1. “EMERGENCE OF TRADE CREDIT
INSURANCE IN THE MIDDLE EAST MARKET
– AVAILABILITY & PRACTICE”
Presented By:
AFTAB HASAN - CEO
‘Arya Insurance Brokerage CO. (LLC)’
Dubai - U.A.E.

2. PRESENTATION OUTLINE
 Concept of Trade Credit Insurance
 Origin of Trade Credit Insurance
 Why to have Trade Credit Insurance?
 Existing Global Underwriting Markets – Key Players
 Availability & Practice by Insurers
 Policy Structures, Coverages & Capacity
 Current Market Prevailing Conditions
 Regional Country Coverages
 The Role of Broker / Advisor
 Summary
 Q & A

3. CONCEPT OF TRADE CREDIT
INSURANCE
What is Risk ?

4. CONCEPT OF TRADE CREDIT
INSURANCE
 Trade credit insurance, business credit insurance, export
credit insurance, or credit insurance is an insurance policy
and a risk management product offered by private insurance
companies and governmental export credit agencies to
business entities wishing to protect their accounts receivable
from loss due to credit risks such as protracted default,
insolvency or bankruptcy.
 Trade Credit Insurance can include a component of political
risk insurance which is offered by the same insurers to insure
the risk of nonpayment by foreign buyers due to currency
issues, political unrest, expropriation etc.

5. ORIGIN OF TRADE CREDIT
INSURANCE
History:
Trade Credit Insurance was born at the end of
nineteenth century but it was mostly developed
in Western Europe between the First and
Second World Wars. Several companies were
founded in many countries; some of them also
managed the political risks of export on behalf
of their own state.

6. ORIGIN OF TRADE CREDIT
INSURANCE
History: (Cont.……)
 It is documented that Issuance of first Credit Insurance
Policy was done in 1850 by a Government backed British
Commercial Insurance Company which was the first Specialist
Credit Insurer.
 Trade Indemnity a privately owned insurance company
formed in 1918 was the First Private Insurer to issue Credit
Insurance Policy.
 After the end of First World War UK established in 1919 a
separate Export Credit Agency reporting to the Secretary of
State for Trade and Industry called “Export Credit Guarantee
Department” (ECGD).

7. ORIGIN OF TRADE CREDIT
INSURANCE
History: (Cont.……)
 In 1991 following the privatization of the short-term
side of the UK's Export Credit Guarantee
Department (ECGD), a concentration of the Trade
Credit Insurance market took place and three groups
namely Euler Hermes, Atradius & Coface now account
for over 80% of the global credit insurance market
emerged rapidly. These main players initially focused
on Western Europe but rapidly expanded towards
Eastern Europe, Asia and America.

8. WHY TO HAVE
TRADE CREDIT INSURANCE?
 Protection Against Bad Debt
 Comfort To Financers
 Balance Sheet Protection
 Expansion In New Market
 Assist Debt Collection
 Information & Due Diligence On Client
 Proper Corporate Governance
 Relaxation On Available Credit Conditions

9. EXISTING GLOBAL UNDERWRITING
MARKETS – KEY PLAYERS
Euler Hermes came into existence with the merger of the two credit insurance companies of
the Allianz Group. Euler Hermes is the world's number one credit insurance provider.
•Presence in 50 countries
•Part of Allianz Group
•AA-rating by Standard & Poor's (Feb. 2014)
•34% Global Market Share as at Dec 2013.

10. EXISTING GLOBAL UNDERWRITING
MARKETS – KEY PLAYERS
Atradius occurred with the merger between NCM and Gerling Kreditversicherung. Later
renamed Atradius after it was demerged from the Gerling insurance group.
•Presence in 50 countries
•Ownership: Grupo Compañía Espanõla de Crédito y Caución, S.L. (Grupo CyC) 64.23% &
34.95% Grupo Catalana Occidente S.A. (GCO)
•A rating by Standard & Poor's, A.M. Best is ‘A (excellent) outlook stable’ and ‘A3 outlook
stable’ by Moody’s
•22% Global Market Share as at Dec 2013.

11. EXISTING GLOBAL UNDERWRITING
MARKETS – KEY PLAYERS
Coface was formerly a French government sponsored institution established in 1946; this
company is now part of the a wholly-owned subsidiary of Natixis, the financing, asset
management and financial services arm of the BPCE Group, France’s second largest banking
group.
• Presence in 67 countries
• As of August 7th 2014, the shareholding is as follows: Public: 58.50%; Natixis: 41.24%;
Employees: 0.26%.
• AA-rating from S & P
•24% Global Market Share as at Dec 2013.

12. EXISTING GLOBAL UNDERWRITING
MARKETS – SOME OTHER PLAYERS
Trade credit insurance stimulates global trade specially after global
crisis. Here is a listing of some of other insurance companies
offering Trade Credit Insurance.

13. AVAILABILITY &
PRACTICE BY INSURERS
Trade credit insurance can help a company protect accounts
receivable from losses caused by the insolvency, protracted
default, or political events.
Most of the companies offer Coverage based on following
structure according to clients specific requirements, including:
 Whole Turnover: A single contract to insure all of your firm’s
receivables;
 Key Accounts: A contract designed to insure only your largest
customers or another defined band of customers; and
 Single Debtor: A policy designed to insure exposures related to
one customer.

14. AVAILABILITY &
PRACTICE BY INSURERS
Each of these contracts can be designed for domestic sales, export
sales, or a combination and can be defined regionally or globally.
Trade credit insurance is applicable for companies that:
 conduct business on open, unsecured credit terms or have
significant bad debt reserves;
 have heavy export activity or international receivables;
 want their enterprise risk management philosophy to be
applied to treasury and financial management;
 have accounts receivable concentrations to only a few accounts;
 seek asset-based lending arrangements with banks; and
 may not collect sufficient credit information on their own
customers and value a credit partner to access credit risk.

15. POLICY STRUCTURES,
COVERAGES & CAPACITY
Whole turnover
Domestic
 Export
Commercial
 Political
 Trade Specific
 Special Risks
Anything else
 Supplier default
Captives
 Specific Account
 Single Customer
 Selection of Customers
 Bonds
Niche Market
 Specialist Underwriters

16. DISTINCTIVE POLICY
STRUCTURE
 Multi buyer/obligor or single and specific risk
 First loss/risk share/co-insurance
 Endorsed buyers by credit limit
 Tenor flexibility (i.e. terms)
 Formula maximum liabilities, although negotiable
 Comprehensive cover (TCI and PRI) in some instances
 Currency flexibility within most policies
 Point of Issue?

17. POLITICAL RISKS (PRI)
 Contract Frustration
 Confiscation
 Expropriation
 Nationalization
 Deprivation
 Strikes
 Civil Commotion
 Rebellion
 Terrorism
 War
 Political Violence
What is covered ?

18. CURRENT MARKET PREVAILING
CONDITIONS
 Underwriters are providing flexible and innovative products
 Sober outlook of Reinsurance Capacity
 Wide choice of underwriters available
 Competitive pricing offered with key players
 Supportive risk underwriting condition
 Expansive international/global outlook
 Profit margins continue to squeezed
 Market is cyclical in nature and reactive
 Increased divergence between those underwriters who are looking to build or
expand their accounts and those who may become increasingly defensive or
selective
 This means a market place where it will be essential to employ a SOUND
BROKER!

19. REGIONAL COUNTRY COVERAGES
UNDERWRITERS DEAL FREQUENTLY
UAE
Saudi Arabia
Kuwait
Qatar
Oman
Bahrain
Egypt
Lebanon
Yemen
Jordan
Turkey
Algeria
USA
Canada
United Kingdom
Germany
France
Spain
Switzerland
India
China
Pakistan
Bangladesh
Srilanka

20. C0UNTRIES WHICH ARE UNSTABLE
OR ON SANCTION ARE OFF RISK
Iran – Iraq – Sudan – Libya – Afghanistan etc…..
Principal trade credit insurers are off risk for these
markets and have very less appetite or reservations by
most underwriters due to:
 Restricted PRI interest/availability from Lloyds of
London
Although in certain cases they cover with:
 Certain difficult exceptions
 Obligor specific underwriting conditions

21. THE ROLE OF BROKER/ADVISOR
TO CLIENT
 Advising client with experts tailor solutions to the
unique needs of each company or organization
 Negotiate with Insurers / Underwriters on behalf of
client
 Assist in understanding Policy Structure to client
 Negotiating Competitive Price – new business or
renewals
 Assisting Client in settlement of their legitimate Claims
 Negotiating Credit limits to be approved per buyer
 Manage smooth relationship between client and
underwriters
 Training, Policy Compliance & Reviews

22. ARYA INSURANCE BROKERAGE
COMPANY (AIBC)PROFILE
 Formed in UAE in 1988 replacing the name of Secure
Insurance Services
 ISO 9001 Certified Company by TUV Germany
 Full-fledged Trade Credit Insurance Division with
proficient team of experts with vast industry
knowledge
 Strong associations with major key players of the
Trade Credit Insurance Market
 Bespoke client service – team approach
 Multi-national client portfolio
 Negotiation on your behalf to provide a cost-effective
program

23. CONCLUSION
 Plenty of options open for buyers, but beware of the long-term
implications.
 Strong political risk (PRI) appetite for risks within region,
written for the most part from Underwriters in London
 Major banks involved in trade finance which mandates
compulsory Trade Credit Insurance to lenders already have
substantial presence in the region.
 Intelligent ‘INSURANCE BROKER’ can help identify and
quantify risks and bring them under control. They can create
and implement customized solutions employing the most
effective blend of risk mitigation, risk transfer, and advanced
risk financing.

24. CONCLUSION
Considering all above explanation I
do not anticipate a drastic increase
in rates particularly for 2015 rather
will expect each market to be rated
separately, taking into account their
exposure and experiences across
industry.

25. QUESTIONS?