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Insurance brokers AU Group and ETG Insurance and Risk Solutions (EIRS) have launched a trade credit and political risk unit for Sub-Saharan Africa, teaming up to capture business in a region often viewed as high-risk by insurers.

The move, announced in recent weeks, will see the brokers deploy personnel and capital to the venture.

The partnership will pair AU Group’s specialist expertise in trade credit and political risk insurance with EIRS’ established network in Africa, with teams located in 11 regional hubs including Tanzania, Kenya and Côte d’Ivoire.

By combining forces, the brokers are betting they can secure significant business across Sub-Saharan Africa.

“In Africa, you need to be more than a broker. You must assess the risk properly for underwriters who may be interested in the market but cannot assess the risks themselves,” says AU Group’s chief executive for the Middle East, Aurélien Paradis.

A joint team of about 17 employees will be led by Paradis and EIRS’ chief commercial officer, Nolwenn Allano, both of whom are based in Dubai.

The unit will make regular trips to build business ties with potential obligors, including banks, corporates and sovereigns, before placing the business in London and other international markets.

“The idea is to focus on the first layer where the premium will be quite decent, we are not going too deep into the supply chains,” Paradis tells GTR. “First of all, you need to address the barriers for large companies, because there is a need among companies that are well structured.”

The brokers will largely target clients in both West and East Africa, utilising EIRS’ contacts in the regions.

“They are in contact with private companies, so when we visit, we will have access to clients that have already been filtered by their local teams,” Paradis says. “AU Group is established around the world, but Africa is a relatively new region for us. We have been dealing with South Africa and Morocco; it is a new market that needs to be built.”

The firms will seek to place business with commercial and multilateral insurers, offering them both short-term and medium to long-term risks. Policy tenors could be as short as six months, or up to 15 years.

While the brokers are sector-agnostic in their approach, they anticipate business in a few key areas.

“Africa’s food sector is quite developed and is one where we are already receiving a lot of enquiries,” Paradis says, while also flagging opportunities in the energy sector. “There are a lot of solar projects that need financing.”

The wider ETG conglomerate specialises in trading agricultural goods, and within its insurance division, employs about 65 people – about 10 of which are dedicated to trade credit.

By contrast, AU Group focuses solely on credit and political risk and employs around 300 staff globally. AU Group will commit seven people from its Dubai office to the joint partnership and task them with developing business in both the Middle East and Africa.

Allano tells GTR the objective is to form a “long-term” business partnership in Africa rather than trying to simply turn a quick profit.