African Trade Insurance Agency
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African Trade Insurance Agency

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African Trade Insurance Agency African Trade Insurance Agency Presentation Transcript

  • Presentation to the The African Development Bank Trade Finance Initiative 14 April, 2009 Peter M. Jones Chief Executive Officer
  • Objectives of Presentation
    • Background to the Agency
    • Products and Services
    • Possible solutions to Trade Finance Crisis
  • Objective 1
    • Background to the Agency
  • What is ATI?
    • A Multilateral Political Risk and Credit Insurer established by International Treaty
    • Established by African Member States with the financial and technical support of the World Bank to fill a market failure
    • WBG provides financial support to allow African Members to fund their equity contributions in ATI
    • Partners with major public and private credit and investment insurers
  • ATI: What is the rationale?
    • Small volume of trade credit and investment in African States does not merit the establishment of national trade credit and investment insurers.
    • ATI is a regional multilateral insurer that fills this key market gap with the following benefits:
      • Economies of scale and effective and efficient use of scarce underwriting skills in the region;
      • Cost-effective use of scarce underwriting capital;
      • Regional integration and risk sharing that benefits all African Member States;
      • Enhanced risk diversification from a regional risk portfolio (reducing the impact of an individual country’s volatilities and sector dependencies);
      • Encouraging public and private sector insurers to assume risk in Africa.
  • ATI: What is the rationale cont’d:-
    • ATI reduces the ‘costs of doing business’ in Africa
    • by:
    • - Allows exporters to sell direct to buyers on open account ( as against auction houses/wholesalers) and move up the value chain;
    • - Reduces the interest margins on bank funding;
    • - Creates a level playing ground for investors and trade credit in African Member States.
    • Membership is open to:
    • African States
    • Non-African States
    • Regional Economic Organizations
    • International Development Financial Institutions
    • Export Credit Agencies
    • Private Corporations
    ATI Membership Categories
    • Current African Member States
    • Burundi
    • Democratic Republic of Congo
    • Kenya
    • Madagascar
    • Malawi
    • Rwanda
    • Tanzania
    • Uganda
    • Zambia
    • *Djibouti, Eritrea and Sudan are signatories (pending ratification and capital subscription). ** Liberia’s membership is pending signature, ratification and capital subscription
    • ATI is open to all African Union States
    • Corporate & Regional Body Members
    • Atradius, COMESA, PTA-Bank & ZEP RE
    ATI Membership
  • Focus on new African Member States Eastern and Southern Africa : Angola, Ethiopia, Mauritius, Mozambique & Seychelles Central Africa : Cameroon Western Africa : Benin, Ghana, C ô te d’Ivoire, Mali, Mauritania, Nigeria & Senegal Focus on Regional and International Financial Institutions AfDB, France (AFD), Italy (SACE) and Africa Re ATI: Membership Expansion
  • Objective 2
    • Product and Services
    • Political Risk Insurance:
    • Short, medium and long term foreign direct investment including intra-regional investment.
    • Comprehensive nonpayment cover for sovereign and sub-sovereign obligors.
    • Trade Credit Risk Insurance:
    • Inter & intra-regional whole turnover trade credit non-payment cover (365 days)
    • Medium to long term buyer credit insurance
    • Exports, imports and domestic sales
    ATI : Product Offering
    • Maximum Tenor 10 years
    • No Minimum Transaction Size
    • Maximum line size (net exposure):
    • Political Risk: US$7.5 million
    • Credit Risk: US$3.75 million
    • Indemnity:
    • - Up to 100% (Political Risks)
    • - Up to 85% (Commercial Risks)
    • Price to risk. No subsidy to the private sector
    ATI-ACA ATI: Main Terms
    • Objectives:
    • Leverage ATI’s line size by up to 10 times and country limits by up to 2.5 times; and
    • Encourage public and private risk sharing in Africa;
    • Filling market failure. Crowd in the public and private sector.
    ATI-ACA ATI: Reinsurance
  • ATI : Reinsurance (Cont’d) ATI: Relationship with Reinsurers Whole Turnover Trade Credit Insurance Political Risk Insurance and Medium Term Credit Insurance Atradius Re Quota Share Reinsurance Treaty. 60% Cession. Reinsurers include: Lloyd’s of London Syndicates; Sovereign Risk (Bermuda); Zurich (USA); AIG; Chubb; and Africa Re Facultative or Treaty Reinsurance as required. Risk Retention no less than 10%
  • Standard and Poor’s assigned ‘A’ Stable Rating to ATI in April 2008 for both Counterparty and Insurer Financial Strength credit ratings. More business opportunities from Banks, Insurance Broker and International Investors Results: more trade and investment flows for African Member States ATI-ACA ATI: Credit Rating
  • ATI: Solutions
    • Expand Membership of African Member States to support higher volumes of regional and international trade and investment
    • Expand membership of Non-African State Members to expand shareholder and capital base
    • Provide Pre-export Finance for African Member States’ Exporters
    • Protect commercial banks from the impact of foreign buyer default on the credit quality of their customers
  • Through the ATI’s website www.ati-aca.org via Email [email_address] By telephone +254 (0)20 271 9727 +254 (0)20 272 6999 ATI: Contacts