credit insurance cooperating with ecas denmark copenhagen, june 16, 2009 erik skovgaard nielsen,...
TRANSCRIPT
Credit Insurance
Cooperating with ECAs Denmark
Copenhagen, June 16, 2009
Erik Skovgaard Nielsen,Executive Manager, Denmark
Slide 2 of 10
Contents
Atradius – facts and figures
Economic cycle management
EKF scheme
Slide 3 of 10
Atradius – facts and figures
Atradius Group
World wide market share 31%
Annual revenues of more than EUR 1,8 billion
“A-” from S&P and “A2” from Moody’s
Information on 52 million companies
22000 credit decisions daily
Atradius in Denmark
Largest credit insurer – market share 65%
Insured turnover appr. EUR 20 billion
Appr. 80% related to export
Credit insurance, B2B Collection and guarantee business
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Contents
Atradius – facts and figures
Economic cycle management
EKF scheme
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Economic cycle management
Facts
Severe and fast change in economic cycle
Recession in most countries
Business defaults increasing sharply everywhere
Country issues increasing
Result
Credit capacity is shrinking
Fewer companies qualify for cover
Price for credit is increasing significantly
Credit insurers are pulling limits
Politicians/governments worry on impact on exports and economy overall
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CreditworthinessVery good Very poor
‘Marketable’ credit risks
‘Non-Marketable’ credit risks
Economic crisis
Market Outlook – Deterioration of Creditworthiness
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” The best of the rejected risks ”
‘Marketable’ credit risks
‘Non-Marketable’ credit risks
Economic crisis
EKF Reinsurance
Scope for EKF involvement
CreditworthinessVery good Very poor
Good times
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Contents
Atradius – facts and figures
Economic cycle management
EKF scheme
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Basic principles
Structured as a quota share reinsurance facility Private insurers front in all aspects
Premium split between EKF and insurer
EKF pays a ceding commission to insurers
Market have the “first right of refusal” to a limit
Market facility - offered to all major market players
EKF sets the price
The private insurers have the “underwriting pen”
Increased risk retention for the customers
Only covers export
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Terms & Conditions
Policyholder
Scheme is a supplement to the policyholders current credit insurance.
Private insurers decide whether they accept a customer for the facility
Separate policies are issued for the EKF scheme
EKF must approve policyholder
Buyer risk
Diverse country group, incl. most OECD/EU-countries
Only ”the best of the non-marketable risks” can be covered
Specific guidelines on buyer underwriting applies
The private insurers do the risk underwriting decisions without interference from EKF, unless……
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Why use quota share structure
Historically the preferred option by the Danish government
Relatively easy in terms of admin – well known concept by the private market
EKF will not have to be involved directly into the market
Treaty signed for a year – with possibility to renew
Easy to phase-out again when market capacity gets back to normal
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Premium rate and retained risk
Policyholder must take additional risk retention (20%)
Buyer risks are concentrated on buyers above average credit risk.
The premium rate is fixed and has been decided by EKF based on a grouping of countries. The premium rates – turnover basis – are:
1.00% in country group 1
1.50% in country group 2
2.00% in country group 3
Political risk cover is compulsory in country groups 2 and 3. For country group 1, political risk cover is optional subject to an excess premium of 0.10%.
