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Credit and investment insurance for export credit agencies
The public sector: key risks and concerns
When considering opportunities in developing economies, investors and financiers often face heightened risk of financial default, as well as a wide range of political risks which can prevent the movement of goods or cause major disruption to a project – such as government confiscation, expropriation, political unrest, or trouble converting and accessing hard currency. In order to transact, they therefore need know they are covered against such risks.
The role of export credit agencies (ECAs) and multilateral organisations can be vital in supporting the economic growth of developing countries, promoting foreign direct investment into, and trade with, these markets. However, in providing risk mitigation or funding to their clients, public sector entities are left with significant risk of their own – particularly as long-term credit risk solutions are often required in the very markets where such is the greatest challenge to achieve.
How can Gallagher help the ECAs manage risk?
Our expertise in structured credit and political risk means we are well placed to support ECAs by spreading their risk through carefully selected reinsurance products which cover a portion of the underlying insurance contract. Cover can be structured on a ‘follow the fortunes’ basis, putting the ECA in the driving seat and giving enhanced confidence that the reinsurance will respond in the event the ECA requires it.
Reinsurance protection allows ECAs to increase capacity available to their clients; ensure portfolio diversification, by managing concentration risk; and adhere to capital requirements, where applicable. It also provides a degree of confidence in the ECA’s own underwriting approach. Solutions can be considered at a transactional level on a case by case basis or alternatively in respect of a static or dynamic portfolio.
Insurance for multilateral organisations
A multilaterals’ mandate to facilitate trade and development in emerging markets exposes them to a higher degree of risk. In fact, the very solutions they are tasked with providing are often those which in a pure commercial market are the most difficult to achieve. As such, they too can benefit from the support of insurance. By distributing risk to commercial insurers, multilateral organisations can free-up limit headroom, allowing them to consider additional opportunities in support of achieving their mandate; manage capital adequacy requirements; and ensure a diversified portfolio.
The partnership between the commercial insurance market and public sector financiers and insurers has been one of the strongest growth areas in recent years. As a consequence, there is now increased understanding of this broad sector and an appetite for partnership.
Your specialist Gallagher team
Our public agency and multilateral team is an integral part of Gallagher’s wider Structured Credit and Political Risk team, providing specialist risk management solutions for organisations who trade and invest worldwide.
We bring experience from a range of backgrounds, from insurance, to banking, and the public sector, enabling us to combine our expertise and understanding of this sector, and provide tailored products.
Support throughout the claims process
When you need to make a claim, we are here to support you and help ensure payment. We have handled and arranged settlement of what we understand to be the largest ECA reinsurance claim in the market being excess if USD 250m.
Public and Multilateral Organisations
- Insurance and reinsurance products for ECAs and multilateral organisations
- Established limits increased through shared risk
- A specialist team with the benefit of public sector experience
- Dedicated in-house claims team