African Trade Insurance (ATI) has announced 6th consecutive year of earnings growth to $9.9 million net profit for the year ending December 2017. Gross written premiums and equity reached %$44.8 million and $242.2 million, respectively, buoyed by steady business expansion.
Mr George Otieno, African Trade Insurance’s Chief Executive Officer, said the repositioning of the company to provide even more support to its member countries across Africa with a specific focus to help governments reduce their cost of borrowing and provides an alternative to raising foreign currency debt through bond markets or syndicated loans, had supported the company’s stronger performance.
“The continent is currently searching for African solutions to tackle development challenges such as affordable access to financing. As an African institution, ATI is poised to become a go-to option for African governments – we are pursuing a strategy to achieve this goal,” Mr Otieno said.
ATI is expanding its presence in key markets to include office openings in the next year in Benin, which will operate as ATI’s West Africa hub, Côte d’Ivoire and Ethiopia. Importantly, ATI is also planning to undertake a rebrand in order to better reflect its new positioning as a strategic investment insurance partner to Africa and the world.
ATI is partnering with governments to provide a one-stop risk mitigation solution to lenders. This allows governments to negotiate more competitive rates that can reduce their cost of financing by as much as 100 bps per annum for example, on loans of $250 million to $350 million.
“In 2017, ATI took several steps to ensure its readiness to offer this level of support. First, the company is focusing on large strategic deals in order to support governments’ development priorities. For example, in 2017, ATI provided insurance cover on a USD159 million loan to Ethiopian Airlines to support the carrier’s fleet expansion. In this instance, ATI’s support ultimately furthers Africa’s development agenda – as the continent moves towards full implementation of a free trade zone, airlines such as Ethiopian will be key drivers facilitating the movement of goods and people across Africa,” said Mr. Otieno.
The recent restoration by S&P Global Ratings of ATI’s ‘A/Stable’ (positive outlook) rating is proof that ATI’s strategy is gaining traction, the CEO said. In 2016, S&P placed ATI on a negative watch prompting the company to step up efforts to recover payments on sovereign claims while also putting in place structures to avoid future payment delays by governments. In 2017, ATI successfully negotiated repayments on member government’s outstanding sovereign claims.
“As a signal of ATI’s growing relevance, governments reimbursed all but one claim that is pending review, and in its last assessment in March 2018, S&P also noted that ATI could qualify for an upgraded rating once its capital reaches USD250 million, which the institution is on track to achieve in the next year,” Mr Otieno said.