ATI’s Chief Underwriting Officer John Lentaigne (left), ATI’s Chief Financial Officer Toavina Ramamonjiarisoa (centre, and ATI’s Chief Executive Officer George Otieno go through the company’s 2016 financial results.
BY UPESINEWS BUSINESS DESK,NAIROBI,4TH MAY 2017– The African Trade Insurance Agency , the pan African investment and commercial risk insurance provider posted record results for the sixth consecutive year ending December 2016 of net USD6.4 million (KES649 million), representing a 36 percent increase over 2015.According to ATI’s Chief Financial Officer Toavina Ramamonjiarisoa the positive results are largely attributable to increase business opportunities across the member state.
Among other factors, ATI attributes this success to stronger partnerships with African governments, who increasingly see the value of ATI to their growth and development objectives.
“We are increasingly viewed as a strategic partner in Africa helping investors and our member countries attract vital foreign investments. Our impact is being felt and this is reflected in statistics that indicate we are insuring investments equivalent to approximately 1% of our member country’s GDP every year. This is helping us attract new member countries,” notes George Otieno, ATI’s Chief Executive Officer.
In 2016, ATI insured close to USD4 billion (KES405 billion) worth of trade and investments. The company continues to support important transactions. For example, ATI began negotiations in 2016 on a cover that closed in 2017 of a USD159 million loan from the African Development Bank to Ethiopian Airlines to help the carrier expand its fleet. ATI also underwrote the first deal in a non-member country in Angola in Q-1 2017, reflecting the company’s new pan-African mandate.
The growing demand for ATI’s products can be partly explained by the fall-out from the end of the commodities super-cycle which has caused a weakened financial position in some African economies. The other factor is the tougher global regulatory environment which has made it difficult for international lenders to lend to sub-investment grade borrowers, which includes a majority of African countries.
In this environment, ATI’s products are being seen as a valuable tool to enable lenders to take sub-investment grade risk in Africa thus allowing governments and corporates to access more affordable financing. Importantly, in its role as an investment insurer of last resort, ATI is also providing the necessary comfort to support continued investments into the continent amidst a period of uncertainty.
This demand is reflected in ATI’s current regional expansion. The company now counts five of the six fastest growing African countries among its members including recent new members Côte d’Ivoire, Ethiopia and Zimbabwe and is actively pursuing membership of other countries including Angola, Ghana, Nigeria and other ECOWAS countries.
In August 2016, S&P Global Ratings reaffirmed for the 9th consecutive year ATI’s ‘A’ rating though placing the company on a negative watch. This decision was based on delays experienced by ATI in recouping payments from member governments on sovereign claims. ATI has since taken several steps to resolve the pending claims reimbursements and in parallel, put in place a more efficient process for mitigating claims and ensuring quicker future sovereign claims recoveries.
“As we have significantly grown and increased our business volumes in recent years, including counter-cyclical increases in exposures in a number of member states, it was inevitable that our Preferred Creditor Status would be tested. I believe that our response, which is ongoing, has been swift and thorough enough that it will effectively address these issues to the satisfaction of our clients, member governments and the ratings agency,” added Mr. Otieno.
ATI is a multilateral investment insurer that was formed by COMESA member countries with the support of the World Bank in 2001. Since then, ATI has expanded to include countries in the ECOWAS region. The company provides a range of products that mitigate risks impeding the flow of investments and trade to and within Africa. As of 2016, ATI has supported USD25 billion (KES2.5 trillion) worth of trade and investments into its member countries.