Denmark’s EKF has signed an agreement with 10 reinsurers that will see the export credit agency sell off risk on its past and future guarantees.

In what is believed to be a market first for a public-owned ECA, the 10 reinsurance companies will assume 20% of the risk on all the guarantees that EKF will take on its book this year. This will improve EKF’s capital ratio and allow it to release an estimated Dkr2bn (€300mn) annually.

In addition to this, the reinsurers have also agreed to assume 15% of the risk on EKF guarantees from the past three years (2013, 2014 and 2015), freeing up a further Dkr4.5bn (€600mn) of capital for the ECA.

“The agreement is a very good acknowledgement of the way we assess risk at EKF,” CEO Anette Eberhard tells GTR. I think that this is the best way to illustrate the good work that we do. Otherwise the reinsurers would not have wanted to take the future transactions on their books.”

EKF initiated the agreement by briefing a broker to assemble a team of reinsurers that would be interested in reinsuring part of its portfolio.

The agreement applies to all of EKF’s buyers’ credit and project finance guarantees globally, including in more challenging markets such as Egypt, Belarus, Lebanon, Kenya and Ethiopia, GTR understands. According to Eberhard, there is a degree of flexibility in place for when there is demand from certain countries where the ECA’s limit of risk has already been reached.

Eberhard explains that the agreement was devised as a solution to meet the growing demand among Danish exporters for EKF’s guarantees. “Historically, EKF has grown in the past years in terms of guarantee exposure and we expect demand to continue on a high level,” she says.

EKF’s guarantee exposure is currently divided into wind, cement, infrastructure & supply and ships & ports. Guarantees for wind turbines currently account for more than 60% of total exposure. “In 2015 we also had a good volume of transactions in biomass in the UK,” says Eberhard. Volume-wise, the majority of EKF’s customers are in the manufacturing and agricultural & food technology sectors, and this trend is expected to continue.