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East Africa: Comesa Insurance Agency Gets Top Rating
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The Nation (Nairobi)
7 May 2008
Posted to the web 7 May 2008
Kaburu Mugambi
Nairobi
Standards & Poors, the world's leading provider of independent credit ratings, given the African Trade Insurance Agency stable 'A' rating. The grade, consequently, underscores the company's ability to pay claims.
The investments and trade insurer's rating, reflects its capacity to pay its insurance policies and contracts in accordance with their terms.
Comesa member countries formed the African Trade Insurance Agency (ATI) in 2000 to cover the perception of high risk associated with poor public governance and negative political events. The company also insures against losses incurred by exporters in case their importers refuse to pay after delivery.
Cross-border transactions constantly present exporters with challenges on how best to safeguard their contractual positions against the threat of government action, inaction or interference that would result in financial losses. ATI chief executive, Mr Peter Jones, Tuesday said that the rating would open up more business opportunities for the agency based in Nairobi. "ATI will be able to engage more regional and international commercial enterprises because of an investment grade rating from a major international credit rating," he told reporters at The Sarova Stanley hotel, Nairobi. Mr Jones asked Kenyan exporters and importers to take advantage of the political and credit insurance to enhance their credit worthiness with financial institutions.
These insurance covers can help traders borrow from banks with the ATI policy as security and reduce the over-reliance on tangible security when receiving funding from banks. Finance minister, Mr Amos Kimunya, said that negative perception has constrained Africa's ability to maximise on its vast resources and potential. He said that although Africa's trade and investment conditions are attractive, there are risk concerns of international capital which ATI addresses.
The agency recorded $1 million (Sh62 million) in gross written premium in 2007 and expects this figure to exceed $4 million this year. It paid its first claims amounting to $64,859 (Sh4 million) in 2007.
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"This shows that business now appreciate the advantages of protecting their investments and trade transactions against the risks that undermine the profitability of trade and investments," Mr Kimunya said.
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