AICS
Il Rischio Politico alla luce della situazione
internazionale: la Aon Political Map 2011
Credit Insurance from Aon UK perspective
18th May 2011
Mark Brincat / Lisa Knall
Main Sponsor Manchester United
Aon Risk Solutions l Trade Credit International l May 2011 1
Overview
Introduction by Lisa Knall
Why do companies buy credit insurance?
UK Credit Insurance market
How attitudes to credit insurance have changed
What is political risk?
The Mena region
Alternative solutions
Questions
Penetrazione Assicurazione Crediti nella UE
Francia
Spagna
Inghilterra
Olanda
Italia
Portogallo
Belgio
Austria
Grecia
Danimarca
Polonia
Finlandia
Svizzera
Germania
Premi in %
sul PIL
Aliq. Fiscali
Sui Premi
Incasso dei
Pagamenti in gg
0,046
0,040
0,068
0,031
0,089
0,018
0,025
0,033
0,031
0,020
0,021
0,030
0,031
0,034
19,00%
9,00%
6,00%
5,00%
7,50%
12,50%
5,00%
9,25%
11,00%
10,00%
0,00%
0,00%
0,00%
0,00%
39
58
47
53
40
72
49
48
42
32
38
41
35
40
• L’Italia è il primo Paese
per ritardi nei pagamenti.
• L’Italia è il Paese meno
sviluppato per quanto
riguarda la penetrazione
dell’assicurazione credito.
•La tassazione dei premi
dell’assicurazione credito
in Italia è la più alta dopo la
Germania
Fonte : Ufficio Studi EH Siac
Aon Risk Solutions l Trade Credit International l May 2011 3
Why do companies buy credit insurance?
Risk protection Financing Credit management SalesR
isk
pre
ven
tio
n
Facilitates access
to improved
financing
Underpins the credit management
function
Directs sales to key customers and
markets
Ris
k tr
ansf
er
Aon Risk Solutions l Trade Credit International l May 2011 4
Lead insurers in the market
Euler Hermes Coface Atradius
Part of AGF owned
in full by Allianz
Owned in full by
Natexis Banques
Populaire
Shareholders:
Groupo CyC (64.2%)
Swiss Re (25%)
Deutsche Bank (9.1%)
Sal. Oppenheim (1.7%)
Argentina, Austria, Belgium, Brazil,
Canada, China, Czech Republic,
Denmark, Estonia, Finland, France,
Germany, Greece, Hong Kong,
Hungary, India, Indonesia, Ireland,
Italy, Japan, Latvia, Lithuania,
Malaysia, Mexico, Morocco,
Netherlands, Norway, Philippines,
Poland, Portugal, Romania, Russia,
Singapore, Slovakia, South Korea,
Spain, Sweden, Switzerland, Taiwan,
Thailand, Tunisia, Turkey, UK, USA.
Algeria, Argentina, Australia, Austria,
Belgium, Benin, Brazil, Bulgaria,
Burkina Faso, Cameroon, Canada,
Chile, China, Colombia, Costa Rica,
Croatia, Czech Republic, Denmark,
Ecuador, Estonia, France, Germany,
Hong Kong, Hungary, India, Ireland,
Israel, Italy, Ivory Coast, Latvia,
Lithuania, Luxembourg, Malaysia,
Mali, Mexico, Morocco, Netherlands,
Norway, Panama, Peru, Poland,
Portugal, Romania, Russia, Senegal,
Serbia, Singapore, Slovakia,
Slovenia, South Africa, South Korea,
Spain, Sweden, Switzerland, Taiwan,
Thailand, Togo, Turkey, UAE,
Ukraine, UK, US, Venezuela.
Aruba, Australia, Austria, Belgium,
Brazil, Canada, Chile, China, Czech
Republic, Denmark, Finland, France,
Germany, Greece, Hong Kong,
Hungary, Iceland, India, Ireland,
Israel, Italy, Japan, Lebanon,
Luxembourg, Mexico, New Zealand,
Netherlands, Norway, Poland,
Portugal, Singapore, Slovakia, South
Africa, Spain, Sweden, Switzerland,
Tunisia, Turkey, UAE, UK, USA.
Aon Risk Solutions l Trade Credit International l May 2011 5
Independent credit insurers
United Kingdom USA Other
HCC
QBE
ACE Europe
Markel
Ducroire
Lloyd’s
Catlin
CIFS
Kiln
Beazley
Chartis
FCIA
CIGNA
Chubb
Exporters
CNA Worldwide
Assur Credit France
Sace BT Italy
Garant Versicherung
Austria
Credit y Caution Spain
Mapfre Spain
CESCE Spain
Zurich Switzerland,
Germany & UK
Equinox Global
Aon Risk Solutions l Trade Credit International l May 2011 6
Underwriting market summary
Aon Risk Solutions l Trade Credit International l May 2011 7
Structures types and options
Whole turnover
insurance
Complete self
insurance
Top up
insurance
Market excess
Aggregate first
loss
Catastrophe
insurance
Syndication
insuranceKey market
cover
ART solution
Buyer select
Single top up
insurance
Use of captive
Third party analysis & trade finance solutions
Aon Risk Solutions l Trade Credit International l May 2011 8
Client purchasing behaviours – how things changed
The financial crisis led to a change in
attitudes
Heightened credit risk awareness
Often perceived as a key boardroom issue
Companies seeking solutions across full
spectrum of receivable management needs
A willingness to invest in credit management
capabilities
Greater focus on TCOR
Willingness to risk share in return for greater
credit limit certainty
A need for a trusted advisor not just a placing
and servicing credit broker
Aon Risk Solutions l Trade Credit International l May 2011 9
Economic
Political
Economic factors look to asses notions of economic balance and sustainability.
Political factors aim to offer an assessment of the overall political situation.
Financial factors generally aim to give an assessment of capacity to service debt as well as financial depth.
What is political/country risk?
Financial
Aon Risk Solutions l Trade Credit International l May 2011 10
Transfer delays
Transfer delays relate to impediments to the transfer of deposited funds. Whereas the buyer may, in good faith, have deposited the funds administrative or bureaucratic delays, economic difficulties or foreign exchange shortages may result in a delay in the transfer of funds to the customer.
Export licence cancellation
Export licence cancellation refers to the arbitrary cancellation or non-renewal of an export licence that prevents the dispatch of goods (in the Customers country).
Natural disaster
Losses resulting from storms, floods, earthquake, volcanic eruption or tidal wave or other forms of natural disaster in the Buyer’s country.
Contract frustration
Contract Frustration refers to action or decisions taken by the government in the buyers country which prevents the whole or partial fulfilment of the contract. While not akin to expropriation, contract frustration may result in a significant reduction in the value of a contract. Covered events may include changes in pre-agreed tariff structures or import licence revocation.
Discharges of debt
The discharge of debt clause relates to the possibility that a loss could occur despite the fact that the buyer has taken appropriate steps to ensure payment. For example, the buyer may have made payment through an appropriate channel (such as a local bank) and therefore have valid discharge of the debt. However, bureaucratic or political factors that cause a delay to the transfer of funds may result in losses if exchange rate depreciation in the intervening period ensures that the deposited funds, when converted, amount to less than the originally contracted payment terms.
Public buyer default
This clause covers the failure or refusal on the part of a Public Buyer to fulfil any of the terms of the contract. A Public Buyer is defined as “an entity that cannot become insolvent”, e.g., a ministry or a state-owned company .
Moratorium on external payments
A moratorium on external payments refers to the possibility that the government is unable or unwilling to provide foreign exchange for payment of external obligations.
Political risk causes of
loss
War
Political risk insurance also covers damages associated with war, revolution, terrorism or general civil unrest.
Political risk causes of loss
Aon Risk Solutions l Trade Credit International l May 2011 11
Aon Trade Credit - Political Risk and Aon Benfield
Aon Benfield
leading reinsurance broker
for credit & surety
in the world
Aon Crisis Management
leading placing broker
in London Political Risk
market
Aon Risk Solutions l Trade Credit International l May 2011 13
MENA region
Economic and social challenges:
– Impact of financial crisis on GCC (Gulf Cooperation Council) was limited except in Dubai
– Failure of predominantly repressive Arab states to deliver good quality of life and services to growing populations
– Urgent need to reform education sector & privatising huge state industries
– Limited safety net for the poor and underprivileged
– Outside the GCC - poor delivery in terms of human development
– Rapidly growing populations pressure on infrastructure, need for large job creation annually
– High dependence in GCC on oil and gas - need to diversify
– The impact of political Islam on society
– The emergence of new media (internet) which is no longer state-controlled
Aon Risk Solutions l Trade Credit International l May 2011 14
Political Risk cover
No cover available
– 11 countries including Libya, Iran, Iraq etc
Offered as standard for companies exporting outside of EEC
CILC only cover
– Congo, Cuba, Pakistan etc – offers cover for Pre Credit Risk
Open account with political risk cover
– Available for most markets
Aon Risk Solutions l Trade Credit International l May 2011 15
What are the alternatives?
Alternative payment methods
– Payment on advance
– Parental guarantee (cross border)
Bank solutions
– Bank guarantee
– ILC, CILC, CAD
Alternative risk transfer
– Receivable puts
– Bankruptcy swaps
– Forfait
– Captives
– Silent confirmation by banks
– Information products - Aon Trade Manager, Tinubu Square
Aon Risk Solutions l Trade Credit International l May 2011 16
Aon Trade Credit - responding to clients’ needs
Aon Receivables Management Solutions – our dedicated credit
management consultancy team.
Aon Trade Captivator – our risk diagnostic platform that provides a total
solution for trade credit exposure management within the captive.
Aon Trade Link – our online portal for customer financial information, risk
and monitoring tools.
Aon Trade Manager – our online credit risk diagnostic tool that gives a
recommended credit limit for each of your customers.
Aon Trade Top-Up – our exclusive “top-up” insurance facility providing
additional excess coverage and capacity.
Aon Buyer Bank – our buyer insight and limit capacity identification platform
Market leading analytical and diagnostic tools to assess your total cost of credit risk
Objective advice and “one-stop-shop” for credit risk management solutions
Unrivalled credit risk management capabilities through The Hub
Project management team to monitor and research product innovation based on your needs
Benchmarking of your needs against industry peers and insurer products