Denmark’s Eksport Kredit Fonden (EKF) and Sovereign Risk Insurance have completed a political risk insurance contract supporting DKr100mn of exports to Ukraine.

The transaction involves export of equipment for processing edible fats and oil to a number of mills in the Ukraine. The exporter is Alfa Laval Copenhagen and the Ukrainian borrower’s obligations are insured under EKF’s insurance contract.

The transaction also involved banks, one of which is the beneficiary of EKF’s policy. The fact that the transaction also included non-Danish content prompted EKF to get reinsurance for part of its exposure.

The Danish contribution in the deal is primarily know-how and project management.  Says, Lars Kolte, EKF’s managing director, who is also president of the Berne Union (the world-wide organisation of national export credit agencies and investment insurance agencies): “The cooperation between EKF and Sovereign has made it possible to make a deal where the Danish part is relatively small – below 20%.”

This marks the first time EKF has utilised private reinsurance. Kolte highlights the new challenges facing ECAs in an increasingly globalised operating environment, where ECAs will have to adapt to new market structure in order to better support its national companies.

“The ability of EKF to work with private companies makes it possible for us to better serve our Danish companies by enabling us to focus more on the national interest than the national content,” says Kolte. “Sovereign has substantial experience working with ECAs in the European countries, and we are very pleased with our cooperation on this transaction.”

Price Lowenstein, president and chief executive officer of Sovereign, states that he is “extremely pleased about the opportunity to work with EKF, and look forward to being able to assist EKF on other transactions for which reinsurance might be needed”.

He further comments that Sovereign has longstanding relationships with both multilateral and national export credit agencies, and very much values the relationships with these agencies.

“Sovereign’s understanding of the constraints under which national agencies operate, and our ability to offer creative and customised solutions, as well as our strong claims payment record, are important ingredients in our success in working with agencies on a global basis,” he says.