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Positive Outlook at the 69th Annual General Meeting

June 2011 Volume 6 ◆ Issue 3

69th Annual General MeetingContent

Interviews AGM Guest SpeakersAnthony Kennaway 2The Geneva Association

Dr. Taha 3ICIEC

Q & A Committee ChairsRossella Pappalardo 4(Committee of Underwriters)

Martin van der Hoek 5(Credit Insurance Committee)

Louis Habib-Deloncle 6(Single Risk Committee)

Luc Reuter 7(Surety Committee)

InterviewsMartina Dobringer 8Coface Austria

Jos Kroon 9Nationale Borg

Column by Uwe Remy 11

At the 69th Annual General Meeting in Edinburgh (United Kingdom) ICISA members shared views on the positive but fragile market outlook and discussed relevant industry developments. While loss ratios have improved substantially and the outlook is overall positive, several external factors remain uncertain and can influence overall results for the coming year. The industry has applied lessons learned from the crisis; by improving credit management tools and increasing transparency expectations of policyholders are better met.

The Association’s membership continues to grow as we welcomed Novae Group PLC (United Kingdom) and Catlin Re (Switzerland) as our newest members. We are privileged that these respected industry players have joined the Association which has now grown to 47 members.

From a historically European focused industry, the sector is seeing increased demand in Latin-America and Asia. At the Edinburgh meeting ICISA’s President, Joaquin de la Herrán, reaffirmed the association’s focus on these growing regions by promoting the awareness of Trade Credit Insurance and Surety products in the most important emerging economies. I am further pleased to inform that both Joaquín de la Herrán and Jim Davidson were reelected at the 69th Annual General Meeting as respectively President and Vice-President for the coming year.

In this edition of our Newsletter you can get a flavour of the annual meeting through the interviews with our Committee Chairs and guest speaker dr.Taha of ICIEC who shared his views on recent developments in North Africa and the Middle East. Anthony Kennaway, Head of Communications at The Geneva Association focused on the challenges associations face nowadays in getting their message across and kindly shared his extensive experience in working with the media and on how best to position an Association in an ever changing world.

Last but certainly not least, I would like to invite you to read the interviews with Mrs. Martina Dobringer, Director General of Coface Austria, about the

economic developments in the Central and Eastern European region and with Mr. Jos Kroon, CEO of Nationale Borg, who talks about the aftermath of the crisis and how his company changed to face future developments. Our Column is this time written by Uwe Remy of Axis Re and he discusses the specifics of surety cycle management.

I wish you pleasant reading!

Rob NijhoutExecutive Director of ICISA

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In the last year or eighteen months, The Geneva Association has been working to expand its contacts amongst trade associations in order to offer its research and wider work to the industry more e f f e c t i v e l y. A n t h o n y K e n n a w a y, H e a d o f Communications at The Geneva Association, was guest speaker at the ICISA General and Associated Meetings and gave an interesting insight in the challenges insurance associations face nowadays.

“As a producer of research and papers on long-term insurance issues facing the industry as a whole, the ICISA and other t rade organizations may wish to use our research in their work. The opportunity to s p e a k a t t h e I C I S A conference was therefore a perfect opportunity to reach out to the ICISA and its membership as well as a chance to help spread the word about The Geneva Association and the work that it does”.

“The opportunity to speak at the ICISA conference was a perfect opportunity to reach out to the ICISA and its membership as well as a chance to help spread the word about The Geneva Association and the work that it does”

As a communications expert, Kennaway addressed the challenges associations face nowadays in order to represent their members in international discussions. “I’ve been asked to provide my own perspective on the communications issues that exist for member organizations such as ours, and some of the points I made there may chime with challenges faced by the ICISA also. Having come from an in-house role, I have come across a series of information and communications challenges in working for a membership organization rather than industry. I shared a sense of some of the work that we have been undertaking to date and think that they will be of interest to the membership of the ICISA. I outlined some of the challenges that I have found in raising the profile and public affairs activities of a previously relatively media shy institution”. According to Kennaway its a fact that “the finding of a common consensus is always extremely challenging amongst conflicting interests and opinions. Some initiatives can even be stopped because the vision and or perceived interests of a particular party or parties are not fulfilled by the initiative – often even when it is not damaging to them. Issues like these occupy huge amounts of time – and it takes time to find a common and yet effective resolution.”

Of course the focus of The Geneva Association and ICISA might differ depending on the issue. “We always say that the key criteria for our issues is that they must be Board Room relevant, international in nature and pre-competitive”, Kennaway points out. “Pre competitive means broadly that it is an area that has not yet reached commercial maturity or that it relates to an issue that transcends competition - our recent work on systemic risk and climate change are good examples of transcendental challenges. We also don’t tend to cover particular business lines. This rule means that our membership takes a more collegiate approach to understanding and tackling the issues and, equally importantly, means that we don’t overlap with the work of the business line, national and regional trade associations. The actual nature of our work is multi-faceted”. However he clearly identifies areas of common interest for The Geneva Association and ICISA.

“We are keen to build stronger links with other trade associations and see that we can play the role of an intelligence or information provider”

“This relates back to the purpose of coming to talk I would say – we are keen to build stronger links with other trade associations and see that we can play the role of an intelligence or information provider to the trade associations and companies in the industry. This is certainly the situation with the ICISA”. This means, according to him, that both organisations should cooperate more closely “in the areas where our interests overlap. We believe that the industry as a whole needs to work together more closely”. However the need for better alignment, he is aware that it is “something we have not really needed to do in the past and are consequently not very good at doing”. We therefore need to look to industries were they are more experienced in doing so. “When you look at the ability of other sectors to work together to challenge issues – there are a number of things that I believe we could learn – not least the banking sector of course. Whilst reviled at the moment, there can be no question that they are good at working independently towards common purposes where their interests overlap”.

“External Relations Challenges & Opportunities for Insurance Associations”

The Geneva AssociationThe Geneva Association is the leading international insurance think tank of the insurance industry. The Geneva Association identifies fundamental trends and strategic issues where insurance plays a substantial role or which influence the insurance sector. The Geneva Association serves as a catalyst for progress in the understanding of risk and insurance matters and acts as an information creator and disseminator. Information is the leading voice of the largest insurance groups worldwide in the dialogue with international institutions.www.genevaassociation.org

Mr. Anthony Kennaway

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June 2011 Volume 6 ◆ Issue 3

At the AGM 2011 in Edinburgh, dr. Taha, General Manager of the Islamic Corporation for Insurance of Investments and Export Credits (ICIEC), a member of the Islamic Development Bank Group, addressed the members as guest speaker. Dr. Taha kindly accepted the invitation to answer a few questions on ICIEC, their relationship with ICISA and the developments in the Middle East, as it is important to him that ICIEC “is known to the leading credit insurance providers outside the Berne Union”.

“ICIEC is a credible and effective partner, which can enhance the capacity of ICISA members to underwrite emerging markets and Least Developed Member Countries (LDMCs) Sovereign risk”

During his presentation he emphasized that “ICIEC is a credible and effective partner, which can enhance the capacity of ICISA members to underwrite emerging markets and Least Developed Member Countries (LDMCs) Sovereign risk”. In this respect dr. Taha wants to underline that it is important to know that “ICIEC is an experienced, highly rated, multilateral insurer of trade credit and political risk with a focus and expertise on LDMCs and emerging markets risk and Islamic finance structures”.

“how to strike a balance between the need for a strong and sound financial position and its mandate to assist in the development of its least developed member countries”

At the moment the main strategic issue for ICIEC nowadays is “how to strike a balance between the need for a strong and sound financial position and its mandate to assist in the development of its least developed member countries”.

“for countries with underdeveloped institutional and regulatory framework, it is anybody’s guess how things will evolve.”

Looking to the current situation in the Middle East, dr. Taha is careful in predicting the future outcomes, but it has shown already that “there is no such thing as one single undifferentiated MENA risk. Those countries with more established institutional set-up are in a better position to

weather the storm and are more likely to succeed in establishing a more open and positive business environment”. But he underlines that “for countries with underdeveloped institutional and regulatory framework, it is anybody’s guess how things will evolve.”

Dr. Taha - ICIEC is a Credible and Effective Partner for ICISA

ICIECThe Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) is a member of the Islamic Development Bank (IDB) Group, established in 1994. ICIEC Shareholders are the IDB and 40 member countries of the Organization of the Islamic Conference (OIC). ICIEC’s objective is to increase the scope of trade transactions from its Member Countries to facilitate foreign direct investments into Member Countries, and to provide reinsurance facilities to Export Credit Insurance Agencies (ECAs) in Member Countries. ICIEC fulfills these objectives by providing Islamic Shariah compatible credit and country risk insurance and reinsurance products. ICIEC is rated Aa3 by Moody’s and enjoys strong reinsurance support from the international credit and political risk reinsurance industry. www.iciec.com

Dr. Abdel-Rahman Taha

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Which (economic) developments had the greatest impact on your business (positive/negative) in the last year?The 2010 represented, from an economic point of view, the starting point of a slow recovery. The modest positive results in the financial market has encouraged our industry to be more open towards clients and buyers. In particular, for Risk U n d e r w r i t i n g i t m e a n t m o r e confidence in buyers development and results and increasing in commitment and exposures.

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The positive effect of the recovery also influenced policy pricing and conditions showing a more open attitude towards policyholders. The economic positive trend is giving its benefits on our industry also during this year. In terms of risk underwriting it means more and more support for

both policyholders and potential clients.

Has this lead to changes in your product? The restrictive measures taken during 2008 and 2009 in risk underwriting, and the reduction of exposures and commitments created a gap between po l icyho lders coverage needs and policy pricing. The policyholders asked for a new pricing formula more based on the effective coverage. This request forced our Industry to think about a review in pricing approach and a review of our products.

What were the key issues for your committee over the last year?Our Committee format allows us to be updated on Members’ Country economic situation, thanks to the round table, and to focus on sensible trade sectors, countries and Buyers that could have impact on risk underwriting. Each time we decided together which are the key issues we want to focus on. The rules we have is to discuss about what we think can help us in doing better our job. In the 2010 Meetings we had the possibilities to discuss in particular about Greece, China, Italy and Russia. Concerning Trade Sectors, we spoke about Automotive, Steel and Construction.

What goals did your Committee set regarding these issues?It depends on the issues. For examples, presentation on Greece helped us in better monitoring Greek

risks, giving us a clear picture of the economic situation of the Country and perspectives for the near future. T h e p r e s e n t a t i o n o n R u s s i a contributed to better understand the financial improvements and market development.

What are the main topics for your committee in the coming year?The year 2011 has already offered us the “opportunity” to discuss on sensible issue like the North Africa crisis. A presentation has been given during the last Spring Meeting on those Countries that have been affected by rising strong social pressure and financial difficulties. We also discussed about the UK economy and European labor situation. Concerning the future Autumn Meeting we are planning to go on with Australia and Brazilian economic situation and commodities and renewable energy.

What should the readers know about your committee?We try to be updated on international economic main concerns. We can give our advice on sensible countries or trade sectors. We are ready to prepare documents or presentations on different subjects if there is a particular request or need. I often say that we are a Window On The World. I can add that we have to be a Window on the World because only in this way we can do a better job by helping our clients to push their activities in the right direction.

Ms. Rossella Pappalardo Commercial Director - SACE BT

Rossella Pappalardo - Committee of Underwriters

CLAL Credit InsuranceHayim Cohen has left the company on 1 March 2011. Shlomi Sarid was appointed as his successor as CEO of CLAL Credit Insurance. Shlomi Sarid joined Clal ten years ago, and successfully established and led Clal Factoring since then. Under his leadership, Clal Factoring grew to be the market leader with more than 33% market share. Before joining Clal, Shlomi Sarid served a senior VP at IFTRIC, the former long

and short term ECA owned by the State of Israel, responsible among other issues, to the ECA’s reinsurance, marketing and risk management. Shlomi Sarid is well regarded as a manager and as an expert in credit management and credit insurance, an experience that will contribute to the future growth of CCI. Shlomi Sarid holds an MBA and B.A in Political Science, both from, Tel Aviv University. For more information, please visit www.clalcredit.co.il

Rossella Pappalardo - Committee of Underwriters June 2011 Volume 6 ◆ Issue 3

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Martin van der Hoek - Credit Insurance CommitteeWhich (economic) developments had the greatest impact on your business (positive/negative) in the last year?The recovery from the greatest economic crisis since 1929 had a major impact on our business.

Has this lead to changes in your product?The drastic measures by credit

insurers to reduce or withdraw cover shocked the market. Customers' need for cover became more important than the amount of premium they had to pay. Credit insurers were forced to regain their market share by a constructive dialogue with their clients. The answer of Coface to the increased risk awareness of our customers was the offer of a transparent view on their buyers' underwriting.

What were the key issues for your committee over the last year?Key issues for the Credit Insurance Committee were the preparation of update of the Catalogue of Credit Insurance Terminology and the kick off for the writing of the ICISA Book on Trade Credit Insurance and Surety.

What goals did your Committee set regarding these issues? The Credit Insurance Committee will facilitate open discussions and exchange of views on any non-competitive subject related to our product and our services. A new edition of the Catalogue of Credit Insurance Terminology in several

languages should be ready at the end of this year. as well as the set up and some chapters of the ICISA Book on Trade Credit Insurance and Surety.

What are the main topics for your committee in the coming year?The main topics for the Credit Insurance Committee in the coming year will be: Lessons learned form the crisis and State Support for C r e d i t I n s u r a n c e , D i f f e r e n t poss ib i l i t i es o f a l l oca t i on o f recoveries in case of overtrade, The function of the maximum liability related to high credit limits, Bonus / Malus Schemes on a risk attaching or losses occurring base and the issues related to cover of insolvency only: advantages and disadvantages.

What should the readers know about your committee?It is a unique platform for study and development of our product, offering every member the chance to benefit from the aggregate know how and experience of their colleagues.

Mr. Martin van der Hoek Director Insurance TechniqueCoface Nederland

In June ICISA welcomed Catlin Re Switzerland Ltd. as its newest member. Catlin Re Switzerland is based in Zurich and is a wholly owned subsidiary of Catlin Group Limited (‘CGL’: London Stock Exchange).

Catlin was established in 1984 at Lloyd’s of London, where the group currently operates the largest syndicate in terms of gross written premium. The formation of Catlin Re Switzerland, along with Catlin’s existing insurance/reinsurance activities at Lloyd’s as well as in the US and Bermuda, allows Catlin to provide cedants with high-quality security for more than 30 classes of business. The purpose of Catlin Re Switzerland is to access European property, casualty, and specialty reinsurance business otherwise not accessible through the existing Catlin operations. In addition, Catlin Re Switzerland writes trade credit, surety, and political risk reinsurance on a global basis. Catlin Re Switzerland is rated ‘A’ by S&P and AM Best and is regulated by the Swiss Financial Market Authority (FINMA).

Catlin as a group has been actively underwriting various classes of credit business for many years, namely trade finance, political risk, trade credit and surety. Catlin recognizes trade credit and surety bond insurers’ vital and stabilizing role in global economic development. It aspires to be a reliable partner which offers high-quality capacity across the underwriting cycle on a global basis. The broad trade credit and surety bond expertise at Catlin Re Switzerland complements the group’s existing global trade expertise, strengthening Catlin’s aim to be a capital provider of choice for clients in these.For more information, please visit http://www.catlin.com/Home/Catlin-Europe/Catlin-ReSwitzerland

New Member: Catlin Re Switzerland Ltd

Martin van der Hoek - Credit Insurance Committee June 2011 Volume 6 ◆ Issue 3

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Which (economic)developments had the greatest impact on your business (positive/negative) in the last year?The consequences of the crisis have generated more demand in our market while capacities remained stable, i f not s l ight ly i n c r e a s i n g . W i t h t h e occurrence of the Arab revolutions, political risks are back in such demand w i t h n e w t e c h n i c a l challenges for the insurers.

Has this lead to changes in your product?Political violence is becoming more crucial as a result of the recent political events. The difficulty here is that, contrary to the traditional credit risks, political violence may generate straight full losses with hardly any possibility of recovery. It requires thus a specific technical approach.

What were the key issues for your committee over the last year?Our committee being relatively young, we have been focusing on the most urgent aspects: first, conducting the first single risk market survey, which shall be implemented in 2011, then drafting a single risk catalogue of terminology and third, promoting an action towards multilateral institutions concerning trade debt treatment in international rescheduling. It has to be pointed out that all these

activities are conducted in coordination with non ICISA members, primarily the Lloyd’s market, which is a prominent player in the single risk segment.What goals did your Committee set regarding these issues? The first target is to implement the market survey before the end of the year. It is essential to have a better picture of the size and role of the single risk market.The catalogue of terminology will be worked out in 2011 and 2012. We would like then to have such terminology supported by jurisprudence in different jurisdiction.

With regard to trade debt treatment at the multilateral level, we have to work with experts in this field which should draft with us a specialized report for the multilateral organizations.

What are the main topics for your committee in the coming year?We shall draft the single risk section of the credit insurance book that ICISA is preparing. We shall propose new topics for review to our members and I guess the issue of political violence should be among them. In the meantime, we shall still elaborate on the “trade related” issue as we see demand for different types of operations.

What should the readers know about your committee?The single risk market is in permanent evolution in line with the evolution of global trade flows and practices. The SRC is here to have private insurers being recognized partners in the dialogue with other players such as the ECAs, banks, regulators and lawyers. The better we structure our market, the stronger we appear, the best it will be for the development of credit insurance as a whole and for global trade growth overall.

Louis Habib-Deloncle - Single Risk Committee

Mr. Louis Habib-Deloncle Chairman Management Board Garant

In May ICISA welcomed Novae Group plc as our new member. Novae Group plc is a multi-line insurer based in the United Kingdom.

Novae has underwritten credit insurance since 2000 and encompasses:- Credit Indemnity & Financial Services (CIFS), a trade credit insurance division offering whole turnover insolvency and political risk cover in the UK and Ireland- Novae's Syndicate 2007 at Lloyd's, a Lloyd’s syndicate

offering single risk cover in emerging markets around the world. The Lloyd’s syndicate has been operating since 1986 and is also the underwriting security for CIFS.- Novae Re, the group's reinsurance arm, set up in

2009 and based in Zurich and London.

-It operates at Lloyd’s through the Group’s underwriting syndicate, ‘Syndicate 2007’. It offers a full range of products and started offering credit and surety reinsurance in 2010.

Lloyd’s Syndicate 2007 benefits from the Lloyd's A (A.M. Best) and A+ (Standard & Poor’s; Fitch) ratings.For more information, please visit www.novae.com

New Member: Novae Group plc

Louis Habib-Deloncle - Single Risk Committee June 2011 Volume 6 ◆ Issue 3

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Which (economic) developments had the greatest impact on your business (positive/negative) in the last year?It was and is the public finance crisis of Greece, Ireland, Portugal and Spain. Beyond that we are concerned about possible implications for the rest of the Eurozone. This creates uncertaint ies and increases risk in our business.

Has this lead to changes in your product?None at the bond level. Our efforts circle around enhancing our indemnity agreements for example.

What were the key issues for your committee over the last year?The ongoing PML Study on Surety, the ICISA Book project and our EU level playing field topic

What goals did your Committee set regarding these issues? The goals of the committee are now clear. Not a book on Surety but to start a series of briefs on surety. The concept will be presented at the next Autumn meeting. A first brief as well. We are all very excited about this decision. The committee voted unanimously in favour of our proposal.

What are the main topics for your committee in the coming year?The main topics will not change, but the way we will tackle them should change. I want to motivate people to contribute more in preparatory work between committee

meetings. During our spring session we did decide to go this way. A prior chairman kindly drew our attention to a public consultation from the EC on a new public procurement directive. This was the ideal opportunity to place our key concerns about bonding and public contracts. We did set up a working group and were successful in delivering written answers on behalf of ICISA, meeting the short deadline. Let me please say thank you to: Martyn Ward from HCC, Paul Daas from Nationale Borg, and Rob and Willem from the ICISA.

Recently I was made aware of a new draft amendment to the French Environmental Code to allow permit bonds from sureties and banks to be replaced by parental guarantees. This is of course nonsense and not acceptable, discriminating against smaller companies and potentially risking taxpayers' money.

We as ICISA should have the means to be aware of risks to the industry and give us the means to support local sureties and their associations. There is a lot to do, we need effective communication between the ICISA surety committee and the local committees in the countries. In today's email age there is no reason why we should not succeed. We will debate about this this year and come up with solutions. The reverse is true as well, a new law enacting a new type of bond to protect end consumers from failing companies in one country may also be what other countries need. ICISA can be the one promoting the exchange of in format ion, research, leg is la t ive development, etc.

What should the readers know about your committee?Well, they should know that we are passionate surety professionals..., and dream of a world where the term bank guarantee has no future...

Luc Reuter - Surety Committee

Mr. Luc Reuter Head International SuretyZurich Insurance plc

AXA AssurcreditAXA Assurcredit has announced its new management board:◆ CEO is Pierre Fournel, ◆ Commercial Director Jean-David Kon◆ Internal controls, claims and accounting management Director Michel Thébault◆ Credit underwriting, commercial management and marketing Director Christian Aguas.For more information, please visit www.assurcredit.com.

AXA WinterthurJean-Pierre Knébel has retired on the 31 March 2011. Dieter Schäfer was appointed as his successor as Director and Head Credit & Surety. He started his new role on 1 March. Marlène Hertel (Head of the Surety Department) is his deputy. For more information, please visit www.axa-winterthur.com

SID -First Credit Insurance Inc.As of 23 May 2011 SID -First Credit Insurance Inc. has moved its operations to a new address: SID - Prva kreditna zavarovalnica d.d., Ljubljana, Davčna ulica 1, 1000 Ljubljana, SloveniaThe former address will no longer be used.Existing telephone and fax numbers and e-mails will remain unchanged.To read the full notice, please visit www.sid-pkz.si.

Luc Reuter - Surety Committee June 2011 Volume 6 ◆ Issue 3

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Advanced Economies and Emerging Countries Risk Gap Progressively Narrowed

Mrs. Dobringer, Director General at Coface Austria and member of the ICISA Management Committee, shares her views regarding ICISA and the economic developments in the Central and Eastern European region.

Although she has only pa r t i c i pa ted tw ice i n d i s c u s s i o n s a s Management Committee member, she experiences her membership as an excellent opportunity to meet co l leagues and s h a r e e x p e r i e n c e s . “Personally I appreciate the discussions on operational topics as well as the exchange of thoughts regarding the working groups on future challenges. As ICISA we are on the right track and especially the lobby efforts concerning Solvency II are valuable for our industry”.

“As ICISA we are on the right track and especially the lobby efforts concerning Solvency II are valuable for our industry”

Regarding her personal goals as Management Committee member, she indicates that “it is a bit too early to set goals; I want to deepen my relationship first”. But she would like to stimulate the development of trade credit insurance in her region as especially in Central and Eastern Europe positive developments are expected to continue the coming years. “During the crisis the claims ratio of various countries in Central Europe was beyond what was ever seen. For example in Lithuania we faced a claims ratio of 600% in 2009 (this was the worst country) but due to strict risk management actions during the crisis we could bring it down to a normal level of 73% in 2010. In the entire region of Central Europe the consolidated claims ratio was in 2009 219% and in 2010 62%”. She also indicates the remarkable growth some countries in her region made during the crisis. “We have the winners who have come through the crisis with flying colors. Especially Poland is certainly one of them. Poland can be proud of its recent performance, not least because it was the only EU member state that saw its economy expand during the 2009 crisis. What’s more, the country continued this success by recording the strongest growth rate in the EU last year. We believe that Poland will again be one of the economic front

runners in the EU in 2011, with growth of 3.7% – second only to Estonia, where we expect growth of 4%”.

“We have the winners who have come through the crisis with flying colors”

Comparing the developments in her region to the global and Western-European economic developments, she notes a remarkable difference between the two. She points out that worldwide “we are on the mend since the annus horribilis we experienced in 2009. All key indicators are looking healthier. And after the worldwide economic growth hit 4% last year – that figure includes a number of catch-up effects – we at Coface are predicting growth of 3.2% for the global economy in 2011”. Looking however to the emerging economies over 2011, “Coface expects an average growth of 6.2% in my region, compared to just 1.4% in the Euro zone. The main reason for this sharp contrast is the Euro zones’ debt crisis, which has made it much more difficult for governments to take steps to combat the impact of the recession.”

This however does not indicate that all countries in her region are on the right track yet. “Corruption is still in some countries an issue. But the biggest challenge for the South East countries is the legal framework and the executive forces”. But besides these ongoing issues, she underlines that countries are recovering from the crisis and the outlook is promising. “Those hit harder will take longer to be back on the pre crisis level. We see, as indicated already, good growth in Poland and a steady but slightly weaker growth in Bulgaria, Slovakia, Czech Republic, Croatia and so on. Coface offers in the region is Credit Insurance, Business Information and Debt Collection. In Poland we are offering Factoring on top. Even in 2010 – the year of recovery – we managed a double digit growth (+18%) and we are positive to outperform this in 2011.”

“The power of ICISA can help to promote trade credit insurance through a dedicated communications concept”

Taking these positive regional developments into account, she strongly feels ICISA should play an important role in developing these markets. “The power of ICISA can help to promote trade credit insurance through a dedicated communications concept. Push agents might be the right choice to support the common understanding of our mission in Central and Eastern Europe”.

Ms. Martina DobringerDirector General - Coface Austria

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Business as Usual While Changes Take Place Behind the Scene CEO Jos Kroon, Nationale Borg

The worldwide economy is growing and the crisis seems to be over. Regarding the crisis, the aftermath and the future developments of the worldwide economy in relation to Nationale Borg, Jos Kroon, CEO of Nationale Borg kindly accepted the invitation to share his views with us.

He is reluctant to analyze the macroeconomic developments that have occurred since the start of the crisis, as “we are still in it and do not yet have the proper perspective”. He warns that “although we like to think we are climbing out of it, there are many ongoing developments that are hard to interpret.

“It will be many years from now before we can look at this era with enough distance to make a proper analysis of what went wrong”

I think it will be many years from now before we can look at this era with enough distance to make a proper analysis of what went wrong”. He emphasizes however that this does not mean that we should be reluctant in our actions. “It is obvious that we cannot sit back and wait for time to pass to get a proper perspective on matters. We have to act now in order to get things on track. It seems to me that we are very anxious to get things back onto the very same track they were on before”.

But is that the right track he wonders openly. “Personally, I feel we may miss the opportunity of a lifetime to make fundamental changes that will help create a more sustainable and equitable world”.

“We may miss the opportunity of a lifetime to make fundamental changes that will help create a more sustainable and equitable world”

The negative macroeconomic developments had of course also effects on Nationale Borg, but although difficult decisions needed to be taken, most clients appreciated the continuity provided by the company Kroon emphasizes that “as a surety company with a long track record, it is our aim to support our clients in both good and bad times. Continuity and reliability are key elements of our service.

Faced with the choice to let go of numerous clients or to stick with this aim, we felt the best choice was to renegotiate the terms of our cooperation with clients. This has meant an increase of rates and stricter conditions.

Even so, we have ended our relationship with some clients where we felt the risk was no longer acceptable. Overall, however, we have been able to continue our services and we feel that this was greatly appreciated by most clients”.

“In Belgium, construction activity has continued throughout the crisis, but in Holland we feel that all segments of the construction sector have been hit seriously”

However positive the signs, Kroon notes that “the world is full of mixed signals about economic developments and it would be presumptuous to pretend that we know better than others where the world economy is headed”. He especially sees signs of improvement and increased economic activity in the two home markets of Nationale Borg. However, he is concerned about the activity level in the construction industry and “those concerns are primarily focused on the Dutch market”, he confirms. “In Belgium, construction activity has continued throughout the crisis, but in Holland we feel that all segments of the construction sector have been hit seriously”.

“By the nature of our business, decreasing order books only translate into problems for us after several years”, Kroon explains. “We feel that the market needs an impulse soon to ascertain that the construction sector can continue to play its role as one of the drivers of economic activity. At the same time, we see that housing construction in Holland is at a historic low as the real estate market has slowed down due to the economic crisis and political uncertainty around financing options. There is significant oversupply in the office market and infrastructure spending will be sharply reduced in order to balance the national budget”.

“We feel that the market needs an impulse soon to ascertain that the construction sector can continue to play its role as one of the drivers of economic activity”

These developments are worrying for the surety industry in general, but Kroon expects Nationale Borg to continue expanding its market position in the Dutch and Belgian surety markets. “We have spent the past few years to improve many aspects of our operation, including systems, risk management and our commercial departments.

Mr. Jos KroonCEO - Nationale Borg

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We have appointed Tom Nederlof to head up our commercial team in the Netherlands and Hilde Braeken has just joined us as the head of our Belgian team. Meanwhile, our most experienced manager, Paul Daas, is involved in the continued improvement of all the systems and processes that ensure a smooth process for our clients and financial security and efficiency to all stakeholders”.

“Reinsurance represents more than 50% of our volume and since the start of 2011, we have split the company into two separate legal entities: an insurance company and a reinsurance company”

Nationale Borg has also, in addition to the expansion of the surety business, continued to work on their strategy to further develop their reinsurance activity. “Reinsurance represents more than 50% of our volume and at the start of 2011, we have split the company into two separate legal entities: an insurance company and a reinsurance company. This was necessary for regulatory purposes and to remain competitive as a reinsurer after the introduction of Solvency II. Nationale Borg Reinsurance, headed by Richard Lange, is located in Curaçao, where we have been active since the 1960’s. The underwriters who serve Europe and Asia remain in Amsterdam”.

“Clients don’t notice any change, while we continue to build a much more efficient and effective organization: as if we had put up a new building behind the same familiar façade”

All in all the strategy and focus have not changed, according to Kroon. “The change is in the increased attention to execution and the speed of implementation”. He underlines that “the clients have always been very positive about our service. We will be very happy if they don’t notice any change, while we continue to build a much more efficient and effective organization: as if we had put up a new building behind the same familiar façade”.

About Nationale BorgNationale Borg is a specialized issuer of bonds and guarantees, and through Nationale Borg Reinsurance as reinsurer Nationale Borg shares in the guarantee and credit insurance portfolios of insurers throughout the world. Next to that, Nationale Borg is the most important provider of guarantees for businesses in the Netherlands and Belgium. www.nationaleborg.nl

Ducroire | Delcredere N.V.Ducroire Delcredere S.A. N.V. ‘s renewed profit (EUR 11 million on 31 December 2010) is explained by a record in premium income combined with a continued decline of claims during the second half of 2010. Written premiums reach a record high since the company was created in 2004 (EUR 87 million) and claims (EUR 42 million) have been reduced by nearly half in comparison to last year. Dirk Terweduwe (CEO of Ducroire Delcredere N.V.): " We adopted targeted risk controls and were able to maintain cover capacity at a time when companies needed it the most. This approach has attracted numerous new clients and, according to a survey by market research agency Synovate, no less than 87% of current clients state that they would recommend us to their peers. We have booked 38% premium income growth while having reduced the charge of claims paid by 46%".To read the full press release and annual report, please visit www.ducroiredelcredere.be.

Swiss ReSwiss Re is completing adjustments to its leadership structure to reflect the company’s new legal entity set-up. Stefan Lippe will continue to lead the Group as Chief Executive Officer of Swiss Re Ltd. Christian Mumenthaler becomes CEO of its reinsurance subsidiary, Swiss Reinsurance Company Ltd (SRZ).As Chief Marketing Officer for Reinsurance since January 2011, Christian Mumenthaler is already responsible for leading and growing Swiss Re’s core reinsurance business. Effective 1 October 2011, he will become CEO of SRZ assuming additional responsibilities. Christian Mumenthaler will be accountable for the Group’s reinsurance strategy as well as its entire business performance, including financial results, capital and asset allocation, along with governing the legal entitiescomprised within SRZ.Stefan Lippe will continue to focus on running the Group, in charge of implementing Group strategy, overseeing and taking ultimate responsibility for all businesses, and being accountable for the financial performance of Swiss Re Ltd.For more information, please visit www.swissre.com

June 2011 Volume 6 ◆ Issue 3

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June

COLUMNUwe Remy, AXIS Re

Surety and Cycle Management

We are still experiencing the aftermath of the financial crisis. But there is hope that we have reached the final phase. However, the economic recovery remains fragile. The developed and emerging economies are growing at a much different pace. Insolvency rates are coming down but are still far away from the pre-crisis level. Credit Insurance has seen already the bad side of the cycle and demonstrated a remarkable turnaround whereas Surety – except for certain markets - has been fairly loss resilient.

Is there no cycle in Surety or has the industry weathered the financial storm better?Historically, the Surety industry experienced loss cycles. Recent examples are Spain in 2008 and, even more dramatically, Ireland in 2010 where three of the top five construction companies went bankrupt. Some of the losses are stemming from already distressed cases. Others were more of a “shock loss”. Generally, surety losses tend to increase between 18 to 24 months after a recession. Applying this rule of thumb, we cannot be sure that the surety industry is beyond that point. Furthermore, the austerity programs launched by several countries especially in Europe may have not shown their full impact on the construction industry yet.

How to manage a Surety cycle? Surety in contrast to credit insurance is mainly underwritten on a zero-loss basis. Therefore, the underwriting is so essential. Underwriting encompasses the financial and technical underwriting as well as macroeconomic risks. Close monitoring of the risks and detecting early deterioration of the financial strength of a contractor is absolutely necessary. If a contractor with a large exposure is already in a stressed situation the surety might be forced to continue issuing bonds to avoid an immediate large loss. But it might be worthwhile to look at modern credit portfolio management techniques which can help to better understand the drivers of risk in the surety portfolio. Credit risk in a portfolio arises from two sources: systematic and idiosyncratic.

Systematic risk represents the effect of unexpected changes in macroeconomic and financial market conditions on the performance of obligors. Idiosyncratic risk represents the effects of risks that are peculiar to individual firms. Applying modern portfolio techniques requires a more analytical approach to analyze the risks such as ratings and loss given default data. For those surety companies who will apply for an internal capital model, it is a prerequisite to produce and manage such data. The PML surety study of ICISA is an important milestone on the path in this direction.

Of course, relying on ratings, capital or any other model is not the only benchmark as the performance of specific capital market products during the financial crisis has shown. Models need to be complimented with real threat scenarios. Here, a globally acting reinsurer can provide added value on top of reinsurance solutions.

I would herewith like to pass the pen to Gustavo Krieger from Afianzadora Latinoamericana to write the next column.

_________________________________________________________________________The column expresses the personal opinion of the writer and does not necessary reflect the

views of ICISA or any or all of its members.

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ICISA Information Herengracht 473 1017 BS, Amsterdam the Netherlands +31 (0)20 - 625 4115

For news and other suggestions, please contactwillem.bongaarts@icisa,orgFor media relations and interviews, please

contact edward.verhey@icisa.org

June 2011 Volume 6 ◆ Issue 3

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June 2011 Volume 6 ◆ Issue 3

Mads Løgstrup, CEO of Tryg Garanti, celebrated his 25th anniversary in the company on 15 May 2011.

Mads Løgstrup was appointed CEO in 2003. He joined the surety business in 1986 in Københavnske Garanti, which was later merged into Dansk Kaution, now Tryg Garanti. Mr. Løgstrup holds an MSc in Economics and Business Administration and a Graduate Diploma in Finance from CBS, Copenhagen. He is a board member of the ICISA educational foundation STECIS and a member of the Tryg Underwriting and Reinsurance committee since 2006.

When looking back on the developments in the surety industry of the last 25 years, Mr. Løgstrup indicates that “the introduction of the internet was the most important driver of innovation during many years. The ability to replace heavy manual processes with lighter, more efficient and easily accessible processes supported by the internet has changed the way the industry works, and will continue to change the industry for the years to come.”

Also Løgstrup emphasises that “the business has developed towards a more rational behaviour where intuitive decision processes have been replaced by more rigid processes, especially in the field of risk management, reinsurance and capital management.” Løgstrup concludes by saying “all in all I find that the industry today is much more rational and mature in its behaviour than when I entered the business many years ago”.

Mr. Løgstrup expects that “the industry will continue to grow and become even more successful. The core product, the surety bond, will continue to provide "peace of mind" between partners in a contractual relation. The need for "peace of mind" is universal and with the internationalisation and higher level of complexity in trade and commerce, demand for surety bonds will continue to grow. The industry has all reasons to expect a positive and bright future.”

Mads Løgstrup, 25th anniversary - Tryg Garanti

Mr. Mads Løgstrup

About Tryg GarantiTryg Garanti is a main provider of surety bonds and guarantees in the Nordic area. Tryg Garanti also offers credit insurance for the Danish market. Tryg Garanti has branch offices in Denmark, Norway, Sweden and Finland. In addition, Tryg Garanti’s cross-border activities facilitate provision of guarantees for Nordic customers outside the Nordic region. Tryg Garanti is a 100% owned subsidiary of Tryg Forsikring. In line with the Tryg Group’s branding structure, the operations in Sweden trade in the name of Moderna Garanti. In all other markets, the brand name of ‘Tryg Garanti’ is used. www.tryggaranti.com

CALENDAR◆ 21-22 July 2011STECIS training seminars- Trade Credit Insurance- Surety Amsterdam, NL www.stecis.org

◆ 21-23 September 2011Autumn Meetings 2011Amsterdam, NL

The Surety & Fidelity Association of America elected its new Board Members◆ Tracey Vispoli as Chair of their Board for 2011-2012 (Senior Vice President of Chubb Group of Insurance Companies).◆ Timothy Mikolajwski as Vice Chair of the Board (President of Liberty Mutual Group).◆ Also elected to the SFAA Executive Committee were Stephen Haney (Vice President and CUO of ACE USA Group), Ross Fisher (Vice President & General Manager of The Hartford Insurance Group) and Thomas M. Kunkel (President & CEO, Bonds and Financial Products of The Travelers Companies).

June 2011 Volume 6 ◆ Issue 3