ATI’s Projected 2019 Results & Innovation Drives Record Membership Growth - African Trade Insurance Agency

ATI’s Projected 2019 Results & Innovation Drives Record Membership Growth

  • ATI is on track to record the best results ever. The company expects to post an impressive 150% increase in its annual profit to an estimated US$30m.
  • ATI also supported a record volume of business with projected Gross Exposure by YE2019 to exceed US$6bn, up from US$4.8bn at YE2018.
  • These impressive results are, in part, owing to an innovation in utilizing ATI’s credit insurance to secure more competitively priced and longer tenures of commercial financing for a number of African sovereigns, amounting to over US$1bn of additional financing.
  • This innovation has led to a record number of new African member countries totalling 5 that have either finalized ATI membership in 2019 or will do so by Q1 2020.
  • Chubb, the world’s largest publicly traded property and casualty insurance company also invested US$10m in 2019.
  • These new shareholdings, combined with a solid performance and steady growth, are expected to bring ATI’s equity to a level exceeding US$400M in 2020.

NAIROBI, 20 December 2019 – The African Trade Insurance Agency (ATI) continued its record eight-year-long growth run with projected 2019 results expected to significantly outperform previous records.

ATI’s top-line results are projected to outpace, by a significant margin, previous records.

  • A projected US$30m profit (a c.150% increase over that of 2018)
  • A projected US$100m Gross Written Premium (a c.65% increase)
  • A projected US$6bn Gross Exposure (a c.25% increase)
  • A projected US$388m Equity (a c.30% increase)

The results are in part a by-product of an innovation that began in 2017, when ATI sought to find a solution to the financing challenges faced by some of its member governments. Historically, expensive commercial financing with shorter tenures placed countries in a tough situation of mismatches between the long-term financing needed to fund priority infrastructure projects and higher debt servicing fees that potentially increased countries’ debt burdens.

In response, ATI partnered with a number of leading international commercial banks to put in place a ‘credit wrap’ structure that secured these loans against the risk of sovereign non-payment. ATI’s investment-grade cover along with reinsurance capacity from its global partners was enough to help countries obtain cheaper financing (sub-five per cent) with longer tenures (10 – 12 years). This ATI-wrapped financing has helped countries to re-profile some of their existing (frequently shorter-term and more expensive) financing, helping to cut debt-servicing costs and to create more manageable redemption curves.

This solution has been applauded globally for facilitating a new class of institutional investors (such as pension funds and life insurance companies from Asia and Europe), which would not have happened without ATI’s credit cover, to enter the African market. And, in the case of one transaction in Benin, both the IMF and S&P Global Ratings agency acknowledged the positive impact in reducing Benin’s debt profile.

ATI has also been at the forefront of encouraging its member countries to obtain external ratings, which has helped to remove another barrier to competitively priced commercial financing. In the coming months, ATI plans to increase its focus on supporting member countries to create frameworks that bring them more in line with the ESG (Environmental, Social and Governance) and other requirements of global investors in order to help its member states attract more foreign direct investment.

In addition to ATI’s projected record financial results, the company has also posted impressive achievements in a number of areas:

  • Signing a record number of MoUs with Japanese financial institutions – Mizuho, MUFG, SMBC and Japan’s Export Credit Agency, NEXI;
  • Attracted a record number of new shareholders – Chubb and Ghana completed membership in 2019 and Cameroon, Nigeria, Niger and Togo to finalize in Q1 2020;
  • Opened a Regional Office in Cotonou, Benin expanding ATI’s presence in West Africa;
  • Entered into agreements with the European Investment Bank (EIB) and the German development bank, KfW, to fund new member countries. Under the agreements, EIB will fund the impending shareholding of Cameroon, Niger and Togo while KfW, in 2019, supported Ghana’s membership and Côte d’Ivoire’s equity increase in ATI; and
  • ATI joined the Co-Guarantee Platform, an African Development Bank initiative that will provide additional insurance capacity to the African market.

QUOTE from John Lentaigne, Ag CEO of ATI

“2019 has been a game-changing year for ATI. Thanks to the support and dedication of a capable and hard-working ATI team, we were able to achieve results that reflect the innovations and opportunities that are widespread throughout the continent. I am particularly pleased that we helped raise so much awareness of the tremendous possibilities for trade and investment in Africa.”

QUOTE from Benjamin Mugisha, Ag CUO of ATI

“This year ATI, proved to itself and to the world that it is a global player. For example, our guarantees have supported African governments’ access to international financing at competitive rates, through a transparent process. ATI’s growth is a reflection of the fact that lenders, traders and investors in Africa, both traditional and non-traditional, know ATI is key to unlocking opportunities on the continent. We remain committed to providing value to all our stakeholders, and look forward to delivering even more support to our increasing roster of member governments in the coming year.”

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