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Solutions for an uncertain world

Global / 20-11-18 / by
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AIG’s Marilyn Blattner-Hoyle, Head of Supply Chain and Trade Finance, and Sharon Giddings, Head of UK Trade Credit, discuss how recent geopolitics are driving the need for well-thought-out trade credit and finance insurance products.

 

Growing protectionism and a rapid escalation in trade disputes involving the world’s biggest economies are creating ripples across the world, threatening trade flows and the businesses that rely on them for survival.

In unsettling times, banks and corporates need more than ever an insurer they can rely on to provide a degree of certainty in an uncertain world. AIG prides itself on building true partnerships with clients, founded on trust, and on a long-standing culture of avoiding knee-jerk decisions. This unique approach also includes helping clients navigate challenges as they arise with innovative solutions only available at AIG.

 

Non-cancellable cover

One product that not only comes into its own ahead of a downturn, but demonstrates AIG’s special commitment to clients, is trade credit insurance. For example, AIG’s excess of loss trade credit insurance is designed to ensure a company can offer credit to its buyer clients with confidence. It is an important tool that allows companies to protect their accounts receivable from loss due to credit risks such as protracted default, insolvency and bankruptcy – and which helps keep trade flowing throughout the economic cycle.

The value of trade credit insurance has been amply demonstrated worldwide. In the UK alone, a recent string of corporate collapses has contributed to the highest number of trade credit insurance payouts in a single quarter since at least 2007, when the Association of British Insurers (ABI) started collecting this data. During the second quarter of 2018, trade credit insurers paid £92mn to help British firms cope with bad debts.

For the right client, AIG is prepared to go one step further, adding an extra layer of safety through the provision of non-cancellable trade credit coverage across the whole client portfolio. This involves a commitment by the insurer to maintain credit coverage for future shipments to buyers on a client’s policy, even if the buyer posts poor operating results or is suddenly downgraded. Coverage also remains intact when a country or entire industry sector hits bad times.

As well as protecting trade flows, this provides certainty to policy holders that once a credit limit is established it will remain in place for a specific time – usually the duration of the policy – unless the insured requests otherwise. Policy holders are also able to stand by their customers during difficult periods, meaning their customer base is more likely to remain intact – and their own sales recover quickly – once the business environment recovers.

“With credit limits in place that stand the test of time, policy holders can negotiate and invest in long-term relationships with their customers,” says Sharon Giddings, Head of UK Trade Credit at AIG.

AIG is able to extend non-cancellable cover to customers that can demonstrate they are well positioned to trade safely through a downturn due to robust risk and credit management. The product is therefore available mostly for bigger companies that already have sophisticated risk and credit management strategiesin place or mid-sized companies thatare willing to centralise their treasury systems and invest in online platforms to strengthen those capabilities.

In return, policy holders are given more autonomy and discretion in how they implement that strategy, only being required, for example, to provide AIG with guidance on their customers once a year, when a policy is put in place or renewed. In contrast, holders of cancellable or whole turnover policies effectively rely on their insurer to take control of their credit management.

 

Bridging the divide: helping banks and corporates win with Basel III

Regulatory change – especially when the final shape of demands remains unclear – can create a further layer of complexity for corporates and banks looking to navigate an already turbulent world. Here too, insurers like AIG can help.

As demand for trade finance grows, financial institutions are increasingly tapping credit insurance to protect themselves against the risk of non-payment by obligors for trade finance transactions. In a Basel III world, however, there is often now a mismatch between banks’ insurance needs and those of their seller or exporter clients. Fortunately, AIG has developed a tool that can help bridge the divide.

Basel III – a global regulatory framework for banks designed to address capital adequacy, stress testing and market liquidity risk – creates a challenge globally for banks looking to buy receivables from a specific buyer of their seller or exporter client. This is because where the same receivables have been insured under the seller client’s standard trade credit insurance policy, there is typically a high degree of conditionality that relies on the seller. The bank therefore often cannot get the capital relief it needs by just relying on a loss payee position on the standard trade credit policy of the seller client.

Banks do have the option of taking out a Basel III-compliant trade finance insurance policy, which by shifting the risk of corporate default onto the often higher-credit-rated insurer could hand the bank capital relief while remaining compliant with the rules. This would however require the payment of additional premium.

To help smooth the process and reduce costs for both sides, AIG has created a tool that allows the seller client to keep their existing credit policy on their buyers, but provide the bank with their own Basel III-compliant wording on their own standard form or on AIG’s simple trade finance Basel III-compliant form, and which then seamlessly links the two. It does this via an endorsement in the middle called the “TC Bridge”.

This solution allows for the sharing of limits, while giving the bank control in respect of relevant obligors up to the size of their facility. It also enables the two sides to share the costs of a single premium, albeit with a slight uptick to allow for the benefit of Basel III limited conditionality.

“With the TC Bridge, you have a simple solution. There’s only one risk cover, because the receivable either falls under the trade credit policy or the trade finance policy, depending on who owns it, and therefore you don’t have to pay premium twice,” says Marilyn Blattner-Hoyle, Head of Supply Chain and Trade Finance at AIG. “We give the seller what they need and the bank what they need without complex amendments to the seller’s trade credit policy.”

 

Tailored solutions

Non-cancellable trade credit cover and the TC Bridge are of course just parts of AIG’s tool box, which includes a broad suite of products related to trade finance and trade credit.

AIG’s expertise in trade credit insurance also extends to excess of loss coverage for bigger firms as well as the Trade + and AR Secure products for mid-sized companies.

AIG brings a team of trade finance experts from the worlds of banking and insurance to create simple, market-leading solutions to support growth in trade finance. Its trade finance credit insurance can protect financial institutions offering everything from receivables finance and payables finance to trade loans, letters of credit and asset-backed lending as well as other short-term and self-liquidating trade facilities. AIG is also a lead insurer in API and blockchain-based solutions and can support both funders and corporates that use various technologies, leading to potential cost savings, better payment terms and streamlined working capital solutions.

We welcome enquiries about how we can tailor solutions to meet clients’ requirements, leveraging our wealth of market intelligence, country knowledge, sector specialists, experienced underwriters and A+ rating.

Please contact Marilyn Blattner-Hoyle and the AIG Trade Finance team at marilyn.blattner-hoyle@aig.com for more information on the TC Bridge and other trade finance solutions, or Sharon Giddings and the Trade Credit team at sharon.giddings@aig.com for AIG’s trade credit products.

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This Privacy Policy outlines the information we may collect about you in relation to your use of our websites, events, related publications and services (“personal data”) and how we may use that personal data. It also outlines the methods by which we and our service providers may (subject to necessary consents) monitor your online behaviour to deliver customised advertisements, marketing materials and other tailored services. This Privacy Policy also tells you how you can verify the accuracy of your personal data and how you can request that we delete or update it.

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Established in 2002 and with offices in London and Singapore, Exporta Publishing & Events Ltd is the world’s leading trade and trade finance media company, offering information, news, events and services for companies and individuals involved in global trade.

Our principal business activities are:

  • Business-to-Business financial publishing. We provide a range of products and services focused on international commodities, export, supply chain and trade finance markets including magazines, newsletters, electronic information and data
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We collect certain personal data from you, which you give to us when using our Site and/or registering or subscribing for our products and services. However, we also give you the option to access our Sites’ home pages without subscribing or registering or disclosing your personal data.

We also collect certain personal data from other group companies to whom you have given information through their websites (including, by way of example, Exporta Publishing & Events Ltd and subsidiaries, in accordance with the purposes listed below). Should we discover that any such personal data has been delivered to any of the Sites, we will remove that information as soon as possible.

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We may change this Policy from time to time so please check this page occasionally to ensure that you’re happy with any changes. By using our website, you’re agreeing to be bound by this Policy.

Data protection law

The Data Protection Act 1998 described how organisations – including Exporta Publishing & Events Ltd – must collect, handle and store personal information. These rules apply regardless of whether data is stored electronically, on paper or on other materials. To comply with the law, personal information collected must be stored safely, not disclosed unlawfully and used fairly.

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 Types of Personal Data Held and its Use

1.      Customer Services and Administration

On some Sites, Exporta Publishing & Events Ltd collects personal data such as your name, job title, department, company, e-mail, phone, work and/or home address, in order to register you for access to certain content, subscriptions and events. In addition, we may also store information including IP address and page analytics, including information regarding what pages are accessed, by whom and when.

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Where, as part of our Site services, we enable you to post information or materials on our Site, we may access and monitor any information which you upload or input, including in any password-protected sections. Subject to any necessary consents, we also monitor and/or record the different Sites you visit and actions taken on those Sites, e.g. content viewed or searched for. If you are a registered user (e.g. a subscriber or taking a trial), when you log on, this places a cookie on your machine. This enables your access to content and services that

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  • to enable our journalists to contact and interact with you online in connection with any content you may post to our Sites.

Please see paragraph 5 below for more information on cookies and similar technologies and a link to a page where you can turn them on or off.

3.      Marketing

Some of your personal data collected under paragraphs 1 and 2 above may be used by us to contact you by e-mail, telephone and/or post for sending information or promotional material on our products and/or services and/or those of our other group companies.
We give you the opportunity to opt-out of receiving marketing communications. Further detail can be found on the applicable Site and in the footer of each marketing communication sent by us, our group companies or service providers. See also “Consents and opt-outs” section below.
We will not share your information with third parties for marketing purposes.

4.      Profiling

We may analyse your personal information to create a profile of your interests and preferences so that we can contact you with information relevant to you.

5.      Cookies and similar technologies

All our Sites use cookies and similar technical tools to collect information about your access to the Site and the services we provide.

What is a cookie?

When you enter some sites, your computer will be issued with a cookie. Cookies are text files that identify your computer to servers. Cookies in themselves do not identify the individual user, just the computer used.

Many sites do this whenever a user visits their site in order to track traffic flows, recording those areas of the site that have been visited by the computer in question, and for how long.

Users have the opportunity to set their computers to accept all cookies, to notify them when a cookie is issued, or not to receive cookies at any time. Selecting not to receive means that certain personalised services Exporta Publishing & Events Ltd offers cannot then be provided to that user.

 

Why do we use cookies?

  1. Log In – Where we provide log in mechanisms for site users a cookie is created at login and for the duration of the session. Each cookie contains a unique reference number only (no personal information) which is used to confirm you are authorised.
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Find and control your cookies

All of the major browser providers offer advice on setting up and using the privacy and security functions for their products. If you require technical advice or support for a specific browser/version please contact the provider or visit their website for further details: www.microsoft.com / www.mozilla.com / www.apple.com
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We may use cookies to:

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  • gather information about the pages on the Site that you visit, and other information about other websites that you visit, so as to place you in a “market segment”. This information is only collected by reference to the IP address that you are using, but does include information about the county and city you are in, together with the name of your internet service provider.

Most web browsers automatically accept cookies but, if you prefer, you can change your browser to prevent that, or to notify you each time a cookie is set. You can also learn more about cookies in general by visiting www.allaboutcookies.org which includes additional useful information on cookies and how to block cookies using different types of browser. Please note however, that by blocking, deleting or turning off cookies used on the Site you may not be able to take full advantage of the Site.

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E-mail tracking is a method for monitoring the e-mail delivery to those subscribers who have opted-in to receive marketing e-mails from GTR, including GTR Africa, GTR Asia, GTR Americas, GTR Europe, GTR Mena, GTR eNews, Third party e-mails and GTR Ventures.

Why do we track e-mails?

So that we can better understand our users’ needs, we track responses, subscription behaviour and engagement to our e-mails – for example, to see which links are the most popular in newsletters. They enable us to understand the consumers journey through metrics including open rate, click-through rate, bounces and unsubscribes. Any other purposes for which Exporta Publishing & Events Ltd wishes to use your personal data will be notified to you and your personal data will not be used for any such purpose without obtaining your prior consent.

How do you track GTR eNewsletters?

To do this, we use pixel GIFs, also known as “pixel tags” – these are small image files that are placed within the body of our e-mail messages. When that image is downloaded from our web servers, the e-mail is recorded as being opened. By using some form of digitally time-stamped record to reveal the exact time and date that an e-mail was received or opened, as well the IP address of the recipient.

7.      Consents and opt-outs

You can give your consent to opt-out of all or any particular uses of your data as indicated above by:

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To turn cookies and similar technologies on and off, see the information in paragraph 5 above. Any questions regarding consents and opt-outs should be sent by e-mail to privacy@gtreview.com or by writing to Data Protection Officer at, Exporta Publishing & Events Ltd, 4 Hillgate Place, London, SW12 9ER, United Kingdom. Alternatively, you can telephone our London headquarters at +44 (0) 20 8673 9666.

8.      Disclosures

Information collected at one Site may be shared between Exporta Publishing & Events Ltd and other group companies for the purposes listed above.

We may transfer, sell or assign any of the information described in this policy to third parties as a result of a sale, merger, consolidation, change of control, transfer of assets or reorganisation of our business.

9.      Public forums, message boards and blogs

Some of our Sites may have a message board, blogs or other facilities for user generated content available and users can participate in these facilities. Any information that is disclosed in these areas becomes public information and you should always be careful when deciding to disclose your personal information.

10.  Data outside the EEA

Services on the Internet are accessible globally so collection and transmission of personal data is not always limited to one country. Exporta Publishing & Events Ltd may transfer your personal data, for the above-listed purposes to other third parties, which may be located outside the European Economic Area and/or with a different level of personal data protection. However, when conducting transfers, we take all necessary steps to ensure that your data is treated reasonably, securely and in accordance with this Privacy Statement.

Who has access to your information?

Confidentiality and Security of Your Personal Data

We are committed to keeping the data you provide us secure and will take reasonable precautions to protect your personal data from loss, misuse or alteration.

However, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our Site; any transmission is at your own risk. Once we have received your information, we will use strict procedures and security features described above to try to prevent unauthorised access.

We have implemented information security policies, rules and technical measures to protect the personal data that we have under our control from:

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  • unauthorised modification
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All our employees, contractors and data processors (i.e. those who process your personal data on our behalf, for the purposes listed above), who have access to, and are associated with the processing of your personal data, are obliged to keep the information confidential and not use it for any other purpose than to carry out the services they are performing for us.

Responsibilities

Everyone who works for or with Exporta Publishing & Events Ltd has some responsibility for ensuring data is collected, stored and handled appropriately. Each team handling personal data must ensure that it is handled and processed in line with this policy and data protection principles. However, the following people have key areas of responsibility. The board of directors is ultimately responsible for ensuring that Exporta Publishing & Events Ltd meets its legal obligations.

Name of Data Controller


The Data Controller is Exporta Publishing & Events Ltd. Exporta Publishing & Events Ltd is subject to the UK Data Protection Act 1998 and is registered in the UK with the Information Commissioner`s Office.

How to access, update and erase your personal information

If you wish to know whether we are keeping personal data about you, or if you have an enquiry about our privacy policy or your personal data held by us, in relation to any of the Sites, you can contact the Data Protection Officer via:

  • By writing to this address: Data Protection Officer, Exporta Publishing & Events Ltd, 4 Hillgate Place, London, SW12 9ER, UK
  • Telephone: +44 (0) 20 8673 9666
  • E-mail: privacy@gtreview.com

Upon request, we will provide you with a readable copy of the personal data which we keep about you. We may require proof of your identity and may charge a small fee (not exceeding the statutory maximum fee that can be charged) to cover administration and postage.

Exporta Publishing & Events Ltd allows you to challenge the data that we hold about you and, where appropriate in accordance with applicable laws, you may have your personal information:

  • erased
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  • completed

Disclosing data for other reasons

In certain circumstances, the Data Protection Act allows personal data to be disclosed to law enforcement agencies without the consent of the data subject. Under these circumstances, Exporta Publishing & Events Ltd, will disclose requested data. However, the Data Controller will ensure the request is legitimate, seeking assistance from the board and from the company’s legal advisors where necessary.

Changes to this Privacy Statement

We will occasionally update this Privacy Statement to reflect new legislation or industry practice, group company changes and customer feedback. We encourage you to review this Privacy Statement periodically to be informed of how we are protecting your personal data.

Providing information

Exporta Publishing & Events Ltd aims to ensure that individuals are aware that their data is being processed, and that they understand.

  • How the data is being used
  • How to exercise their rights

To this end, the company has a privacy statement, setting out how data relating to individuals is used by the company. This is available on request and available on the company’s website.

Review of this policy

We keep this Policy under regular review. This Privacy Statement was last updated in April 2018.

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