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Trade Credit Insurance in the Middle East

  • March 2014
  • -
  • Finaccord
  • -
  • 28 pages

Trade Credit Insurance in the Middle East is a report about the market for trade credit cover in six GCC countries, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.

In addition to documenting the development of the market value from 2009 to 2013, the report also divides it for the most recent year between four key segments: between small companies with an annual turnover of less than USD 5 million and larger companies with a turnover above this threshold; between single-risk and annual policies; between export and domestic trade credit insurance; and between protection acquired for political risks and cover bought for business risks.

These unique market splits are based in part on a survey of leading brokers of trade credit insurance in the six GCC countries in scope. This same survey also identifies the underwriters of this type of cover used by brokers on a regular basis, gives an input into Finaccord's estimates for the market shares of underwriters of trade credit insurance in the six countries, provides a basis for commentary surrounding distribution channels used for this type of policy, and informs Finaccord's forecasts for the market value through to 2017.

Key features of this report include:

- quantification of the market size for trade credit insurance in these six GCC countries: how much is the market worth, how has it developed since 2009 and how does it break down into key segments?

- presentation of the actual or estimated market shares of underwriters of trade credit insurance in 2013 based on both the broker survey and other available data sources, plus identification of leading brokers of this type of cover;

- audit of the frequency of usage of underwriters by major brokers of trade credit insurance in the Middle East: to what extent are competitors effectively challenging the main incumbent underwriters?

- availability of an accompanying PartnerBASE™ dataset that logs partnerships for trade credit insurance identified by Finaccord across a combined total of over 40 leading banks and major trade associations;

- forecasts for the market for trade credit insurance across the six GCC countries in question and how it will split between domestic and export trade credit cover: what is this sector likely to look like in 2017?

Table Of Contents

Trade Credit Insurance in the Middle East
0.0 EXECUTIVE SUMMARY 1
1.0 INTRODUCTION 3
What is this report about? 3
Rationale 3
Several factors underpin the rationale for the production of this study 3
There are several distribution channel options in addition to brokers 3
Globally, trade credit insurers cover over USD 2 trillion of commercial credit exposures 3
The report provides a standardised analysis of important metrics for trade credit insurance 4
Methodology 4
Research program 4
Market data analysis 4
Definitions 5
Trade credit insurance 5
Single-risk and annual policies 5
Export and domestic policies 5
Political and business risks 6
Premiums 6
Abbreviations 6
PartnerBASE 6
Finaccord 7
2.0 MARKET ANALYSIS 8
Introduction 8
Market size, growth and segmentation 9
The regional market for trade credit insurance has experienced very rapid growth in recent years… 9
…with demand gradually increasing among domestic companies 9
A lack of adequate bankruptcy legislation is generally perceived to be a problem in the whole region 9
Small companies account for a substantial proportion of the regional market for trade credit insurance 11
A majority of brokers surveyed intermediate both annual and single-risk policies 12
A very high proportion of trade credit insurance premiums in the Middle East are export-related… 13
The GCC countries are characterised by a very high value of exports as a percentage of GDP 14
The provision of cover for political risks plays a notable role in the Middle East 15
Factoring as a complementary / substitute product 16
The factoring markets of Qatar and the UAE are growing from a very low base 16
Underwriter market shares 17
Euler Hermes is likely to be a fairly clear market leader in the region among underwriters... 17
... and is believed to hold an especially high market share in Saudi Arabia 17
Coface maintains several important distribution partnerships in the UAE… 17
… and Atradius also collaborates with local partners 17
Competitors include international specialists, local underwriters and niche players 19
Distribution channels 21
Brokers are absent from two of the six GCC countries but present in the other four 21
A number of banks in the region have established distribution relationships for this type of cover 21
Future outlook 23
The boom in trade credit insurance in the Middle East is likely to continue in the coming years 23
3.0 APPENDIX 25
Brokers participating in the survey 25


List of Graphics / Tables


0.0 EXECUTIVE SUMMARY 1
Key market data for trade credit insurance in the Middle East 2
1.0 INTRODUCTION 3
2.0 MARKET ANALYSIS 8
Gross written premiums for trade credit insurance in the Middle East, 2009 to 2013 10
Premium income paid by small companies with an annual turnover of less than USD 5 million as a
proportion of the total market for trade credit insurance in the Middle East, 2013 11
Premium income paid for single-risk policies as a proportion of the total market for trade credit insurance
in the Middle East, 2013 12
Premium income paid for export trade credit insurance as a proportion of the total market for trade credit
insurance in the Middle East, 2013 13
Values of exports and imports and split of GDP by sector in the Middle East, 2009 to 2013 14
Premium income paid for political risk cover as a proportion of the total market for export trade credit
insurance in the Middle East, 2013 15
Total factoring market value in Qatar and the UAE, 2008 to 2012 16
Estimated market shares of gross written premiums of trade credit insurance underwriters in the Middle
East, 2013 18
Frequency of usage of specific trade credit insurance underwriters by brokers in the Middle East, 2014 . 20
Major banks offering trade credit insurance in the Middle East: operating models and partnerships, 2014
22
Forecast gross written premiums for trade credit insurance in the Middle East and the proportion due to
export trade credit insurance, 2017 23
Forecast segmentation of gross written premiums in the Middle East between domestic and export trade
credit insurance, 2017 (table) 24
3.0 APPENDIX 25

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