Exporters, the Bermudan-domiciled group captive credit insurer that issued its first policy in 1990, has become well known in the market as a captive insurer with over 100 corporate and banking members that use its various credit insurance products. Less well understood is that, for the past two years, it has also been running a highly successful Low Concentration Countries (LCC) Program, which permits insureds access to its capacity – without any membership requirement – in those markets where Exporters has little exposure.
Since the LCC Program was established, Exporters has written over 100 such LCC policies in 41 different countries, incurring gross liabilities in excess of US$370mn.
Typically, coverage under the LCC Program has involved comprehensive non-payment cover on corporate obligors in emerging markets, for amounts of up to US$15mn and policy periods of up to 60 months, in countries where Exporters has had relatively little exposure, such as China, South Korea, Indonesia, Romania and Kazakhstan.
Russia, the US and UK have also proved popular LCC markets, so much so that these latter countries are now no longer eligible for the LCC Program; but the vast majority of countries around the world, where foreign trade is regularly conducted, are still eligible and LCC capacity remains available.
Before the LCC Program, Exporters’ US$3bn portfolio had been heavily weighted in what the insurer calls its “MBAT “countries, ie, Mexico, Brazil, Argentina and Turkey, so the LCC Program was a means of broadening its appeal to reinsurers by providing a better spread of risk and, at the same time, widening Exporters “customer base.
Existing members have also benefited by being able to take out policies without the need to acquire further preference shares or capacity entitlement certificates (CECs – the new membership method and a simpler, quicker way of joining).
Exporters allocates half its LCC capacity (per country) to established members, which has meant that the LCC Program has attracted members and non-members alike.