A trade summit held at the Address Hotel Dubai Mall brought the likes of Euler Hermes to town. Pictured is chief economist and director of economic research for Euler Hermes, Ludovic Subran. Lee Hoagland / The National
A trade summit held at the Address Hotel Dubai Mall brought the likes of Euler Hermes to town. Pictured is chief economist and director of economic research for Euler Hermes, Ludovic Subran. Lee HoaglShow more

Egypt and Syria hit as insurers seek to lay off Middle East risk



Volatility in Egypt and Syria is prompting trade credit insurers to limit cover as they seek to avoid multimillion-dollar payouts linked to elsewhere in the region.

It follows more than US$100 million of claims paid last year related to Iran and about $140m the year before in Libya, according to the Berne Union, an association representing global credit and investment insurers.

“We have some concerns for the future. Parts of the [Middle East and North Africa] region are politically volatile and we are concerned about the potential spillover of that to the now healthy parts of the Mena region,” said Robert Nijhout, the executive director of International Credit Insurance & Surety Association, another body that represents insurers around the world.

Alongside Mena, southern Europe and parts of Africa and South America were also potentially risky areas, he said. Still, the outlook for growth in the region was positive, he added.

Offered by special insurers, banks and government-backed export credit agencies, trade credit insurance covers sellers of goods and services against the risk of non-payment by customers both at home and abroad. Demand for the insurance in the region is taking off as companies seek to improve their ability to cover risks.

Such risks flared in the region in 2011 when a revolution and foreign military action in Libya prompted a clutch of big claims by oil majors and other foreign companies who had been left unpaid.

International sanctions against Iran prompted more payouts last year as Iranian buyers struggled to pay foreign sellers of goods amid a slump in the value of the currency.

“We are in a situation today where the Iranian buyers say ‘we would like to pay but no one is accepting our payment’ so the credit insurers then have to indemnify and they are then trying to recover the money from the Iranian buyers,” said Fabrice Morel, the deputy secretary general of the Berne Union.

As yet, no big claims had been paid out linked to Egypt as insurers reduced their exposure, he said. But volatility had intensified since the removal of Mohammed Morsi as president in a July uprising .

“It is an explosive situation and it might well be that we see claims coming from this country in the future,” said Mr Morel.

Euler Hermes, the largest trade credit insurer in the world, experienced a 20 per cent rise in claims in the region last year, said Mahan Bolourchi, the head of risk, information and claims in the GCC and Middle East for the company. The increase in claims was still below the firm’s annual regional revenue growth of 55 per cent.

Along with other international insurers such as Coface and American International Group, it has strengthened its presence in the region to tap into surging flows of trade, particularly in the UAE, a major transshipment hub.

Euler Hermes is limiting new exposure in Egypt and Libya and not providing any cover currently in Syria or Iran.

“In Egypt, the risk is that no one will be held accountable for the dues,” said Ludovic Subran, the Euler Hermes chief economist. “In terms of the private sector buyer, the risk is a little different. The risk is that there’s very little cash left in the country.”

Euler Hermes has been encouraging GCC countries to explore new export markets in some parts of the Mediterranean such as Morocco and Tunisia.

tarnold@thenational.ae

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Saturday's results

West Ham 2-3 Tottenham
Arsenal 2-2 Southampton
Bournemouth 1-2 Wolves
Brighton 0-2 Leicester City
Crystal Palace 1-2 Liverpool
Everton 0-2 Norwich City
Watford 0-3 Burnley

Manchester City v Chelsea, 9.30pm 

If you go

Flight connections to Ulaanbaatar are available through a variety of hubs, including Seoul and Beijing, with airlines including Mongolian Airlines and Korean Air. While some nationalities, such as Americans, don’t need a tourist visa for Mongolia, others, including UAE citizens, can obtain a visa on arrival, while others including UK citizens, need to obtain a visa in advance. Contact the Mongolian Embassy in the UAE for more information.

Nomadic Road offers expedition-style trips to Mongolia in January and August, and other destinations during most other months. Its nine-day August 2020 Mongolia trip will cost from $5,250 per person based on two sharing, including airport transfers, two nights’ hotel accommodation in Ulaanbaatar, vehicle rental, fuel, third party vehicle liability insurance, the services of a guide and support team, accommodation, food and entrance fees; nomadicroad.com

A fully guided three-day, two-night itinerary at Three Camel Lodge costs from $2,420 per person based on two sharing, including airport transfers, accommodation, meals and excursions including the Yol Valley and Flaming Cliffs. A return internal flight from Ulaanbaatar to Dalanzadgad costs $300 per person and the flight takes 90 minutes each way; threecamellodge.com

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Director: Laxman Utekar

Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna

Rating: 1/5

Zidane's managerial achievements

La Liga: 2016/17
Spanish Super Cup: 2017
Uefa Champions League: 2015/16, 2016/17, 2017/18
Uefa Super Cup: 2016, 2017
Fifa Club World Cup: 2016, 2017