Several members of the export market came together on November 22 for a stimulating conference on minimising export trade risk and growing sales, hosted by insurance brokerage Rattner Mackenzie, writes Freddie Duff Gordon of Moorgate Group.

The host for the day, Rupert Murray from Rattner Mackenzie, welcomed everybody to The Cumberland Hotel and made all the introductions – the conference was supported by the British Exporters Association (Bexa), GTR, Natexis Banques Populaires (which now forms part of Natixis), Euler Hermes, KPMG, and Omni Bridgeway.

Andrew Dickinson of Euler Hermes began by giving an overview of his firm’s current methodology for ranking country risk. His colleague and namesake, David Dickinson, then highlighted various stress points for 2007, giving an indication of what may affect the ratings. These included commodity price movements, the tightening of global liquidity, and the US economic slow-down – which may result in a negative impact on Asia, as has been witnessed in the past.

However, increasing intra-regional trade in Asia may cushion this, although measures imposed by authorities in China could tip the balance back the other way. Elsewhere, countries with strong forex reserves and fiscal policy should be able to cushion a US slowdown.

Mark Wyatt finished the Euler Hermes presentation by running through in some detail the information which the insurer inputs to determine a credit limit decision, including public information, information from Euler’s regional risk offices, underwriter visits, and bank information etc.

Stephen Taylor and Barrie Watson from Rattner Mackenzie then gave a presentation on how to best use insurance in the trade finance market, providing a series of interesting examples. In one, an exporter replaced the confirmation of LCs by its bank by having this exposure covered in the insurance market, thereby also covering pre-delivery at no extra cost and with an overall lower premium.

Then Rodney Ballard from Natixis gave a presentation on structured trade finance, market developments and ways to minimise export trade risk. The overwhelming message was that as global trade is increasing, the proportion of LCs in the market is declining and being replaced by open account business. One solution outlined, not only to address trade finance risk but also liquidity in the market, is the monetisation of receivables, off balance sheet.

Before lunch, Heleen Rijkens of Omni Bridgeway went through various scenarios for recovering defaults in emerging markets, including options available under adopting a ‘hard “and “soft “negotiating tactic. Or, as Rijkens nicely suggested, how to climb back up the cliff having fallen over the edge whilst looking for where the most beautiful flowers grow (Dutch proverb).

A lively panel discussion in the afternoon was chaired by BAE Systems “Richard Hill, also chairman of Bexa. In addition to dealing with the questions posed to the panel, Hill mentioned the resources available from Bexa and its website in regard to trade finance.