and Political Risk Column by Doris EgliSchaufelberger, SCOR SE
UPDATES
| ICISA Committee's Working Groups
6 | What's the Point? How do TCI and Surety prove their worth in challenging times Insight by Daniel de Burca, ICISA
10 | The cost of Pay me later: 1 in 5 listed corporates pay their suppliers after 90 days globally Insight by Maxime Lemerle, Allianz Trade
Embracing diversity: Empowering women in credit
by Raluca Ezaru, ICISA
| EXIM Thailand Joins ICISA
with Dr. Rak Vorrakitpokatorn
Global sanctions against Russia: where we are and what’s next?
Disclaimer
All articles in the ICISA Insider represent solely the opinions of the individual authors, not ICISA, unless otherwise stated. Original articles appearing in the Insider may not be reprinted without the express permission of the author and ICISA. When citing articles, please refer to the title of the article, the author, and the relevant edition of the Insider, including a full url to the article page.
Foreword
As we embrace the summer, we are happy to present this season's edition of our magazine, packed with fresh insights and compelling discussions related to our industry.
In this issue, we are delighted to feature exclusive interviews with the newest members of our association, EXIM Thailand and Interamerican. These conversations provide a fascinating glimpse into their visions, innovative approaches, and the unique contributions they bring to our collective efforts.
The performance and trends within the Trade Credit Insurance (TCI) and Surety sectors are vital barometers of our industry's health and resilience. Daniel de Burca looks carefully at the latest results of ICISA members, and he is offering a comprehensive analysis of these results. These insights are essential for the evolving landscape and driving sustained growth. Diversity remains a pivotal theme for our industry, not only as a social imperative but as a strategic advantage. Raluca Ezaru explores the current state of diversity within Credit Insurance and Surety, examining how inclusivity can fuel creativity, enhance decision-making, and strengthen our industry's fabric. By embracing diverse perspectives, we can unlock new potential and foster a more equitable future.
Additionally, we address a pressing issue impacting our sector: the financial strain caused by delayed payments. With findings that 1 in 5 listed companies pay their suppliers 90 days after, we analyze the broader economic implications and discuss potential solutions to mitigate these risks.
There are more articles, which we hope you find inspiration and actionable insights that will propel your work forward. This summer, let's continue to push boundaries, champion diversity, and drive positive change in our industry.
All the best, Richard Wulff
The fascination of Credit, Surety, and Political Risks
Column by Doris Egli-Schaufelberger, Underwriting Manager, Credit, Surety & PRI, SCOR SE
I started my professional career in the direct insurance industry, where I gained experience in different lines of business and positions, including reinsurance. When I was asked to join the Credit, Surety, Political Risk team at Zurich Re, I was very happy, but I did not think at that time that I would stay and be active in credit insurance, surety, and political risks for more than 25 years. Amazingly, I have never felt bored!
I was very lucky to start in a small team in a company with a good rating. We received both traditional and nontraditional submissions. I worked in many different markets, which allowed me to travel to countries I had not known beforehand. I was very curious and did not really know what to expect when I made my first business trips to Kenya, South Africa, and some countries in the Near & Middle East. I was not familiar with Eastern Europe, the Balkans, and the Baltic States before I met our clients in these regions. I feel very privileged to have had the opportunity to travel to so many different places. Some of these places I would have certainly missed due to wrong perceptions. I got to know so many interesting and nice people from all over the world and learned a lot about different cultures.
There are, however, other aspects that we need to consider in our underwriting, including the political environment of a country, regulatory issues, and laws. Nobody was talking about sanctions and embargoes when I learned the basics of CSPR 25 years ago. Additionally, the Basel regulations and Solvency II were not topics then. New regulations are always coming up, which can create new opportunities for our lines. Our industry is so diverse. I learned a lot over the years without even realizing it, and I am still learning.
Each of the three lines has its fascination, and all have an important role in the financial industry. They assist corporates, from small to large companies, and sometimes even individual persons (e.g., housing bonds) to avoid losing money due to the insolvency of a business partner. During the financial crisis of 2008 and 2009, the industry paid out claims exceeding 9 billion EUR to its insured policyholders. Many of them would not have survived without the Trade Credit Insurance compensation.
I have been active in several working groups in ICISA (credit and surety committee). The knowledge exchange in the committee meetings, especially in the working groups, has been very interesting and professional. I still remember my first experience in a working group. We had to translate the Credit Insurance booklet from English to German. As all our correspondence is in English, it was trickier than I thought. In any case, it was a good basis for my contribution to the credit insurance book. Nowadays, I very much appreciate our lively discussions in the Suretypedia working team. On that occasion, I would like to thank all my colleagues in the various working groups for the very interesting discussions and professional knowledge exchange. Furthermore, I would like to encourage all the ICISA committee members to join working groups. You will benefit from the professional discussions with your peers, and you will contribute to successful committee meetings.
The last topic at the ICISA AGM in Madrid was about “Future Talent in our Industry” and “How can we attract new talent? How can we make our industry more attractive?” A few weeks later, I attended the AGM of the Forum Cauzioni in Italy, and we discussed the same topics. Why is it so difficult to make our fascinating industry more attractive to new talents?
ICISA Committee’s Working Groups
ICISA has recently formed working groups within the committees. The Management Committee of ICISA has given the mandate to the committee to form a working group(s) for each committee in order to produce an output which will be beneficial for our industry. Each committee is given the liberty to choose the topic for the working group depending on their expertise and knowledge on the subject. Through the Autumn Meeting of each committee and ICISA Spring Meetings in March, all committees have managed to form working groups.
Committee of Underwriters (CoU)
Systemic Risk Working Group: This group has produced a paper to take away the impression that TCI's panacea to systemic risk is to implement non cancelable limits.
Accumulation Project Working Group: Sharing best practices on TCI industry. Unlike other types of insurance, TCI deals with large exposures per risk. However, the nominal exposure in TCI is not necessarily similar to the expected loss.
Credit Insurance Committee (CIC)
Megatrends Working Group: This group explores the trends affecting our industry
Banking/Finance Working Group: This group examines the relationship and co-operation between TCI companies and financial institutions.
Credit and Political Risk Insurance (CPRI) Committee
Evolution in CPRI: The newly named committee, CPRI Committee, previously Single Risk Committee, just formed a new working group which focuses on the development and transformation of CPRI.
Surety Committee (SC)
Cross Border Working Group: This group evaluates the International Bonding topic, when it comes to cross border surety transactions. The initial idea of this Working Group is to provide recommendations and guidance on this topic as well as touching base on legal & underwriting issues.
ESG/Decommissioning Bonds Working Group: The newest working group of the Surety Committee focuses on how surety providers can pro-actively support energy transition.
Innovative Guarantee Working Group: This group is looking for a new and innovative types of guarantees and bonds to meet evolving market demands.
Suretypedia Working Group: The first working group of the SC, this group has produced definitions related to Surety industry. The work from this Working Group can be found on ICISA Website
What’s the point?
How do TCI and Surety prove their worth in challenging times?
Daniel
de Búrca, Head of Policy and Regulatory Affairs, ICISA
ICISA published its annual statistics on the trade credit insurance and surety industry in June this year. These results – aggregated from across the global membership of the association – showed that despite difficult economic challenges, trade credit insurance and surety continued to show their value to the global economy.
Whether through making trade more resilient or supporting the delivery of critical infrastructure, the industry continues to play a key role. Increases in both premium and exposures across TCI and surety lines show the growing demand for the quality protection ICISA members provide, but also trust in the performance of that protection. That too is shown in the increase in claims also seen across both credit insurance and surety lines.
It is often said in the insurance world: if you’re not paying claims, you’re not doing insurance. And that brings up a really interesting question that those of us in the industry probably don’t think about very often: Generally speaking, what is the point of insurance? This may seem like an obvious question with obvious answers. Surely, it’s as simple as being about mitigating risks individuals and businesses face. When bad things happen, insurance gets the policyholder back on their feet and returns them to the position they were at when the loss event occurred. Pretty straightforward, right?
Well, that’s the theory at least. The truth today is a little more complicated. Changing risk environments, pressures on profitability and meeting investor expectations of return, regulatory change and tightening prudential requirements. All of these and more impact the underlying concept of insurance. If insurance is about protection – and paying claims being the obvious example of that – how does that square with managing exposures, meeting capital requirements, and rewarding investors?
The growing protection gap
If the basic existential reason for insurance is simply to provide protection against monetary loss from unforeseen
events, why then do we have such enormous protection gaps around the world? The protection gap usually refers specifically to the growing disparity between levels of insurance against losses from natural catastrophe and the cost of major events. Swiss Re puts the 10-year protection gap for such events in North America at 45%, 70% in, at 80% in LatAm, and a whopping 85% in Asia.
The reasons for these gaps can be various. Sometimes it is because those economies are starting from an already low level of insurance take-up. The use of insurance to protect property and other assets in many countries – especially developing markets - is often seen as a luxury or tertiary consideration. In other case, the reason comes down to “insurability” of risk. That is that the likelihood of paying large claims is so high, that insurers are unable or unwilling to take on that level of exposure. Reasons driving this can be simple profitability, the need to meet investor demands for regular return on equity, or to meet prudential requirements.
But protection gaps can also arise in more discrete segments of the insurance sector. For example, due to increased litigation and related inflation in litigation costs and pay-outs, liability insurance markets in several countries have become significantly constrained in recent years (e.g. public liability cover for events in Ireland, or for sports clubs in Australia). This is in part driven by the exit of some insurers from those lines, reducing competition. On the other hand, premiums also rise both due to lower competition and the underlying market conditions.
This makes it less attractive for customers and can also have an impact on insurers’ reputations. So, not only is there a protection gap, but the wider sentiment towards insurance is damaged. This brings us back to our earlier question –what is the point of insurance under these circumstances?
Prudential, fiduciary and other demands dictate that at the very least, exposures are reduced, and the availability of protection shrinks. This may reduce claims for those remaining in the market and preserve their profitability, but at the expense of greater risks being borne by individuals
But protection gaps can also arise in more discrete segments of the insurance sector. For example, due to increased litigation and related inflation in litigation costs and pay-outs, liability insurance markets in several countries have become significantly constrained in recent years (e.g. public liability cover for events in Ireland, or for sports clubs in Australia). This is in part driven by the exit of some insurers from those lines, reducing competition. On the other hand, premiums also rise both due to lower competition and the underlying market conditions.
This makes it less attractive for customers and can also have an impact on insurers’ reputations. So, not only is there a protection gap, but the wider sentiment towards insurance is damaged. This brings us back to our earlier question –what is the point of insurance under these circumstances? Prudential, fiduciary and other demands dictate that at the very least, exposures are reduced, and the availability of protection shrinks. This may reduce claims for those remaining in the market and preserve their profitability, but at the expense of greater risks being borne by individuals and businesses. In the most extreme version of this story, the question becomes an impossible one of meeting all risks regardless of their commercial or prudential sense, or remaining liquid and a viable entity in your own right.
How does this apply to TCI and surety?
We’re not in such circumstances within the TCI and surety market – thankfully! But we’ve only just emerged from the Covid-19 pandemic, where questions were asked about credit insurance and whether it is the umbrella that doesn’t open when it rains. This experience and past experiences have taught our sector the need to better explain how we make decisions and how the protection we provide works. A good reputation built over many years can be undone overnight – and such bad memories, whether justified or not, tend to last longer than any good reputation.
Part of maintaining that good reputation and trust involves being clear with insureds about their risks. This includes, for example, having frank conversations about the viability of continuing to trade with buyers who have seen a significant deterioration in their credit risk. Indeed, while reducing the availability of or cover on particular buyers may seem selfserving for the insurer, it is clearly not in the interest of any company to trade with partners that are unlikely to be able to pay. This is where excellent communication and paying claims efficiently creates the kind of goodwill that leads customers back to us, rather than drives them away.
This also points to the fact that there must be a balance. Even when we accept that the fundamental purpose of insurance is to provide protection, that does not mean that protection must be given in all cases, or at all times. For example, common sense would suggest that building a house in a wildfire zone without reasonable fire protection is not only unwise, but too risky to expect to be insured. In fact, to insure such a risk would also undermine the protection offered to others whose houses do not have such elevated risk. In this way, the collective protection principle that also sits behind insurance cannot be ignored.
This also highlights the important role of government in this question. Authorities which encourage or enable economic activities must also understand what reasonable and unreasonable risks look like. If after that, they still decide that something which has an inflated risk also has a social benefit in pursuing, then this may create opportunities for public/private cooperation to support investment, but also to mitigate risk.
Questions about reasonable risk levels also apply across all other lines of insurance, including TCI and surety. What matters is that decisions about when, where and why insurance is given (or not) are clear and justifiable. Where insurance is available for risks, that protection must be predictable and consistent over time in line with the evolution
of the risk environment. In this way, consumers can rely on their insurance, convert that into entrepreneurial confidence, and go about their business in a way that drives growth, innovation and continued success.
TCI and Surety performance in difficult times
This also brings us back to the ICISA annual statistics and what they show us about the trust that consumers have in TCI and surety in challenging economic periods. It is not surprising that in such times, those involved in trade, investment or commerce seek out more protection. They will have firsthand experience of the increased difficulty of operating and the challenges that can arise. They may also be experiencing longer payment periods from counterparties. Research presented in this edition of the Insider from Allianz Trade notes, 47% of corporates globally reported an increase in Day Sales Outstanding (DSO) at the end of Q1 2024. DSO is a key contributor to the observed increase in Working Capital Requirements for the third year in a row. Similarly, anecdotal reports from around the world show that difficulties in contractor markets are being felt by sureties with increased bankruptcies in most locations.
Increased demand for the kind of protection provided by TCI and surety saw strong growth in both markets throughout 2023. ICISA’s surety members reported an increase of premiums written by 8.9%, which saw premium income cap out at just under EUR 7 billion for the year. This corresponds to insured exposures of EUR 1.4 trillion globally – an increase of 7.7% over 2022’s figures. TCI members (shortterm, whole turnover) also noted similar trends for 2023. Premiums peaked at EUR 8.2 billion, an increase of 5% on the previous period. This translated to an insured exposure amounting to EUR 3.2 trillion; up 4.5% on the year before.
It's not simply that businesses, municipalities and other users of ICISA members’ products bought more protection throughout 2023. Insurers stepped up when needed, and proved to their customers what the point of insurance is – by paying claims. ICISA’s surety members reported a significant increase in claims for 2023, paying out EUR 2 billion worldwide; an increase of 68.5% on 2022. TCI providers on the other hand saw a more modest, yet also meaningful, increase in claims of 11.4% - a total of EUR 3.2 billion being paid back into the economy.
Of course, what these statistics don’t necessarily show are the many cases where ICISA members stepped in and supported customers before losses could occur. This could be to advise about the deterioration of creditworthiness in a buyer, or by working with the beneficiary of a bond to find short-term solutions to help a contractor through a
rough patch. This mixture of enhancing risk management, supporting customers and risks, and ultimately paying claims when all else fails is the purpose of TCI and surety.
Anyone who has invested will know the maxims about returns not being guaranteed, that the value of investments may go up or down, and ultimately, that you may lose your initial investment. Insurance is not about taking away risk entirely. It’s necessary that those running businesses or managing corporate or public finances have “skin in the game”. This means that they act responsibly and with common sense. However, insurance allows them to adjust their risk appetite sufficiently to take sensible risks, to innovate, and to succeed.
This is where TCI and Surety prove their worth time and time again. There will always be risks that cannot be underwritten for different reasons. Sometimes those reasons may not be well understood by those seeking protection or might not coincide with their perception of the risk. This is why industries like ours must focus on two basic aims – to provide quality, predictable protection to support sustainable economic performance, and to communicate clearly with not only our customers, but to governments, regulators and the wider public about how we do that. This is a truism at the best of times, but it’s essential when times are difficult and insures must carefully manage exposures – balancing those interests we noted above. But at its core, we must not forget the reason why insurance exists.
The cost of pay me later: 1 in 5 listed corporates pay their suppliers after 90 days globally
Maxime Lemerle, Lead Advisor for Insolvency Research Allianz Trade
Corporate financing constraints hit a record high in 2023, mainly driven by the largest jump in payment delays since 2008. In 2023, global Working Capital Requirements (WCR) increased for the third consecutive year, reaching 76 days of turnover, driven by softer economic growth and higher operating and financing costs. All regions saw an increasing trend in WCR, notably APAC (+2 days), North America (+1) and Western Europe (+1). Days Sales Outstanding (DSO) appeared as the key driver of the annual rise in global WCR with the highest increase since 2008, almost double that of 2022 (+3 days to 59), notably in Asia and North America, while in Europe, the inventory glut and associated costs explained 60% of the rise in WCR. Almost all sectors have seen their DSO increase globally, with most seeing a consequent increase in WCR despite some reductions in Days Payables Outstanding (DPO) and adjustments in inventories.
The start of 2024 brought uneven improvement. Following the seasonal pattern that is usually observed in the first quarter, average WCR bounced back noticeably in Q1 2024 (+7 days q/q) from the drop recorded in Q4 2023 (-6 days q/q), with China leading the way (+17) ahead of Western Europe (+8) and the US (+3). Compared to Q1 2023, however, this corresponds to a slight reduction globally (-1 day y/y) with opposite momentum between, on one side, the US and China (-2 and -1, respectively) and on the other Western Europe (+1), where the rise in WCR resulted from higher DSO (+2) and DPO (+1) and flat inventories. Interestingly, the net changes in payment behaviors, when combining DSO and DPO, contributed to enlarge WCR across almost all sectors globally, notably in construction and machinery equipment, with the majority of them (4 out of 5) posting an increase in DSO that outpaced the rise in DPO in y/y terms. Yet, the shifts in inventories proved to be the primary driver behind the annual change in WCR, pushing almost
half of the sectors to register a lower WCR compared to the first quarter of 2023 – in particular computers & telecom (-6), transport equipment (-3) and electronics (-3), as well as textiles, chemicals, automotive and household equipment – and all the others to experience a larger WCR, notably construction, paper and metals.
Globally, 47% of companies posted payment delays above 60 days of turnover at the end of Q1 2024. In Europe, this share (45%) was close to the global average, while it was above in Asia (51%) and below in North America (35%). At the global level, the sectors with the highest proportion of firms with large DSOs were machinery equipment (71% above of 60 days), transport equipment (68%), electronics (67%) and computer/telecoms (63%). Yet, it is worth noting that 22% of companies worldwide are paid after 90 days, suggesting that the role of suppliers as the invisible bank
is coming back in full force, increasing liquidity risks in the system. Of course, firms can mitigate the impact on WCR by an extension in DPO and/or a decrease in inventories, but the level of WCR varies widely across countries and, more importantly across sectors. Overall, looking at key markets, the highest proportion of firms with large WCR as of Q1 2024 is in China (42% above 90 days compared to 35% in Europe and 30% in the US) and in specific global sectors, including machinery equipment (55% above of 90 days), electronics (54%), transport equipment (53%) and computer/telecoms (49%). The higher the WCR, the more companies spend their financial resources on just running the business instead of investment, product development, geographical expansion, acquisitions, modernization or debt reduction.
The ongoing profitability squeeze sets the stage for payment terms to deteriorate further, especially in Europe. Several economic, financial and regulatory considerations shape both payables and receivables management, which in turn vary widely across industries. But we find that profitability is the most important driver. Our panel1 shows that a 1pp drop in profitability could increase the difference between DSO and DPO by over 7 days of turnover. Profitable firms generally have more leeway in managing their payables and receivables. They might choose to pay suppliers early to secure discounts or improve supplier relationships. In contrast, less profitable firms might extend payable periods to suppliers as a way to manage liquidity pressures. There are often also industry-specific dynamics at play. For example, the construction sector faces long project timelines and variable costs. As a result, companies in this sector might prioritize flexible payment terms to accommodate the unpredictability of their operations. In contrast, fast-moving consumer goods companies operate on thin margins and required tight control over receivables to sustain liquidity. Similarly, firms in the luxury goods sector, where quality and the timeliness of inputs are crucial, might choose to pay and get paid quickly. In this context, the looming profitability squeeze in Europe suggests that payment terms could worsen significantly in the region. 2024 will be a year of reality checks for companies: weaker-for-longer demand is likely to result in increased competition, leading to reduced pricing power and declines in revenue growth, increasing the pressure on profitability at a time of still-high operating costs, with little relief from energy prices and labour costs.
Addressing late payments is key to build resilience for European corporates, but the devil is in the details. Official negotiations and discussions on the European Commission’s proposal for an EU Late Payment Regulation have been on hold since June, but the latter suggested that payment terms could be reduced from the current recommended 60 days to 30 days binding. While the European Parliament has incorporated the possibility to deviate to 60 days if agreed by contract or to 120 days for slow-moving or specific goods, it still brings significantly lesser business flexibility compared to the current terms and is likely to increase the
1 Using data for over 2000 firms from the UK, France, Germany, Italy and Spain over 18 years, and using the difference between DSO and DPO as proxy for payment delays.
Methodological note:
- Our computation of DSO, DPO, DIO and WCR is based on the financials of listed firms as available on LSEG Refinitiv for 35 countries i.e. 45,000 firms representing over USD40trn of turnover in 2023.
- We focus on companies having released an extended and detailed version of their financials (i.e. operating/financial results + balance sheets) for each period of reference (quarter, year) in order to have a stable universe, with annual figures computing the succession of quarterly changes and dispersion data showing the last quarter (Q1 2024).
- All figures are as of 26 June 2024
financing gap for more than 40% of European companies paying after more than 60 days as of Q1 2024, resulting in a significant macroeconomic impact. To reduce payment terms to 30 days, European companies would need EUR2trn in additional financing. At current interest rates, that would increase corporates’ interest payments by EUR100bn, the equivalent of a -2pps loss of margins. Ultimately, boosting corporate profitability by lowering costs (labor, taxes, financing) could go a long way in improving payment culture in Europe.
A Guide to Trade Credit Insurance
By the International Credit Insurance & Surety Association
A
practical and accessible industry-wide
reference on Trade Credit Insurance, written by a team of industry experts.
This compact volume is a practical guide for anyone interested in Trade Credit Insurance. The International Credit Insurance & Surety Association (ICISA) presents an approachable but detailed guide written collaboratively by carefully selected industry experts. The guide describes the lifecycle of the credit insurance product, from the initial application stage to the expiration phase of the policy, including practical use aspects for credit managers. The volume offers compact information on the history of trade, the need for protection against trade credit risks, and solutions offered by credit insurance providers. The focus is on short term credit, including whole turnover policies and single risk policies.
Readership
Suitable for anyone interested in Trade Credit Insurance, from credit managers to policymakers.
Importance
• Collaboration of a diverse group of experts from top organisations around the world
• Written in an approachable style, accessible to the non-specialist
• Includes extended glossary of key terminology
• Includes a list of relevant resources for further reading
Content
Foreword; Introduction; Disclaimer; 1.What is trade?; 2. What is trade credit insurance?; 3. Product types; 4. Risk types; 5. Typical set-up of a trade credit insurance contract; 6. Premium, the price for cover; 7. Day-to-day policy management; 8. Buyer risk underwriting in trade credit insurance; 9. Debt collection; 10. Imminent loss and indemnification; 11. Renewal, expiry, termination of a policy; 12. Single risk business; 13. The single risk insurance market: Private and public players; 14. Reinsurance of Trade Credit Insurance; Trade Credit Insurance resources; Glossary of trade credit terminology
About the Author(s) / Editor(s)
The International Credit Insurance & Surety Association (ICISA) brings together the world’s leading companies providing trade credit insurance and surety bonds and their reinsurers. ICISA promotes technical excellence, industry innovation and product integrity, as well as addressing business challenges generated by new legislation.
Where to order my copy?
The book can be ordered from Barnes&Noble, Amazon and Bol.com
Embracing diversity: Empowering women in credit insurance and surety
Article by Raluca Ezaru, External Relations & Information Officer, ICISA
In the traditionally male-dominated world of finance, the winds of change are blowing, and nowhere is this more evident than in the credit insurance and surety industry. As companies recognize the invaluable contributions of diversity, particularly the inclusion of women in leadership roles, they are reaping the rewards of a more inclusive and innovative workforce. However, challenges persist in attracting and retaining female talent in this sector.
Perception of a male dominated business and retention obstacles
Historically, the credit insurance and surety business has been viewed through the lens of a male-dominated industry. This perception, coupled with the lack of visibility of women in leadership roles, can dissuade talented females from pursuing careers in this field. The result? A limited pool of female candidates and a missed opportunity to harness the diverse perspectives and talents they bring to the table.
Even for those who enter the industry, retention can be an uphill battle. While maybe this is not felt in every company, the absence of female role models and mentors, coupled with the prevailing notion of a "boys' club" culture, can make it difficult for women to thrive and advance in their careers. Without the necessary support and encouragement, many may opt to leave for more inclusive environments.
Breaking down barriers
So, how can the credit insurance and surety business break free from these barriers and foster a more diverse and inclusive workforce?
In ICISA, females grouped and formed two working groups aiming at showcasing women shining in our sectors. The two industry initiatives, Women in Credit Insurance (WICI) and Women’s Surety Network (WSN), aim to increase the
representation of women in the sectors, particularly in leadership roles. They do this through mentoringship, networking events and training. Both groups were well welcomed by other females working in the industry, with successfully attended events and encouragements from people around.
But what else can companies do to increase diversity?
Promote visibility of talented women. By showcasing successful female leaders within the industry, highlighing achievements and contributions of females, companies can inspire the next generation of female talent and demonstrate that success knows no gender.
Cultivate inclusive cultures: Create a workplace environment where everyone feels valued, respected, and empowered to succeed. Foster a culture of inclusion in surety / credit insurance, by embracing diversity in all its forms and actively challenging stereotypes and biases.
Offer support and development: Provide targeted support and development opportunities for female employees, including mentorship programs, leadership training, and networking events. Empower them to take on challenging assignments, pursue career advancement opportunities, and achieve their full potential.
Address work-life balance: Recognize the unique challenges faced by women in balancing career aspirations with personal and family responsibilities. Offer flexible work arrangements, childcare support, and other initiatives to help employees achieve a healthy work-life balance.
The Value of diversity
Beyond the moral imperative, embracing diversity in the credit insurance and surety business yields tangible benefits for companies and the industry as a whole. Diverse teams bring a wealth of perspectives, ideas, and approaches to problemsolving, leading to greater innovation1, improved decisionmaking, and enhanced business performance. By overcoming the challenges of attracting and retaining female talent, companies can unlock the full potential of their workforce and drive sustainable growth and success.
In conclusion, the value of diversity in the credit insurance and surety industry cannot be overstated. By embracing and empowering women in leadership roles, companies can create a more inclusive and dynamic workforce, driving innovation, fostering creativity, and ultimately, securing a brighter future for the industry.
INTERAMERICAN's journey to ICISA: A commitment to excellence and innovation
A conversation with Theodore Stavrou
INTERAMERICAN in a nutshell
INTERAMERICAN, a leading insurance company in Greece, serves over 1 million individual and corporate customers with a wide range of insurance products and financial services. Founded in 1969 and part of the ACHMEA Group, a major international insurer, INTERAMERICAN ranks first in Reputation and Visibility and has been named the Top Insurance Company in Greece by "World Finance." The company offers life, health, and property insurance, tailored to the needs of Greek consumers, and is committed to innovation through digital technologies. Since 2017, INTERAMERICAN has led the Surety line of business in Greece, supporting principals with solid financial capacity and promoting market education at a high professional level.
INTERAMERICAN has embarked on a significant new chapter by joining the International Credit Insurance & Surety Association (ICISA). This move represents not just a strategic alignment but also a deep-seated commitment to excellence, integrity, and professionalism within the surety business.
The decision to join ICISA was driven by INTERAMERICAN's aspiration to uphold the highest standards in their industry. "Joining ICISA marks a pivotal moment for us," shared Theodore Stavrou, Senior Underwriter of Interamerican. "Our primary motivation stems from our deep commitment to excellence and the values that ICISA embodies— collaboration, knowledge sharing, and continuous improvement. This membership is a testament to our dedication to keeping pace with industry advancements."
As an ICISA member, INTERAMERICAN looks forward to the wealth of knowledge and collaborative opportunities that come with it. The company anticipates invaluable insights from market leaders and experts. "Training opportunities within ICISA would be more than welcomed by our company," noted Theodore. "We are eager to see a more consistent educational program for our underwriters. We also expect to actively participate in discussions and initiatives that will
shape the future of the surety sector."
The topics Theodore is keen to discuss within ICISA are wide-ranging and forward-thinking. From emerging trends in the surety market and regulatory developments to risk management strategies and innovative solutions to common challenges, the company is ready to delve deep. "We are particularly interested in exploring how digital transformation and technological advancements can complement the surety industry," Theodore explained. "Additionally, we aim to delve into best practices for sustainability and ethical governance, which are becoming increasingly important in today's business environment."
Among the various committees within ICISA, INTERAMERICAN is particularly excited about joining the Surety Committee. This committee aligns perfectly with their core expertise and strategic focus. "It is a natural fit for us," Theodore said. "The Surety Committee provides a platform for in-depth discussions on issues directly impacting our business, from regulatory changes to market dynamics. By participating, we can share our insights, learn from peers, and contribute to the development of best practices that benefit the entire sector."
The benefits of INTERAMERICAN's membership in ICISA are expected to be mutual. ICISA members can gain from INTERAMERICAN's experience in developing Surety in a bankdominated market and their innovative approach to surety solutions. "We bring a fresh perspective and a strong commitment to excellence," Theodore noted. "Our agility and customercentric approach are assets we are eager to share with fellow members. Conversely, we will benefit from the collective wisdom and diverse experiences of ICISA members, which will help us refine our methodologies, adopt new technologies, and enhance our service offerings."
As INTERAMERICAN joins the esteemed ICISA community, they express their gratitude and excitement. "We are deeply honored and thrilled to be part of ICISA. This membership marks a significant milestone for INTERAMERICAN, and we are excited about the journey ahead. Together, we have the opportunity to make a positive impact on the surety industry, and we look forward to achieving new heights of success through this partnership."
This new chapter for INTERAMERICAN is not just about joining an association; it's about reaffirming their commitment to excellence and innovation, setting new benchmarks in the surety industry, and fostering a collaborative environment that drives mutual growth and success.
EXIM Thailand Joins ICISA!
An interview with Dr. Rak Vorrakitpokatorn, President of EXIM Thailand
About EXIM Thailand
The Export-Import Bank of Thailand (EXIM Thailand) is one of seven specialized financial institutions (SFIs) wholly owned by the Government and supervised by the Ministry of Finance. The Bank’s objective is to conduct business which promotes and supports Thai export, import, and investment by providing credit facilities, guarantees, insurance against risks, or other services conducive to the achievement of its goals.
In February 2024, EXIM Thailand celebrated its 30th anniversary, solidifying its position as one of Asia’s leading developing banks. With assets totaling approximately USD 5,000 million and a dedicated team of around 800 employees, EXIM Thailand supports about 5,600 Thai entrepreneurs, representing 20 percent of the country’s total exporters. The bank operates 9 branches across Bangkok and other regions in Thailand, along with 4 overseas representative offices in Cambodia, Lao PDR, Myanmar, and Vietnam.
The motivation to join ICISA was clear for EXIM Thailand. Having observed the substantial benefits of ICISA membership during the Asia Committee Meetings held in Singapore (2018) and Bangkok (2023), the bank recognized ICISA as a highly respected organization. “ICISA membership would enable valuable exchanges of information in the trade credit insurance, investment insurance, and reinsurance industries,” explained Dr. Rak Vorrakitpokatorn, President of EXIM Thailand. “It would also help us cultivate strong business relationships with leading insurance and reinsurance companies among ICISA members.”
As an ICISA member, EXIM Thailand aims to stay informed about the latest developments in the trade credit insurance, investment insurance, and reinsurance industries. The bank is particularly interested in industry highlights, emerging trends, and recent performance metrics of ICISA members. "We are keen to learn about new products in the trade credit insurance and investment insurance sectors, such as ESG insurance products," Rak shared.
Within ICISA, EXIM Thailand is eager to discuss topics related to claims and recovery issues, focusing on fraud trends in the trade insurance industry, debt collection and recovery processes, and noteworthy claim cases. “We would greatly appreciate if ICISA could invite members and/ or guest speakers with expertise in these areas to share their insights,” Rak added.
EXIM Thailand plans to join several ICISA committees, including the Credit Insurance Committee, Committee of Underwriters, Single Risk Committee, and Asia Committee. These align with the bank's business interests and focus on issues and concerns in the Asia-Pacific region, making participation particularly convenient.
The membership of EXIM Thailand offers reciprocal benefits. ICISA members can benefit from EXIM Thailand’s extensive experience in the trade insurance and reinsurance industry. Additionally, EXIM Thailand's participation in ICISA meetings will foster business connections and enable the sharing of industry information. In turn, EXIM Thailand can provide valuable insights into the CLMV region, where it has overseas representative offices, thereby enriching the knowledge base of ICISA members.
Reflecting on this new chapter, Rak expressed enthusiasm: “We are excited about the opportunities this membership brings. The journey ahead promises mutual growth and enriched understanding, benefiting both EXIM Thailand and the broader ICISA community.”
Global sanctions against Russia:
where we are and what’s next?
Bota Iliyas, Analyst and Tobias Wellner, Senior Analyst, Global Risk Analysis, Control Risks
The global sanctions landscape has dramatically evolved in the aftermath of Russia’s unprovoked full-scale invasion of Ukraine in February 2022, with Russia joining the group of countries under heavy sanctions by Group of Seven (G7) countries. These measures reflect an intensifying effort to isolate Russia economically and undermine its ability to fight the war, and they significantly impact international financial systems and global trade dynamics. In this article, we assess the trajectory of Western sanctions policy and what it means for the insurance and other sectors.
Package number 14
The EU on 24 June announced its 14th sanctions package targeting Russia for its invasion of Ukraine. Brussels designated an additional 116 individuals and entities in Russia and beyond, targeting Russian state officials, as well as “high-value” sectors such as energy, finance, trade and transport.
The package includes the bloc’s first, albeit indirect, measures against Russian LNG, banning EU ports from reselling Russian LNG to third countries and banning EU investments in and provision of services for the Arctic and Murmansk LNG projects. The EU also joined the US and UK in establishing a legal framework to target individual vessels, sanctioning 27 vessels for participating in the Arctic LNG project.
Direct LNG sanctions unlikely
The EU in the coming months remains very unlikely to ban all Russian LNG imports, which remain unrestricted in the interest of the bloc’s energy security. However, the EU is working to gradually divest from Russian LNG in the longer term. Since February 2022, the EU has reduced its dependency on Russian natural gas (which stood at 43% in 2020). Nevertheless, Russia remains an important supplier of LNG: the EU in the first four months of 2024 imported more than 16% of its LNG supplies from Russia, and Russian imports accounted for 14.8% of its overall gas (pipeline gas and LNG) supplies in 2023.
Muted impact on Russian economy
The bloc’s first – if indirect – targeting of Russia’s lucrative LNG sector is likely have a muted impact on the Russian economy. The resale of Russian LNG via EU ports made up only a quarter of Russia’s LNG exports in 2023, while LNG revenues broadly account for only a modest fraction of budget revenues. Russia also continues to successfully generate fossil fuel revenues and engage in sanctions circumvention measures. The EU ban on the resale of LNG from EU ports is likely to force Russia to use longer routes for exporting LNG to Asian markets – most likely from the Arctic to Asia with the use of expensive icebreakers – somewhat reducing LNG sale profits.
Moscow has called the latest sanctions illegal and has threatened countermeasures but is unlikely to announce major new retaliatory measures in response to the package. The Kremlin since May 2022 has a framework in place for “temporarily” taking over the assets of foreign companies seeking to exit Russia and is likely to continue using this tactic. Russia since 2022 has seized the Russia-based assets of Denmark’s Carlsberg, France’s Danone and Germany’s Uniper.
Cracking down on sanctions circumvention
The EU’s 14th sanctions package against Russia also clearly signals that Brussels is increasingly willing to enforce Russia sanctions globally. In response to Russia circumventing Western sanctions, the EU and its G7 partners have increased diplomatic pressure on third countries in recent months to enforce sanctions within their jurisdictions, including encouraging private sector companies to adopt more stringent sanctions controls.
Historically, the EU has been opposed to secondary sections, that is sanctioning companies in third countries for doing business in sanctioned countries.
Secondary sanctions are measures imposed by a sanctioning country (in Russia case, predominantly the US and the EU) not directly on the sanctioned country or entity, but on third
parties that engage in transactions with the sanctioned country or entity. Secondary sanctions aim to deter nonUS/EU persons and entities from doing business with the sanctioned party by threatening to cut off their access to the US/EU market.
However, faced with mounting evidence of Russia circumventing EU and other Western sanctions through various intermediaries, the EU in 2023 created an “anticircumvention tool”. As the war in Ukraine continues, the EU appears committed to expanding secondary sanctions using the tool.
In its 14th sanctions package, Brussels designated 61 entities, including in China (19), Turkiye (9), Kyrgyzstan (2), Kazakhstan (1), India (1) and the UAE (1), for “supporting Russia’s military and industrial complex” across the tech, satellite, aerospace and trading sectors. These sectors will remain the most likely targets of future EU secondary sanctions.
The designations of entities in third countries highlight the increasingly complex sanctions landscape globally and its link to geopolitics. The EU designated “Head Aerospace Group,” a Chinese company that also claims to have subsidiaries and representative offices in the Netherlands, France, South Africa, Spain, Morocco and Mexico. The EU’s designation of 19 Chinese entities (some of which had already been sanctioned by the US) at a time of disputes between the EU and China over EV tariffs will contribute to growing geopolitical tensions.
New appointments at Atradius
Fredrik Ådén has joined Atradius as Global Country Manager for Sweden. Previously, Fredrik worked for Marsh as a Client Executive for just over three years.
“I am honoured and excited to take on the role as Global Country Manager for Sweden and to continue to build the most service-minded and solution driven team in the market alongside all of my colleagues.”
Emma Lienhardt has been promoted to Quebec Regional Manager at Atradius. Based in Montreal, Emma has worked for Atradius for the past ten years. In her new role, Emma will build key partner relationships with Atradius' broker and banking partners and oversee account management and commercial underwriting functions across Canada.
Allianz Trade new appointments
Nadine Haschka has been appointed as a Strategic Account Manager for Allianz Trade in the UK & Ireland and will be based in Cardiff. Previously, Nadine worked nearly thirty-four years at Atradius, most recently as a Customer Service Manager.
Allianz Trade for Multinationals has promoted Lucia Gatta to Regional Director, Account Management – MMEA. Based in Milan, Lucia was previously Regional Account Manager, Mediterranean Countries, Africa and Middle East.
Joe Ketzner appointed as Regional Vice President for Coface
Joe Ketzner has been appointed Regional Vice President - Direct Sales in the Northeast at Coface North America! Previously, Joe was Regional Vice President at Allianz Trade in North America
SCOR supports HKECIC in its inaugural trade credit coverage
Hong Kong Export Credit Insurance Corporation (HKECIC) has announced the launch of its first trade credit insurance cover based on SCOR Smart Credit, an alternative data underwriting tool developed by SCOR Reinsurance Co. (Asia) Ltd. (SCOR), in a bid to support cross-border e-commerce trade. This new product offers protection for trade loans granted by FundPark Ltd. (FundPark), a Hong Kong registered fintech company, to Hong Kong registered merchants. The idea is to facilitate SMEs’ access to trade financing, in order to encourage and support their development of cross-border e-commerce trade.
SCOR Smart Credit is an applied data-driven underwriting engine that takes an innovative approach to digital underwriting by analyzing data from various sources, using an underwriting algorithm developed by SCOR. This makes risk assessment much faster than with traditional, manual underwriting methods, and enhances overall portfolio quality by creating efficiency, effectiveness, and consistency for the insurer.
With this collaboration and innovative digital underwriting tool, SCOR is further demonstrating its ambition to shape the reinsurer of tomorrow.
George Leung, Chief Executive Officer of SCOR Reinsurance Co. (Asia) Ltd., said:
“Assessing trade financing risk is never an easy task, especially when it comes to SMEs whose strength and potential may not be easily realised by looking at their financials or traditional risk underwriting factors. SCOR is pleased to collaborate with HKECIC and FundPark to develop this automated, data-driven underwriting tool that assists efficient and effective trade credit risk assessment and helps insurers and financiers seize opportunities in this undiscovered segment. We strongly believe in combining innovative solutions and solid partnerships to close protection gaps and support economies.”
Peak Re promotes David Menezes to Chief Risk Officer
Hong Kong-based reinsurer Peak Re has promoted Deputy Chief Risk Officer David Menezes to Chief Risk Officer. Mr Menezes had held his previous position with the company since September 2022.
Franz-Josef Hahn, CEO of Peak Re, commented: “David has consistently demonstrated exceptional oversight of our Risk, Compliance, and Legal functions. His leadership skills have been pivotal in fostering a risk-oriented culture throughout the company, driving our risk management strategies and maintaining our robust financial health.”
Mr Menezes, a Fellow of the Institute and Faculty of Actuaries, has been a member of the Peak Re Team since 2016. His participation in several industry working groups, advising on the implementation of IFRS17 for general insurance and the development of risk-based capital solvency standards underscores his deep understanding of the reinsurance industry.
