Export credit insurance ‘facing challenges’

The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) supported investments and exports worth more than $ 3 billion in its member countries in 2012.
The announcement follows a meeting of its board of directors, chaired by Ahmed Muhammad Ali, president of Islamic Development Bank (IDB) Group.
It was held in conjunction with 288th meeting of the board of the executive directors of the IDB, says a statement received here.
During the meeting held at the IDB headquarters in Jeddah, the board members approved the annual report and financial results of ICIEC for 1433H (2012). They will be presented to the corporation’s board of governors during its upcoming annual meeting in Dushanbe, Tajikistan.
The annual report showed a slight decrease in export credit and political risk insurance business (total utilization of the commitments) volumes provided to the corporations’ clients in member countries.
During the year of 1433H (2012G), the corporation insured exports and investments worth
$ 3.074 billion.
The registered decline was partly offset by increased demand under the Foreign Investment Insurance (FII) category. It contributed toward 20 percent of the total Business Insured Volume, up 6 percent. The report shows an increase in the FII business from $ 327 million in 2011 to $ 825 million in 2012, up 153 percent.
The new insurance commitments showed a sharp decline (31 percent) compared to 2012.
Commenting on these results, ICIEC CEO Abdel-Rahman El-Tayeb Taha said: “2012 was a difficult year for the export credit insurance industry worldwide. The results reflect a global deterioration in the credit and country risk environment, and the decrease in trade and investment flows in ICIEC member countries and worldwide. Nerveless, we are pleased that ICIEC managed to sustain its Business Insured Volume under these challenging conditions.”
The CEO highlighted the sharp rise in claims paid to policyholders in member countries. Buyers had failed to pay because of the economic crisis in the euro zone and the political and economic instability in some parts of the region.
The CEO warned: “If the situation persists, we believe more claims will be come up during the remaining months of the year.”
The CEO also told board members that the corporation has managed to maintain its high credit rating of Aa3 from Moody’s, for the sixth consecutive year. It highlights the corporation’s financial strength, he said.