African Trade Insurance Agency

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ATI-ACA

• Why Trade?
• Creates Wealth
• Accelerates Growth
• Enhances Human Development
• Fights Poverty
• In short Money
• Money speaks sense in a language all Nations
  understand (Aphra Behn)

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Af

• Africa Economic Overview
• Second fastest growing region in the developing
  world, behind Eastern and Southern Asia.
• High expectations of Peace Dividends in the
  form of a return to positive rates of per capita
  economic growth across the continent.
• Economic and Political Reforms to improve Trade
  Competitiveness.
• Regional Economic Integration Efforts.
• Rates of Return of up to 30 compared to 15
  (USA), 10 (EU) and 20 (Asia).
• Major global exporter of primary commodities.
• The challenge of full integration into the global
  economy remains primarily due to external trade
  policies (tariff escalation, tariff peaks and
  agricultural protectionism) of OECD countries.

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• The Asian Factor
• 52 of African exports are to the EU.
• 16 of African exports are to Asia and increasing
  at the rate of 10 per year and higher than the
  comparable rates for EU or the US.
• China, due to its increasing demand for energy
  and industrial raw materials is playing a
  fundamental role in setting the price in the
  international commodity markets.
• African imports from Asia is recording
  significant growth.
• China has Trade and Investment Development
  Centers in more than 11 African Countries Credit
  Facility for private corporations and special
  fund scheme for joint ventures.
• China is a Shareholder in key African Financial
  Institutions such as ADB, PTA Bank.

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• Major African Imports
• Telecommunication Equipment.
• Industrial Machinery.
• Construction and Mining Machinery.
• Transportation Vehicles.
• Rice.
• Ships.
• Cotton Fabrics

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• Africas Major Exports
• Petroleum.
• Coal.
• Minerals (Gold, Copper, Iron, Aluminium, Nickel,
  Silver, Platinum, Pearls and Diamonds).
• Cotton.
• Timber and Pulpwood.
• Fruits, Nuts, Coffee, Tea, Cocoa.
• Fisheries

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• What is ATI?
• Established in 2001.
• Headquartered in Nairobi, Kenya.
• Registered with the United Nations.
• A joint initiative between the World Bank and
  African States.
• Africas only multilateral ECA.
• A public-private partnership (Lloyds of London,
  Atradius, Zurich Emerging Markets, OPIC)
• An independent commercial insurer (full
  administrative and underwriting autonomy)
• ATI has in the past two and half years supported
  trade and investment transactions worth US128
  Million in its Member States.

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ATI Mandate To facilitate, encourage and
develop the provision of, or the support for,
insurance, including coinsurance and reinsurance,
guarantees, and other financial instruments and
services, for purposes of trade, investments and
other productive activities in Africa in
supplement to those which may be offered by the
private sector, or in cooperation with the
private sector.
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Membership States Open to all African States
who are, or qualified to be members of the
AU. Burundi, Djibouti, Eritrea, Kenya,
Madagascar, Malawi, Rwanda, Uganda, Tanzania,
Zambia, D.R. Congo. Regional Economic
Organizations and International Development
Financial Institutions The Common Market for
Eastern Southern Africa (COMESA), Eastern and
Southern African Trade and Development Bank (PTA
Bank), PTA Reinsurance (ZEP-RE). Private
Corporations Atradius Group.
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ATI Underwriting Structure
ATI
ATI-ACA
US134mill generating approx 500-600mill of
leveraged capacity
Security Trust agreement
Development Credit agreement
Trust Account
Government
IDA
Project Agreement
Participation Agreement
Security Trust agreement
ATI
Insurance Facility Agreements
Insurance Partners
ATIs capital structure IDA Funding, Members
Contributions, Retained Premium and Interest
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• ATI Products Services
• The Value Added
• Knowledge of Africa.
• Strategic access to African Governments.
• Strong World Bank Group backing.
• Strong partnerships with Global Private Insurers.
• Cash collateralized insurance policies.
• Strong claims avoidance mechanisms.
• Strong mechanisms for recoveries.
• Customized insurance solutions for the African
  market (Policy periods of up to 8 years, no
  minimum transaction value, up to 100 indemnity,
  competitive premium pricing, no nationality
  requirements for insureds, waiting period of upto
  105 days).

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• Trade Political Risk Insurance
• Cross-border transactions constantly present
  exporters with the challenge of how best to
  safeguard their contractual position against the
  threat of government action, inaction or
  interference that would result in financial loss.
  ATIs Trade Political Risk Insurance covers this
  threat, also known in financial parlance as
  Country Risk. The risks covered are
• Inability to Transfer Contractual Payments in
  hard currency
• Inconvertibility of Local Currency deposited for
  transfer in hard currency
• Cancellation of Licences/Authorisations
• Prevention of, or Restrictions on Imports and
  Exports
• Selective and Discriminatory Imposition or
  Increase of Import/Export Taxes, Levies or Duties
• Expropriation or Seizure of Goods
• Government Interference with Contractual
  Obligations
• Government Interference with Carriage of Goods
• Embargo
• Diversion
• War or Political Violence

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• Any trade transaction involving a buyer domiciled
  in one of the ATI Member States is eligible for
  Trade Political Risk Insurance by ATI against a
  selection or all of these political perils.
• Indicative Policy Terms
• Indemnity up to 100.
• Premium form 0.40 to 2.4 of maximum
  indemnified percentage and period.
• Period maximum of 7 years plus 1 year
  pre-shipment.
• Waiting Period 105 days

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• Comprehensive Trade Political Risk Insurance
• An expanded version of Trade Political Risk
  Insurance Cover,
• ATIs Comprehensive Trade Political Insurance
  policy additionally
• offers the exporter protection against the risk
  of non-payment of
• contractual sums due from a public buyer (being a
  corporatised
• state owned or controlled enterprise). A policy
  for Comprehensive
• Trade Political Insurance, also known as Contract
  Frustration
• Insurance, covers the following Risks
• Non-payment of Contractual Sums by Public Buyers
• Inability to Transfer Contractual Payments
  overseas in hard
• currency
• Inconvertibility of Local Currency deposited for
  transfer in
• hard currency
• Cancellation of Licences/Authorisations
• Prevention of, or Restrictions on Imports and
  Exports
• Selective and Discriminatory Imposition or
  Increase of
• Import/Export Taxes, Levies or Duties

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• Embargo
• Diversion
• War or Political Violence
• Any eligible trade transaction involving a public
  buyer in one
• of the ATI Member States may be protected through
• Comprehensive Trade Political Risk Insurance
  cover by ATI
• against a selection or all of these political
  perils.
• Indicative Policy Terms
• Indemnity up to 90.
• Premium from 0.6 to 4 per annum and pro rata
  on maximum
• exposure curve.
• Period maximum of 7 years plus 1 year
  pre-shipment.
• Waiting Period 105 days

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• Foreign Direct Investment Insurance
• ATIs Foreign Direct Investment insurance covers
  the investor
• or financier against the loss of equity in a
  project due to
• confiscation or broad political force majeure.
  The Risks
• Covered under this policy include
• Inability to Transfer Dividends overseas in hard
  currency
• Inconvertibility of Local Currency deposited for
  transfer
• into hard currency
• Confiscation
• Expropriation
• Nationalisation
• Deprivation
• Breach of Concession Rights
• Forced Abandonment
• Forced Divestiture
• Political Violence
• Any eligible cross border investment in one of
  ATIs Member

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• Indemnity up to 100.
• Premium from 0.30 to 0.975 per annum and pro
  rata
• on maximum exposure curve.
• Period maximum of 8 years.
• Waiting Period 105 days

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• Project Loan Cover
• Lenders to projects abroad are exposed to the
  risk that borrowers
• may default in making the contractual debt
  service as a result of
• political force majeure within the domicile of
  the project. ATIs
• Project Loan Cover offers lenders the necessary
  protection
• against the borrowers debt service default where
  this is directly
• due to any of the following political Risks
• Confiscation
• Expropriation
• Nationalisation
• Deprivation
• Inability to Transfer Contractual Payments
  overseas in hard
• currency
• Inconvertibility of Local Currency deposited for
  transfer into hard
• currency
• Any loan to an eligible project in one of the ATI
  Member States
• may be protected through Project Loan Cover by
  ATI.

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• Premium from 0.35 to 1.4 par annum and pro
  rata on maximum
• exposure curve.
• Period maximum of 7 plus 1 year pre-shipment.
• Waiting Period 105 days

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• Mobile Assets Cover
• Undertaking projects abroad often requires the
  taking of mobile
• assets to the location of the project. The owners
  or parties with
• legal responsibility for these mobile assets
  become exposed to
• various political risks such as the inability to
  repatriate these
• assets or associated financial proceeds on
  project completion.
• ATIs Mobile Assets Cover offers the necessary
  protection
• against the loss of their mobile or tangible
  assets that may be
• due to any of the following political Risks
• Forced Abandonment
• Confiscation
• Expropriation
• Nationalisation
• Deprivation
• Inconvertibility of Local Currency deposited for
  transfer into
• hard currency
• Political Violence including War and Terrorism

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• Indicative Policy Terms
• Indemnity up to 100.
• Premium from 0.30 to 0.775 par annum and pro
  rata
• on maximum exposure curve.
• Period maximum of 8 years.
• Waiting Period 105 days

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• Unfair Calling of Bond (or Standby Letter of
  Credit)
• Insurance
• International tenders and cross-border trade
  contracts
• normally require the supplier of goods or
  services to furnish
• the buyer with unconditional on-demand guarantees
  in the
• form of bid bonds, advance payment bonds,
  performance bonds,
• warranty bonds, maintenance bonds, retention
  bonds or customs
• bonds issued by the suppliers bank or insurer.
  Once these
• guarantees are issued, the supplier and the
  suppliers bank are
• then exposed to the risk that the buyer or the
  buyers bank
• may either unfairly or fairly call these
  guarantees.
• ATIs policy offers protection against the twin
  risks of
• unfair calling of these guarantees as well as
  their fair calling
• directly due to defined events of political force
  majeure.

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• Any eligible trade transaction involving the
  issuance
• of a bond to a buyer in one of the ATI Member
  States
• may be protected through Unfair Calling of Bond
  Insurance
• cover by ATI.
• Indicative Policy Terms
• Indemnity up to 100.
• Premium from 0.4 to 0.6 per annum and pro
  rata on maximum exposure curve.
• Period maximum of 8 years.
• Waiting Period 105 days

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• War Terrorism Physical Damage and Consequential
  Loss Insurance
• Business interruption, physical damage to
  property or assets and consequential losses
  arising from terrorist attacks and other forms of
  political violence such as riots, revolution,
  insurrection, civil strife, sabotage and war are
  the key Risks covered by ATIs War Terrorism
  Physical Damage and Consequential Loss Insurance.
  Third party liability insurance is also available
  to provide protection against third party claims
  for injury or damage to property resulting from
  an act of terrorism or political violence at the
  insured premises. This cover is available on a
  stand-alone basis or jointly with other types of
  political risk cover.
• Any business or property located within one of
  the ATI Member States may be protected through
  War Terrorism Physical Damage and Consequential
  Loss Insurance by ATI.
• Indicative Policy Terms

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• Indemnity up to100 excess of an agreed each and
  every loss and/or aggregate deductible or excess.
• Premium from 0.5 to 0.8 per annum on declared
  full value (Total Sum Insured). The premium rate
  may vary depending on the peculiar circumstances
  of each case.
• Period maximum of 12 months renewable.
• Waiting Period None.

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• Credit Insurance Cover
• Exporters of goods or services are concerned
  about the creditworthiness of their buyers prior
  to making any shipment and then about non-payment
  by these buyers after shipment. A cost effective
  solution to these concerns is the use of credit
  insurance covering the exporter against
  non-payment by and the insolvency of the buyer.
• Any exporter domiciled in one of the ATI Member
  States and exporting to a buyer outside Africa is
  eligible for credit insurance by ATI covering
  short term trade receivables usually not
  exceeding 120 days. ATI offers such credit
  insurance under reinsurance arrangements with
  ATRADIUS (formerly Gerling NCM), the second
  largest global credit insurer.
• Benefits
• With policy terms and conditions customized to
  meet the individual requirements of each
  exporter, ATIs credit insurance offers
• Protection for the exporter against non payment
  or insolvency of the buyer before or after
  shipment in accordance with the underlying
  contractual terms and conditions.

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• Access to Financing through the assignment of the
  receivables under the export contract and any
  claim payment by ATI under the credit insurance
  policy to the insureds bank as security for
  either short term working capital finance or
  discounting of trade receivables post shipment.
• Improved Credit Terms by enabling the insured to
  extend longer credit terms to the buyer thereby
  making it easier to increase the volume of
  exports.
• Better Buyer Knowledge by the insured through
  pre-policy due diligence and credit control
  limits on the buyers by ATI.
• Debt Collection and recovery services in respect
  of unpaid trade receivables under the terms of
  the credit insurance policy.
• Indicative Policy Terms
• Indemnity from 75 to 90.
• Premium 0.2 to 0.75 on insured turnover.
• Period 12 months renewable.
• Waiting Period from 1 to 6 months.
• From March 2006 CRI for Intra-African
  Transactions and Non OECD Exports.

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• Eligibility Criteria
• New cross-border transaction.
• Productive activity.
• Private or public buyer (no sovereign risk).
• Buyer in participating country.
• Environmental clearance.

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• Security
• All Insurance Lines taken by ATI are fully cash
  collateralized in the currencies of the policies.
• The security of ATIs public and private
  insurance partners (Atradius, Lloyds of London
  Syndicates, Zurich Emerging Markets Insurance
  Services).
• The Security Structure
• Only African States that have signed/ratified or
  acceded to the ATI Treaty, and entered into
  appropriate agreements with the World Bank and
  ATI can participate in the ATI Insurance Facility
  Scheme.
• Each Participating African State provides to ATI
  in advance the underwriting capital to back
  insurance policies issued in relation to trade
  and investments transactions involving that State.

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• The Funds provided by each Participating African
  State is deposited in hard currencies in the
  joint name of ATI and that State with first class
  commercial banks (currently ING Bank and Nedbank
  through their London Branches) who must at all
  times enjoy the following minimum credit ratings
• By Moodys
• - minimum Aa3 (Senior Unsecured Issuer Rating)
• - minimum P1 (Short term Issuer Rating)
• By Standard Poor
• - minimum AA- (Senior Unsecured Issuer Rating)
• - minimum A1 (Short term Issuer Rating)
• By Fitch IBCA Duff Phelps
• - minimum AI (Short term bank Deposit Rating)
• - minimum AA (Senior Unsecured Issuer Rating)

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• The sole and only use of the funds is to provide
  collateral to ATI Insurance Lines and the Trustee
  Banks are obligated to release the funds only in
  settlement of insurance claims.
• The funds are held as Trust Funds under a
  Declaration of Trust within the terms of the
  Trustee Act, 1925 of England and Wales.
• The Trustee Banks have covenanted not to exercise
  at any time in respect of the Trust Funds any
  lien, right of set-off, counter-claim or similar
  claim against any of the Participating States.
• The Trust Funds are not commingled.
• Each time ATI underwrites a policy the World Bank
  confirms its No Objection to the commitment of
  corresponding amount of the Trust Funds to ensure
  that there is no over commitment.

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• Committed Funds remain so reserved (and cannot be
  committed twice) until the policy expiry or claim
  
• payment, whichever is earlier.
• ATI enjoys full underwriting autonomy and
  complete
• independence in claims processing and payment.
• On receipt of a notice of potential loss, ATI
  promptly
• notifies the concerned Participating State
  (through the Minister of Finance) with a request
  to reverse, within 45 days, the circumstances
  that may lead to a claim crystallizing.
• On the failure of the Participating State to
  undertake the requisite remedial measures, the
  insured has 45 days within which to file a claim
  with ATI.
• ATI and its coinsurers have 15 days within which
  to make a claims determination.

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• Once a claim is determined to be payable, the
  Trustee Banks will, on the first written demand
  by ATI and its coinsurers, release the portion of
  the committed funds equivalent to the claim
  payable in settlement of the claim.
• Promptly after a claim has been settled, ATI will
  suspend the Participating State in default from
  the Insurance Facility Scheme and notify that
  State that a claim has been paid out of its funds
  and demand that that State replenishes the Trust
  Accounts to the amount that has been paid out
  within 60 days.
• If on the expiry of 60 days the Participating
  State in default has not replenished the Trust
  Accounts to the amount demanded, ATI will
  promptly notify the World Bank who will promptly
  demand that the concerned Participating State
  replenished the Trust Accounts to the amount
  required within 10 days.

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• If on the expiry of 10 days the Participating
  State in default has not replenished the Trust
  Accounts to the amount demanded, the World Bank
  will declare a default on the lending portfolio
  of that Participating State and exercise the
  remedies granted to it under its Charter and
  other instruments.

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Waiting Period Claims Processing
ATI-ACA
Notice of potential loss
Up to 45 days
Assessment period
Claims filing period
Up to 45 days
Claim determination
Up to 15 days
Claim settlement
Arbitration
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Illustrative Case Study 1
ATI-ACA
TRANSACTION Buyer credit for import of plant
equipment for power project VALUE US 40mill
(3rd party loan 20m) RISK COUNTRIES Rwanda
Belgium, Germany TENOR 5 years 1 year pre
shipment INSURED Financial institution ADDITIONAL
SECURITY Ministry of Finance guarantee BUYER
Rwandan utility COVER Broad form Trade PRI for
25 mill INDEMNITY W.P. 100 105
days PREMIUM 2.0 pa pr on mthly exposed
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Illustrative Case Study 2
ATI-ACA
TRANSACTION Sales of food products RISK
COUNTRIES Europe East Africa TENOR one year
with automatic renewal INSURED East African
Company BUYERS Wholesalers COVER PRI and
CI INDEMNITYCI - 60 to 90 PRI - 100
days PREMIUM CI - 0.8 of turnover PRI
0.5 ADDITIONAL Loss payee arrangement with
financing bank
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Illustrative Case Study 3
ATI-ACA
TRANSACTION Sale of telecom equipment worth US
20 million RISK COUNTRY Tanzania TENOR 6
years INSURED European company REINSURED
European ECA BUYER Government telephone utility
COVER Comprehensive Trade PR Cover INDEMNITY100
PREMIUM 3.5 pa pro rata (works out at about
9 on contract value) ALSO Loss payee nominated
as financing bank
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Illustrative Case Study 4
ATI-ACA
TRANSACTION Mining contract 75 mill RISK
COUNTRY Zambia INTEREST Contractors plant
and equipment TENOR 4 years INSURED European
contractor EMPLOYER Mining company COVER
Expropriation, Deprivation, Abandonment, War
Terrorism INDEMNITY100 (above excess
point) PREMIUM 0.775 pa pro rata
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Contacting Us www.Africa-ECA.com Underwriting_at_
Africa-ECA.com Info_at_Africa-ECA.com CEO_at_Africa-EC
A.com Tel [phone] or 272
6999 Mob254 733 625 511 or 254 722 205 007
Fax [phone] Thank you for your
kind attention.
ATI-ACA