europe [email protected], 33 1 43 1874 33

Major facilities ✓ Export credit insurance: Policies protect against political and Contact person(s) commercial risks of nonpayment. Single and multi-buyer short- James Thomas, Senior Vice President & Acting Managing term policies (90-100% cover) and single-buyer medium-term Director, [email protected], 202 585 3123 policies are available (100% cover). Ed Moeller, Vice President ✓ Export finance: Provides fixed-rate loans to private and public [email protected], 202 585 3125 sector creditworthy international buyers of US goods and Daniel Riordan, CEO Zurich Global Corporate in North America, services. [email protected], 212 553 3313 ✓ Export loan guarantees: Provides medium and long-term loan guarantees that cover 100% of principal and interest of a commercial loan against political and commercial risks of non- Major facilities payment. ✓ Political Risk Insurance: Coverage against: expropriation; ✓ Export working capital loan guarantees: Provides exporters political violence; currency inconvertibility; non-honoring of with the liquidity to produce US goods and services intended sovereign and sub-sovereign debt obligations; arbitration for export, helping them compete more effectively award default; wrongful calling; non-repossession; and other internationally. perils customised to fit transaction requirements. Policy terms ✓ Project finance: Offers project finance for projects that rely on up to 15 years; capacity up to US$150mn per transaction; project revenues for repayment. Project finance offers indemnities from 90-100%. maximum flexibility for project sponsors and helps US ✓ Credit Insurance: Cover offered: comprehensive payment exporters compete globally. default, whether occurring due to political risk events or commercial reasons. Policy terms up to seven years; capacity up to US$75mn per transaction. Zurich’s Excess of Loss Credit Insurance product covers payment default related to short- term receivables.

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SERBIA BULGARIA AOFI BAEZ Serbian Export Credit and Insurance Agency Bulgarian Export Insurance Agency

AOFI was established by the government of the Republic of Serbia BAEZ was established as a joint stock company and now the sole as a joint stock company in 2005. AOFI’s main objective is shareholder, with 100% capital share, is the Republic of Bulgaria, stimulating and promotion of exports, development of economic represented by the Minister of Economy, energy and Tourism. BAEZ relations of the Republic of Serbia with foreign business entities performs activity on its own account and on the account of the and the reduction of risks resulting from the disposal of products state. The mission of BAEZ is to protect Bulgarian exporters from and services abroad. financial losses and to support the realisation of their production on international markets by export insurance mechanisms. BAEZ General information has also developed schemes that facilitate access of companies to AOFI credit and financing. 30, Nikola Pašic Street Užice, 31000 General information Serbia Bulgarian Export Insurance Agency +381 11 22 05 770 55, Alexander Stamboliiski Blvd. www.aofi.rs Sofia, 1301 office@aofi.rs Bulgaria +359 2 923 69 11/+359 2 923 69 17 History www.baez.bg Founded: 2005 [email protected] Ownership: state ownership – 100% History Senior management Founded: 1998 Mr Dejan Vukotić Ownership: Full state ownership CEO and Chief of Executive Board dejan.vukotic@aofi.rs Senior management Mr Danilo Ćirković Bistra Ilkova Executive manager and member of Executive Board Chairman of the Board of Directors danilo.cirkovic@aofi.rs Dotcho Karadotchev Mr Nikola Tegeltija Member of the Board of Directors and Executive Director Executive Manager and member of Executive Board Nikolay Mishkalov nikola.tegeltija@aofi.rs Member of the Board of Directors

Contact person(s) Contact person(s) Mrs Marija Kulundžić Ivanji Dotcho Karadotchev Director of Credit Insurance, marija.ivanji@aofi.rs Executive Director [email protected] Major facilities ✓ Export credit insurance Major facilities ✓ Loans and guarantees ✓ Export credit insurance: Insurance against short-term ✓ Factoring commercial risk (marketable and non-marketable); insurance against short-term political risk; domestic credit insurance. ✓ Export financing: Pre and post-shipment financing. Investment insurance; insurance of letters of credit; insurance of bank guarantees. ✓ Insurance of credit and financing: Covering the risk of delayed payment on behalf of the debtor or insolvency/over- indebtedness or bankruptcy of the debtor.

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BOTSWANA MULTILATERAL DIRECTORY BECI DHAMAN Export Credit Insurance & Guarantee Company The Arab Investment & Export Credit (Botswana) (Pty) Ltd Guarantee Corporation PRAGUE CLUB MEMBERS

BECI has since its inception in 1996, continued to affirm its position Rated AA Stable by Standard & Poor’s, DHAMAN is a multilateral in the market by growing its product base from offering only export credit and political risk insurer owned by 21 Arab countries. It has credit insurance, to later introducing domestic credit insurance, been playing a significant role in promoting Arab domestic and debt collection, construction related guarantees, and engineering foreign trade as well as investment flows into Arab countries for 40 insurance to complement the bonds and guarantees. The political years, during which it has built solid relationships with credit risks are reinsured by the Government of Botswana whilst insurers, reinsurers and brokers worldwide. commercial risks are reinsured in the private reinsurance market. BECI continues to explore new business opportunities. General information The Arab Investment & Export Credit Guarantee Corp –DHAMAN General information PO Box 23568 BECI Safat, 13096 Private Bag BO 279 Kuwait Gaborone +965 24 959 555 Botswana www.dhaman.org 00 267 3188015 www.beci.co.bw History [email protected] Founded: 1974 Ownership: All Arab countries History Founded: 1996 Senior management Ownership: Botswana Development Corporation Limited Fahad R. Al Ibrahim Director General Senior management [email protected] Pauline Sebina +965 24 959 501 General Manager Bonani Dube Contact person(s) Marketing Manager Mohamed Chouari, Director Rocky Ramalefo Operations Department Underwriting Manager [email protected] +965 24 959 503 Harold Kuvenga Finance & Admin Manager Mohamed Chatti, Head Business Development [email protected] Contact person(s) +965 24 959 548 Pauline Sebina, General Manager [email protected] +267 3188015 Major facilities ✓ Investment insurance: DHAMAN protects Arab and non-Arab investors investing in Arab countries against losses arising Major facilities from political risks: expropriation and nationalisation, currency ✓Export and domestic credit insurance ✓ inconvertibility and transfer restrictions, war and civil Construction-related guarantees disturbances and breach of contract. Both new and existing ✓Engineering insurance ✓ investments are eligible. Debt Collection ✓ Trade credit insurance: Dhaman provides cover against political and 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 issuing bank. – The Leasing Insurance Policy (LIP) which protects the Lessor against the default of the Lessee. – The Factoring Insurance Policy (FIP) which protects the Factor against the default of the obligors.

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OMAN EGYPT ECGA O ECGE E Export Credit Guarantee Agency Export Credit Guarantee Company of Egypt of Oman SAOC

Export Credit Guarantee Agency of Oman SAOC (ECGA O) was ECGE is the government export credit agency of Egypt offering its established in 1991 as the national export credit agency of Oman, clients global credit solutions including credit insurance, factoring, with the primary goal of promoting Oman non-oil exports. ECGA O information reports and debt recovery. plays an instrumental role by extending its services towards enhancing export activities of Omani non-oil goods and thus General information contributing to the national economy. ECGE E 5 El Nast Road General information Nasr City ECGA O 4th Floor PO 2031 Cairo Muscat, PC 111 Egypt Oman +202 2263 6740 / 6745 / 6762 +968 24813979 www.ecgegypt.net www.ecgaoman.com [email protected] [email protected] History History Founded: 1993 Founded: 1991 Ownership: Export Development Bank of Egypt 70%, National Ownership: Fully owned by the Goverment of Oman Investment Bank 21%

Senior management Senior management Nasir Al-Ismaily, GM Ola Gadallah [email protected] Chairman and Managing Director +968 24346650 [email protected] Ahmed Al- Abdali Head of Admin Contact person(s) [email protected] Alaa Gouda +968 24346633 General Manager Imaad Al-Harthy [email protected] Head of Claims & Recovery [email protected] Major facilities +968 24346622 ✓ Export and domestic credit insurance ✓ Whole turnover policy ✓ Contact person(s) Single shipment policy ✓ Nasir Al-Ismaily, GM Unconfirmed letters of credit policy ✓ [email protected] Services policy ✓ +968 24346650 Export, import and domestic factoring ✓ Insurance, finance and collection of export and domestic trade Ahmed Al- Abdali receivables on recourse and non-recourse basis Head of Admin [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 capital credit 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)

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UNITED ARAB EMIRATES GREECE DIRECTORY ECIE ECIO Export Credit Insurance Company of Export Credit Insurance Organisation the Emirates PRAGUE CLUB MEMBERS

The Export Credit Insurance Company of the Emirates (ECIE) is an ECIO was established in 1988 by Law 1796/1988 and it is an export credit agency that was established as part of H.H. Sheikh autonomous Public Entity in Private Law. It is governed by a nine- Mohammed Bin Rashid Al Maktoum’s vision, in his capacity as Vice- member Board of Directors which is appointed by the supervising President and Prime Minister of the UAE, and Ruler of Dubai; to Minister of Development, Competitiveness, Infrastructure, help UAE-based companies make use of opportunities to grow Transportation and Networks. Its reserve capital amounts to their exports safely, and facilitate sustainable economic a140mn. development and prosperity. General information ECIE’s trade credit insurance policies cover a UAE-based seller ECIO against the risk of non-payment by its customers. ECIE’s business 57, Panepistimiou Street activities are governed by the UAE Insurance Authority, and its Athens, 105 64 relations with companies and banks are conducted on a Greece commercial basis. ECIE is a member of the Berne Union Prague +30 210 331 0017 Club, the Organisation of the Credit Alliance and the Aman Union www.ecio.gr – an association of Arab and Islamic trade credit insurers. History General information Founded: 1988 ECIE Ownership: 100% State Ownership Clock Tower Square Business Village, Block A Senior management 3th Floor P.O. Box 121616, Mr. Themistoklis Kalpaktsoglou Dubai, UAE President +971 44455333 [email protected] www.ecie.ae [email protected] Mr. Aggelos Kotsiopoulos General Manager History [email protected] Founded: 2008 Ownership: 100% Government of Dubai Contact person(s) Dr. Clearchos Efstratoglou Senior management Special Adviser Eng. Saed Al Awadi, Managing Director & CEO [email protected] Ms. Mariam Al Afridi, Director Mrs. Eleni Bantra Secretary of the President & Board of Directors Contact person(s) Mr Mohammad Feras Al Hamwi, Sales Manager Major facilities ✓ Insurance for ST Export Credits against commercial and Major facilities political risks ✓ Conventional and Shariah-compliant export trade credit ✓ Insurance for MLT Export Credits against commercial and policies political risks ✓ Short-term marketable and non-marketable credit risk cover ✓ Investment Insurance for Greek investments undertaken ✓ Medium to long-term credit risk cover abroad, against political risks ✓ 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

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IRAN RUSSIA EGFI EXIAR Export Guarantee Fund of Iran Export Insurance Agency of Russia

EGFI, established in 1973, is the Iranian state-owned export credit EXIAR is the national export credit agency of Russia. EXIAR’s insurance company affiliated to I.R. of Iran’s Ministry of Industry, mandate is to support Russian export and investment abroad. Mine & Trade whose responsibility is to help export promotion EXIAR covers short, medium and long-term risks. The charter through providing Iranian exporters with: capital makes up R30bn (ca. US$1bn). The Board of Directors  Overseas insurance policies to cover the major political & consists of senior executives of the Russian government and commercial risks involved in their export operations; independent directors. The Agency’s activities are backed by the  Credit guarantees to help them meet their financial Russian Federation in line with the budget legislation. requirements. General information General information EXIAR Export Guarantee Fund of Iran (EGFI) 3, 1st Zachatievsky Lane, Bldg. 1 No. 5, 16th St. Moscow, 119034 Bucharest Ave. Russian Federation Argentina Sq. +7 495 783 1188 Tehran, 1514837114 www.exiar.ru Iran [email protected] +98 21 8873 9267/8854 6989 [email protected] www.egfi.ir intl@egfi.org History Founded: 2011 History Ownership: Sole shareholder – Vnesheconombank (VEB) Founded: 1973/1994 100% State-owned Ownership: Wholly state-owned Senior management Senior management Petr Fradkov, CEO, Chairman of the Management Board Taher Shah Hamed, Chairman & CEO [email protected] intl@egfi.org +7 495 783-11-88 Rahim Piri, MOB Alexey Tyupanov, Managing Director, Board Member, intl@egfi.org Head, Business Development Hamid Ashtari, MOB [email protected] intl@egfi.org +7 495 783-97-38 Esmaeil Dehban, MOB intl@egfi.org Contact person(s) Ekaterina Karasina, Managing Director, External communications [email protected] Contact person(s) +7 495 783-11-88 Arash Shahraini, Risk & Int'l Cooperation Director Shahraini@egfi.org Arthur Lyaschenko, Senior Expert, External Communications +982188739267/88546989/88733370 [email protected] +7 495 783-11-88 Major facilities 1. Policies: Major facilities ✓ ✓ Whole turnover policy Export credit insurance ✓ ✓ Technical & engineering services policy Investment insurance ✓ 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

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ROMANIA BELARUS DIRECTORY EXIM R EXIMGARANT Eximbank of Romania Eximgarant of Belarus PRAGUE CLUB MEMBERS

Banca de Export Import a României EximBank S.A. has been EXIMGARANT is the official export credit agency of the Republic established in 1992 as a joint stock company with the Romanian of Belarus, the only officially-supported insurance company state as major shareholder. specialising in credit and investment insurance in Belarus. EximBank has been entrusted with the public mandate to support EXIMGARANT was founded in 2001 within the governmental Romanian exporters, as well as projects in the areas important for programme aimed at development of export operations in the the long-term sustainable development of the Romanian economy, country. The main aim of EXIMGARANT is to support export such as: infrastructure, public utilities, regional development, activities of national exporters in order to increase their research & development, employment & training of personnel, or competitiveness in the markets abroad by providing export credit environmental protection. EximBank has also a strategic focus on and investment insurance to export companies, investors, banks, Romanian SME support. leasing companies and finance institutions.

In August 2010 Compania de Asigurari-Reasigurari Exim Romania General information (Care – Romania) S.A., a joint stock company with EximBank EXIMGARANT OF BELARUS Romania as major shareholder, was set up for short-term export 2 Melnikaite Street credit insurance against marketable risk. EximBank Romania Minsk, 220004 cooperates with a wide range of export credit agencies, local and Belarus international banks and related organisations to strengthen the +375 17 203 68 99 operating potential and competitiveness of Romanian companies www.eximgarant.by on domestic and international markets. [email protected]

General information History EXIM R Founded: 2001 15, Splaiul Independentei Ownership: 100% government-owned Bucharest 5 Romania Senior management +40 21 405 33 33/+40 21 405 31 25 Gennady Mitskevich www.eximbank.ro General Manager relatiifi[email protected] [email protected] [email protected] +37517 209 40 28 History Mikhail Olshansky Ownership: 95.374% – the Romanian state 4.626% – five regional First Deputy General Manager investment funds [email protected] Oleg Aniskevich Senior management Deputy General Manager Ionut Costea, President & CEO [email protected] Luminita Manolache, Vice-President Oleg Pavlovsky Paul Ichim, Vice-President Deputy General Manager [email protected] Contact person(s) Corina Vulpes, Director, Head of International Financial Relations Contact person(s) Department Oleg Rutkowski Head of International business development Department [email protected] Major facilities +37517 203 14 11 ✓ Financing of strategic economic sectors ✓ Bonds and guarantees ✓ Export credit insurance Major facilities ✓ – Short-term pre-shipment and credit cover against non- Export credit insurance against commercial and political risks marketable risks (ST & MLT cover) ✓ – Medium and long-term export credit insurance (supplier and Pre-shipment insurance ✓ buyer credits) against commercial and political risks Investment insurance ✓ ✓ Insurance of Romanian capital investments abroad Supplier/Buyer credit insurance ✓ Guarantee, LC insurance ✓ Lease transactions insurance ✓ Factoring

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CROATIA BOSNIA AND HERZEGOVINA HBOR IGA Croatian Bank for Reconstruction and Export Credit Agency Bosnia & Herzegovina Development

Croatian Bank for Reconstruction and Development (HBOR) is the IGA is the ECA of Bosnia and Herzegovina, established in national development and export bank, and export credit insurer September 1996 by the decree of the government of Bosnia and with the task of supporting sustainable economic growth pursuant Herzegovina. The start-up activity was non-commercial risk to the overall strategic goals of the Republic of Croatia. insurance of foreign enterprises and financial institutions having trade exposure in Bosnia and Herzegovina. In 1999, IGA expanded Via different financing programmes, HBOR supports SMEs, its activities, assuming the role of the state ECA. infrastructure projects, tourism, industry, agriculture, environmental protection, energy efficiency and renewable energy resources as General information well as export. HBOR also gives loans for incentives to SME start- IGA ups and loans to improve liquidity, loans for innovations and new Hamdije Cˇemerlic´a 39a technology projects. Sarajevo, 71000 HBOR provides insurance and reinsurance of export against non- Bosnia and Herzegovina marketable risks. By establishing the Croatian Credit Insurance JSC +387 33 720 140 or +387 33 720 151 (HKO) for commercial credit insurance, HBOR Group was www.iga.gov.ba incorporated. [email protected] HBOR is a member of different associations, clubs and other institutions that share a similar background and similar interests History committed to global development. The Bank also co-operates with Founded: 1996 the export credit agencies, international banks and supranational Ownership: Full state ownership institutions to meet the needs of Croatian entrepreneurs. Senior management General information Lamija Kozaric-Rahman, General Director HBOR Ljiljana Bevanda, Deputy General Director Strossmayerov trg 9 Zagreb, 10000 Mirko Dejanovic, Deputy General Director Croatia +385 1 4591 539/ +385 1 4591 546 Contact person(s) www.hbor.hr Lamija Kozaric-Rahman, General Director [email protected] [email protected] [email protected] Aldijana Sabanovic, Credit Insurance Associate [email protected] History Founded: 1992 Ownership: 100% State-owned Major facilities ✓ ST and MT financing for domestic export companies ✓ Senior management Working capital loan guarantees, to local banks providing Anton Kovacev, President of the Managing Board financing to export companies ✓ +385 1 45 91 706 Performance, bid and advance payment bonds facility for domestic companies performing works abroad Mladen Kober, Member of the Managing Board ✓ Factoring facility for domestic exporting companies [email protected] ✓ Export credit insurance +385 1 45 91 909 ✓ Domestic credit insurance Branimir Berkovic, Senior Executive Director ✓ Import credit reinsurance facility for foreign ECAs and [email protected] insurance companies +385 1 45 91 586 ✓ Credit information facility on domestic companies ✓ Andrea Mergedus, Managing Director Political risk insurance for foreign traders with domestic +385 1 45 91 545 companies and sovereign

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

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JORDAN KAZAKHSTAN DIRECTORY JLGC KAZEXPORTGARANT Jordan Loan Guarantee Corporation KazExportGarant Export Credit Insurance Corporation PRAGUE CLUB MEMBERS

The Jordan Loan Guarantee Corporation (JLGC) was established Export Credit Insurance Corporation (KazExportGarant) performs as a public shareholding company in accordance with Jordanian its activities as an export credit agency of the Republic of Companies’ Law and registered in the registry of the public Kazakhstan in order to stimulate non-oil export and investments shareholding companies under number 242 on March 26, 1994. Its abroad by providing insurance against commercial and political establishment was formally declared in the Founders Assembly risks. Since 2010 KazExportGarant provides post-export trade meeting held on April 17, 1994. The corporation was given financing for exporters in non-oil sector. Insurance financial permission to start operating as of May 7, 1994. strength rating assigned by Moody’s Investors Service is Baa2, outlook – “Stable”. The establishment of JLGC came in response to the decision undertaken by the Cabinet session of 24/8/1993, which approved General information the establishment of a public shareholding company for KazExportGarant guaranteeing loans to small and medium-sized organisations. 80 Zenkov Str In 1997, JLGC took on the functions of the Export Credit Guarantee Almaty, 050010 Department and the Counselling Services Unit. JLGC’s capital was Kazakhstan subsequently increased to JD10mn (US$1mn). +7 727 250 00 21 www.keg.kz General information [email protected] JLGC 24 Prince Shaker Bin Zaid Street History Al Shmeisani P.O.Box 830703 Founded: 2003 Amman, 11183 Ownership: Joint stock company, 100% government-owned Jordan +962 6 5625400-06 Senior management www.jlgc.com Yerken Sadykov [email protected] Chairman of the board [email protected] History Founded: 1994 Contact person(s) Ownership: Limited public shareholding company Ruslan Bekturganov Senior Manager of Marketing and PR Department Senior management [email protected] Dr. Mohamed Al Jafari, Director General [email protected] Major facilities Mohannad Rashdan, Assistance Director General for Technical & ✓ Export credit insurance: pre-shipment risks, supplier credit Operational Group insurance, buyer credit insurance. LC insurance, investment Zaid Al Kayed, Head of the Export Credit Department insurance. Reinsurance, bank guarantee insurance. Export [email protected] trade finance: post-shipment export finance through partner banks Contact person(s) Dr. Mohamed Al Jafari, Director General [email protected] Zaid Al Kayed , Head of the Export Credit Department, [email protected]

Major facilities ✓ Loan guarantees ✓ Export credit guarantees

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ESTONIA LEBANON KREDEX LCI KredEx Credit Insurance Ltd The Lebanese Credit Insurer

KredEx Credit Insurance Ltd is a self-sustaining insurance company The Lebanese Credit Insurer s.a.l. (LCI) is the first independent in the jurisdiction of the Estonian state, whose goal is to support specialised credit insurance company in Lebanon and the Middle the development of Estonian exports. The company provides East. LCI is active through its partners in Saudi Arabia, UAE, Kuwait, various insurance solutions, which serve to manage the export risks Qatar, Jordan, Bahrain, Egypt, Oman, Syria, Cyprus and Croatia. of enterprises KredEx Credit Insurance Ltd acts on the principles and self-sustaining diversified portfolio. General information LCI General information Sodeco Square, Block B KREDEX 15th Floor Hobujaama 4 Beirut Tallinn, 10151 Lebanon Estonia +961 615 616 +372 667 4100 www.lci.com.lb www.krediidikindlustus.ee [email protected] [email protected] [email protected] History Founded: 2001 History Ownership: Atradius Participations Holding B.V (49%), Regional Founded: 2009 Insurance Companies (21%) and Private Investors (30%) Ownership: Ministry of Economic Affairs & Communications 2/3; Credit and Export Guarantee Fund KredEx 1/3 Senior management Karim Nasrallah, General Manager Senior management [email protected] Meelis Tambla Ralph Dahan, Business Development Manager, Head of the Board [email protected] [email protected] +372 667 4138 Contact person(s) Diana Loutfy, Project & Planning [email protected] Contact person(s) Mariko Rukholm Member of the Board Major facilities ✓ [email protected] LCI focuses on domestic and export trade credit insurance +372 6674 139 (trade receivables insurance). Policies cover manufacturers, trading companies and providers of services, against the risk of non-payment of their local and foreign customers. Trade Major facilities receivables management tools are also offered such as Credit ✓ ST credit insurance ✓ Information, Debt Collection services, and Risk Management MLT credit insurance Solutiong through its 100% owned subsidiary LCI Services s.a.l. ✓ Pre-shipment insurance ✓ Investment insurance

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LATVIA MACEDONIA DIRECTORY LGA MBDP Latvian Guarantee Agency Macedonian Bank for Development Promotion PRAGUE CLUB MEMBERS

SIA Latvijas Garantiju aģentūra [Latvian Guarantee Agency Ltd] Macedonian Bank for Development Promotion, via commercial (LGA) is a limited liability company, which provides support to banks, provides financial support for start-ups and developing Latvian businesses for implementing business ideas. LGA helps SMEs. The lending programme consists of a variety of ST and MLT entrepreneurs to attract new finance by establishing risk capital credit lines offering favourable credit terms and technical funds that provide seed, start-up and expansion capital as well as assistance tailored according to the entrepreneurs’ specific needs. directly issuing credit and export guarantees, and providing The bank performs the role of an official export credit agency of mezzanine loans. the Republic of Macedonia providing export support for companies through pre-shipment finance loans and export credit insurance. General information LGA General information Zigfrida Annas Meierovica bulvaris 14 MBDP Riga, LV-1050 26, Veljko Vlahovik str, PO Box 379 Latvia Skopje, 1000 +371 6721 6081 Macedonia www.lga.lv +389 2 3115 844 [email protected] www.mbdp.com.mk

History History Founded: 1998 Founded: November 1998 Ownership: LGA is 100% state-owned Limited liability company; Ownership: A shareholding 100% government-owned the holder of state shares is the Ministry of Economics Senior management Senior management Dragan Martinovski, Chief Executive Officer Klavs Vasks, Chairman of the board [email protected] Andris Gadmanis, Member of the board Qenan Idrizi, Chief Operative Officer Inese Matvejeva, Member of the board Ivars Golsts, Director Contact person(s) Darko Stefanovski Manager of Credit Export Department Contact person(s) [email protected] Ivars Golsts, Director [email protected] Jasmina Kolekeska, Senior underwriter +371 6735 9373 Major facilities ✓ Investment loans ✓ ST export credit insurance, ✓ Pre-shipment finance loans ✓ Factoring

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SUDAN NEW ZEALAND NAIFE NZECO National Agency for Insurance and Finance of The New Zealand Export Credit Office Export (NAIFE)-Sudan

The agency was founded under special ordinance in August 2005, The NZECO operates as a business unit within the New Zealand passed by the transitional National Assembly. The headquarters is Treasury. Its mission is to help New Zealand exporters manage risk in Khartoum and can establish branches in any Sudanese state or and capitalise on trade opportunities around the globe by abroad. The agency maintains separate accounts for policyholders’ providing guarantee and insurance solutions that complement funds and shareholders’ funds. those in the private sector. The Secretary to the Treasury has been delegated the power from the Minister of Finance to provide these The main objectives of the agency: guarantee and insurance products pursuant to the Public Finance – To encourage and develop Sudanese exports Act 1989. – Support the exports sector General information To achieve those objectives, the agency practises the following NZECO activities: 1 The Terrace, PO Box 3724 – Insurance and reinsurance of Sudan’s exports proceeds Wellington, 6140 – To compensate insured exporters against risks as stipulated New Zealand on different policies +64 9183 747 107 – To provide finance and guarantees that enhances the www.nzeco.govt.nz competitive position and increase the volume of exports and [email protected] their proceeds. – To participate in promotion of financing for Sudan’s exports History in international markets Founded: 2001 – Conduct marketing researches and studies Ownership: Wholly owned and guaranteed by the New Zealand – Provide and extend credit to exporters Government

General information Senior management NAIFE Chris Chapman, Manager 1 Mustafa Abu Ella Street [email protected] Saving & Social Development Bank Tower +64 4 917 6004 6th Floor Kim Tate, Head of Underwriting Khartoum [email protected] Sudan +64 4 917 6018 +24 9183 747 107 www.naife.org Peter Rowe, Head of Business Origination [email protected] [email protected] +64 4 917 6080 History Founded: 2005 Contact person(s) Ownership: Ministry of Finance & National Economy, Central Bank Rebecca Holleman, Business Origination of Sudan, commercial banks and insurance companies [email protected] +64 4 917 6060 Senior management Mustafa Yousef Holi, General Manager Major facilities Elhadi A.M. Saeed, Manager Export Insurance Department ✓ Export credit insurance: A/Moniem A/Elateef Saad, Promotion and Planning Manager – Covers commercial and political risks on export transactions – Short-term trade credit cover (including co-insurance with Hamid Elrasheed Ahmed, Finance and Investment and Financial private sector) where the private sector lacks the capacity or Manager willingness – Medium/long-term (over one-year credit period) cover for Contact person(s) supplier and buyer credit facilities Elhadi A.M. Saeed – Insurance of confirmed letters of credit Manager Export Insurance Department – Cover for project finance transactions [email protected] ✓ Bonds, sureties and guarantees: – Guarantee products to support bid bonds, advance payment Major facilities bonds, performance bonds, retention payment bonds and US ✓ Export Credit Insurance and Canadian surety bonds ✓ ✓ Credit Faculties Other products: ✓ Promotion and Planning Activities – Bill of exchange guarantee ✓ Co-coordinator for Export Activities, with Various Concerned – Loan guarantee Unit

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SAUDI ARABIA QATAR DIRECTORY SEP TASDEER Saudi Export Programme Qatar Export Development Agency PRAGUE CLUB MEMBERS

The SEP was established under the auspices of the Saudi Fund for TASDEER was launched in 2011, having the following objectives: Development (SFD) in 1999 to act as the national ECA of Saudi  To develop, support, and globally promote exports from Qatar. Arabia, which provides different facilities to support Saudi non-  To act as a public ECA offering export credit Insurance (risk crude oil goods and services, which contain 25% or above of the covers) and export financing solutions and services to mitigate Saudi value-added component. national exporters risks. All Qatari exporters, regardless of their size, ownership, export General information contract volume, sector or turnover are eligible for TASDEER SEP support. PO Box 50483 Riyadh, 11523 General information Saudi Arabia Tasdeer/QDB +966 1 465 9399 Qatar Development Bank www.sep.gov.sa P.O.Box 22789 [email protected] Grand Hamad (Banks) Street Doha History Qatar Founded: 1974 +974 44 30 0000 Ownership: Government of Saudi Arabia www.qdb.qa [email protected] Senior management Eng. Yousef AL-Bassam, Vice-Chairman and Managing Director, History Saudi Fund For Development Founded: 2011 Ownership: Government of Qatar Contact person(s) Senior management Ahmed Al-Ghannam Director General of Saudi Export Program Mansoor I. Al Mahmoud [email protected] CEO, Qatar Development Bank +966 1 2794466 Hassan K. Al Mansoori Sultan Al-Marshad TASDEER Executive Director Acting Director of Credit Insurance & Guarantee [email protected] Contact person(s) +966 1 279 4149 Aladdin Zard ECA Manager Major facilities [email protected] ✓ Credit Insurance and export guarantees: – Whole turnover export credit insurance policies Major facilities – Single transaction policies ✓ Receivables financing (factoring, bill discounting) – Documentary credit insurance policies (DCIP) ✓ Pre-shipment and contracts financing – Documentary credit confirmation insurance contract (DCCIC) ✓ Pre and post-shipment credit insurance – Working capital guarantee cover (WCGC) ✓ Takaful shariah-compliant credit insurance

✓ Direct lending to major export transactions: – Buyer credit – Supplier credit – Lines of credit – Murabaha (profit sharing)

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UKRAINE UZBEKISTAN UKREXIMBANK UZBEKINVEST Joint Stock Company State Export-Import Uzbekinvest National Export-Import Bank of Ukraine Insurance Company

The only Ukrainian bank acting on behalf of the government as a Uzbekinvest was established in 1994 by the government of the financial agent with respect to foreign loans guaranteed by Ukraine. Republic of Uzbekistan as a national insurance company. In 1997 Ukreximbank`s mission is to create favourable conditions for Uzbekinvest was reorganised into the national export-import economic development of Ukraine by supporting national insurance company. Uzbekinvest is acting as the national export manufacturers, especially in the export-oriented sectors. Having credit agency of Uzbekistan to promote export operations by diversified its operations over the last decade, Ukreximbank providing export credit insurance to Uzbek exporters and currently provides a wide range of banking services, with a strong commercial banks. focus on export-import banking. Ukreximbank services a considerable part of foreign economic activity of Ukrainian UIIC (London, UK) is designed to protect the business and assets enterprises, which represent key branches of the national economy. of companies investing or doing business in Uzbekistan. Coverage is provided for investment and trade transactions against certain Ukreximbank has the widest network of correspondents and political risks and events in Uzbekistan taken towards investors and partners among Ukrainian banks, including over 800 commercial lenders. banks that provide over 100 clean credit lines, 35 export credit agencies that recognise Ukreximbank as a direct borrower and General information guarantor, and a number of international financial institutions and UZBEKINVEST development banks, such as IBRD, EBRD, KfW and others, that 2, A. Kodiriy Street partner Ukreximbank under special programmes. Tashkent, 100017 Uzbekistan General information +998 71 235 78 01 UKREXIMBANK www.uzbekinvest.uz 127, Gorkogo St [email protected] Kyiv-150, 03150 Ukraine History +380 44 247-8085 Founded: 1994 www.eximb.com/eng Ownership: 100% state-owned (Ministry of Finance of the [email protected] Republic of Uzbekistan – 17%, National Bank for Foreign Economic Activities of Uzbekistan -83%) History Founded: 1992 Senior management Ownership: 100% state-owned Fakhritdin Saidakhmedov, Director General, UNIC [email protected] Senior management +998 71 2357801 Vitalii Bilous, Chairman of the Board Shavkat Inamov, CEO, UIIC Viktoriia Kononykhina, First Deputy Chairman of the Board [email protected] Sergii Myskiv, Deputy Chairman of the Board, +44 207 954 8397 [email protected] Jamshid Rizaev, Deputy Director General, UNIC Oleksandr Shchur, Member of the Board [email protected] +998 71 1200360 Contact person(s) Kamil Khasanov, General Manager, Export Risks and Investments Olena Kozoriz, Head of Financial Institutions & Trade Finance Insurance Department [email protected] Sviatoslav Kuzmych, Head of International Borrowings +998 71 1200359

Major facilities Contact person(s) ✓ Agency services for the government of Ukraine Umida Musalieva, Manager ✓ Financing of the real economy and support of SME Export Risks and Investments Insurance Department development: project financing, special purpose programmes [email protected] with IFIs +998 71 1200359 ✓ Export-import banking: MLT structured finance, ST trade finance, documentary credits and guarantees, FX and money Major facilities market, international settlements ✓ ✓ Retail and investment banking 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 (provided by UIIC only)

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5 80th Anniversary Berne Union 2014

Historic Timeline

1934: Berne Union founded by three private credit insurers from France, Italy, Spain, and the UK’s public sector representative. 1930s UK Export Finance, ECGD at the time, is the only founding member that is still in existence under its original form

1934: First meeting held in Berne, Switzerland (which is where the name Berne Union comes from)

1940s

1947: Berne Union welcomes its first non-European member, Export

January 4 1934 Assemblee Constitutive Assemblee January 4 1934 Development Canada (EDC)

Berne Union Secretariat established in Paris, France 1950s

1957: EPIC (now EFIC) Australia joins Excerpt: the Berne Union “the present statutes approved by the General Assembly of 7th May 1954 1957: Berne Union welcomes first Asian will come into force as from that date. member, Export Credit Guarantee Corporation Each member will of India (ECGC) receive a copy” Berne Union statutes, 1954 Berne Union statutes,

1957: The Berne Union hires its first Secretary General, Mr. Wladyslaw Houwalt Florence - 1954 Florence 1958: Berne Union welcomes its first African member CGIC South Africa

1960s Membership continues to expand

1970: The Berne Union’s mandate expands to include members who insure foreign 1970s investments; creation of the investment insurance committee (IIC) 1973: First Latin American member joins (CASC, Argentina) 142 Berne Union 2014 80TH ANNIVERSARY

1974: The Berne Union has 32 members from 24 countries Estoril 1971 Estoril IIC document

Berne Union members 1980s start to report business data

1984: Berne Union celebrates its 50th 1989: anniversary; Annual General Meeting (AGM) Collapse of the Berlin wall which led to in Montreux, Switzerland the creation of Eastern European export credit agencies

1992: Berne Union elects first Asian President, 1990s 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 1994: First multi-lateral agency joins, and insurers setting up and developing export Multilateral Investment Guarantee Agency credit and investment insurance schemes) (MIGA)

1994: Berne Union elects first female President 1999: The export credit members formed two (Soledad Abad, CESCE) committees focusing on short term (ST) and medium-long term (MLT), ECA only, export credit business

1999:

First Prague Club member joins 1998 Strategy the Berne Union, Export Credit Insurance Corporation Joint Stock Company Excerpt: “we shall have to answer three fundamental (KUKE), Poland 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 2000s Union to perform in a more optimal way?”

2001: American International Group (AIG) joins Berne Union (first “modern day” private member) 2004: Berne Union Value Statement created

2006: Berne Union Guiding Principles created 2008 – 2009 global financial crisis 2009: Berne Union celebrates its 75th anniversary; Annual General Meeting (AGM) in Seoul, Korea

2013: Prague Club celebrates 2010s 20th anniversary in Prague

2014: Berne Union celebrates Berne Union and Prague Club total 76 members, its 80th anniversary representing over 60 countries worldwide 143 Berne Union 2014

Notes

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International Union of Credit & Investment Insurers 1st Floor · 27-29 Cursitor Street · London · EC4A 1LT · United Kingdom Tel: +44 (0)20 7841 1110 · Fax: +44 (0)20 7430 0375 www.berneunion.org