Despite numerous regulatory challenges over the past year or so, BPL Global’s latest report highlights that there remains plenty of optimism for the continued growth and reach of the credit and political risk insurance (CPRI) market in the coming years.


The publication of BPL Global’s Market Insight report back in 2018 represented a crucial landmark for the credit and political risk insurance (CPRI) industry. Data is often scarce in our niche but growing market, so we decided to collate cross-market data and our own portfolio statistics to analyse CPRI product trends since 1983. Following the report’s warm reception and positive market feedback, we decided to follow it up with an update in early 2019 to explore how CPRI has fared since our last look.

This year’s report addresses what was a standout year for the CPRI market. Despite the numerous challenges that have been facing our industry, we have identified significant growth across key business lines and an agility within the market to adjust to both shifting risk patterns and evolving client demand.


Market capacity



While the headline maximum per risk capacity has dropped slightly in some lines, a closer look at the data for non-payment private obligor risk shows that market capacity at tenors of seven years or more is on a par with last year (see bar chart). This demonstrates the CPRI market’s continued appetite for covering long-term risks in this business line where the availability of capacity for short-tenor risks is rarely an issue.

As for non-trade business (formerly coded as “Financial Guarantee” until Lloyd’s regulations changed last year), we have seen an increase in maximum per risk capacity. Much of this comes from Lloyd’s syndicates, partly due to the redefining of Lloyd’s regulations governing this line of business during 2018, with syndicates now able to obtain approval in their business plans to write non-trade risks from 2019 onwards.


Portfolio update

Over the last 12 months, we have observed a marked increase of over 14% in the gross exposure across our portfolio, rising from US$41.1bn in January 2018 to US$46.9bn as at January 2019. Of particular note is the increase in OECD exposure in our portfolio which accounts for half of this uplift, with nearly US$2bn emanating from Northern and Western Europe.


Claims update

As in last year’s report, we have leveraged our unrivalled historical data (collected since 1983) to provide a claims update for the CPRI market. Last year was a continuation of the broadly consistent market trends that we have seen since the global financial crisis of 2008. Financial institution clients have received the bulk of our claim collections since then, with the African continent remaining the most challenging environment both economically and politically, resulting in both claims and restructurings.



Europe, too, has not been immune to such issues over recent years. Our data from the past three years shows some notable EU countries appearing in our top countries by claims rankings. Between 2016 to 2018, for example, Spain and Germany ranked within our top 10 countries in terms of value of claims collected, at US$32mn and US$27mn, respectively. This is a change from our historical claims collection patterns, which have almost exclusively featured emerging markets as home to the highest value of claims. We believe this is a symptom of the market maturing and developing to cover risk located in the OECD too.



At BPL Global, we handled significant claims resulting from state-controlled banks suspending payments on principal and interest liabilities.

In both continents, the loss pattern is consistent with overall global claims activity for the past 12 months, which evidences that financial institution clients received almost 70% of all new claim payments made during the calendar year – which strongly correlates with their market share.

Although the market has paid out significant claims to our clients, the restructuring of financial models and refinancing of obligor debt has resulted in meaningful recovery payments in insurers’ favour, again demonstrating the collaborative relationship between CPRI underwriters and BPL Global’s clients.

Our historical data highlights the regional diversity of where claims have been collected, with the top five countries by claims value – Ukraine, Brazil, Russia, Indonesia and Venezuela – spanning three separate continents.

The development of the CPRI product has largely been driven by our experience of working alongside clients with exposure in these regions. This has enabled us to continuously refine and improve the flexibility of our policy wordings in order to meet the evolving challenges of placing business in emerging markets. In this sense, the value of the CPRI product is self-evident, as the market has been able to respond effectively to client needs across a wide variety of risks and geographies.

Overall, our claims data continues to validate the CPRI market’s non-payment product as an effective credit risk mitigation tool for banks under the Basel regulatory framework. The resilience of the CPRI market and efficiency of the claims process has contributed to strong relationships being established across a broad spectrum of organisations based on trust, reliability and professionalism.


Market trends

Analysing BPL Global’s enquiry flow over the last six months of 2018 shows that, in terms of risk location, there was an even distribution of enquiries between continents. Interestingly, OECD countries played host to a third of all risk enquiries. This evidences continuing demand growth for single-situation credit insurance beyond emerging markets.



Although we have seen market capacity increase for longer policy periods, half of all enquiries are still short-term in nature (24 months or less). However, this analysis is solely based upon enquiry frequency and does not factor in monetary values or ultimate policies bound. 65% of our bound portfolio – representing approximately US$30.5bn of risk exposure – is generated from medium/long term transactions.

The market is still dominated by enquiries emanating from the extractive industries (oil, mining and metals), which account for approximately 40% of all transactions submitted to insurers. However, power-related enquiries (most notably from renewables) are increasing, along with transport-related transactions, primarily for aircraft and shipping.

In terms of client base, financial institutions provide around half of all new enquiries. One in five of these enquiries relate to unsecured lending, driving the shift towards OECD territories. As would be expected, over 80% of unsecured lending enquiries are for tenors of five years or less.

In contrast, we have observed significant demand growth for longer-term project finance (PF) risks – accounting for 13% of all bank enquiries. These mainly emanate from the power and extractive sectors and naturally push average tenors beyond seven years. Export finance and structured finance transactions also feature prominently.