NAIROBI, 4 May, 2017 – The African Trade Insurance Agency (ATI), the pan African investment and commercial risk insurance provider announced its 2016 results today. The multilateral institution posted record results for the sixth consecutive year. ATI has moved from being loss making as recently as 2011 to positing a positive net result of USD6.4 million in 2016 (on a comparable basis before setting aside technical reserves of USD4 million, representing a 36 percent increase over 2015. Among other factors, ATI attributes this success to stronger partnerships with African governments, who increasingly see the value of ATI to their growth and development objectives.
“We are increasingly viewed as a strategic partner in Africa helping investors and our member countries attract vital foreign investments. Our impact is being felt and this is reflected in statistics that indicate we are insuring investments equivalent to approximately 1% of our member country’s GDP every year. This is helping us attract new member countries,” notes George Otieno, ATI’s Chief Executive Officer.
In 2016, ATI insured close to USD2 billion worth of trade and investments. The company continues to support important transactions. For example, ATI began negotiations in 2016 on a cover that closed in 2017 of a USD159 million loan from the African Development Bank to Ethiopian Airlines to help the carrier expand its fleet. ATI also underwrote the first deal in a non-member country in Angola in Q-1 2017, reflecting the company’s new pan-African mandate.
“While we continue to strengthen our ties with member countries, at the same time we are also expanding our global collaboration with international insurers and financial institutions, enabling ATI to become the go-to investment insurer in Africa for both international and domestic transactions. In 2016, this international expansion included the accession to ATI membership of UK Export Finance (UKEF), the UK’s national export credit agency,” commented John Lentaigne, ATI’s newly appointed Chief Underwriting Officer.
The growing demand for ATI’s products can be partly explained by the fall-out from the end of the commodities super-cycle which has caused a weakened financial position in some African economies. The other factor is the tougher global regulatory environment which has made it difficult for international lenders to lend to sub-investment grade borrowers, which includes a majority of African countries.
In this environment, ATI’s products are being seen as a valuable tool to enable lenders to take sub-investment grade risk in Africa thus allowing governments and corporates to access more affordable financing. Importantly, in its role as an investment insurer of last resort, ATI is also providing the necessary comfort to support continued investments into the continent amidst a period of uncertainty.
This demand is reflected in ATI’s current regional expansion. The company now counts five of the six fastest growing African countries among its members including recent new members Côte d’Ivoire, Ethiopia and Zimbabwe and is actively pursuing membership of other countries including Angola, Ghana, Nigeria and other ECOWAS countries.
In August 2016, S&P Global Ratings reaffirmed for the 9th consecutive year ATI’s ‘A’ rating though placing the company on a negative watch. This decision was based on delays experienced by ATI in recouping payments from member governments on sovereign claims. ATI has since taken several steps to resolve the pending claims reimbursements and in parallel, put in place a more efficient process for mitigating claims and ensuring quicker future sovereign claims recoveries.
“As we have significantly grown and increased our business volumes in recent years, including counter-cyclical increases in exposures in a number of member states, it was inevitable that our Preferred Creditor Status would be tested. I believe that our response, which is ongoing, has been swift and thorough enough that it will effectively address these issues to the satisfaction of our clients, member governments and the ratings agency,” added Mr Otieno.
ATI is a multilateral investment insurer that was formed by COMESA member countries with the support of the World Bank in 2001. Since then, ATI has expanded to include countries in the ECOWAS region. The company provides a range of products that mitigate risks impeding the flow of investments and trade to and within Africa. As of 2016, ATI has supported USD25 billion worth of trade and investments into its member countries.
KEY 2016 RESULTS
Volume of Business Supported Since Inception
USD25 billion (+ 16%)
Insured Trade & Investments (Gross Exposure)
USD1.9 billion (+ 16%)
Gross Written Premium
USD29.5 million (+ 27%)
Net Earned Premium
USD12 million (+ 20%)
Shareholders’ Capital
USD202 million (+ 12%)
Return on Equity
3.2% (+ 28%)
Cost Ratio
35% (-30%)
Profit
USD6.4 million (+ 36%)
On a comparable basis
Rating (S&P)
A/negative
