Peter M. Jones At The Opening Session Of The 9th Annual General Meeeting Of The African Trade Insurance Agency
Statement by Peter M. Jones, CEO - The African Trade Insurance Agency Annual General Meeting at the Inter-Continental Hotel
18 May, 2009, Nairobi, Kenya
Your Excellency, Hon. Stephen Kalonzo Musyoka, Vice-President of the Republic of Kenya and Chief Guest,
Hon. Fred Jachan Omach, Minister of Finance of the Republic of Uganda and Chairman of ATI General Meeting
Board of Directors of ATI,
Ladies and Gentlemen,
It is indeed a great honor for me to welcome you to the 9th Annual General Meeting of the African Trade Insurance Agency (ATI). We are very grateful to His Excellency the Vice President for taking time to join us at the opening of this AGM, to share with us some of his insights on issues that concern ATI. We look forward to hearing from you, Your Excellency and I believe your message will inspire our meeting.
Hon. Ministers, the AGM will be considering and officially launching this year's Annual Report and Accounts of ATI at its session this morning. The report outlines some of the milestone achievements the Agency made during the fiscal year 2008. I am delighted at the outset to inform the AGM and indeed our shareholders who are present here that the profitability record of the agency continued to hold up during the year 2008. Despite the negative effects of the global financial crisis and the credit crunch on several businesses world wide, ATI's sustained growth was witnessed in several areas.
The agency's gross written premium increased by 80% in 2008 compared to the previous years' performance to over US$ 1.9 million. Among the businesses underwritten was a ground breaking policy involving the placement of a re-insurance treaty for a major Kenyan insurer, covering political violence, civil disturbance, sabotage and terrorism, while the other policy was a single obligor credit risk insurance for an Israeli telecommunication equipment supplier to the DRC. Considering the constraints in our product offering prior to the completion of the capital and product restructuring and our inability to offer these types of cover, we are greatly encouraged by the quick results in these new areas, confirming that we are moving in the right direction. Our gross and net exposure also increased by 86% in 2008 to US$ 113 million and US$ 68 million respectively in the fiscal year 2008.
Our financial strength has been unmoved by developments in the global economy with the Standard & Poor's reaffirming in principle our credit rating of "A" stable for both its Insurer Financial Strength and long term Counterparty rating. The rating agency is scheduled to complete the paper work that is entailed for the rating to be formalised in the course of this month. As I have mentioned, our strong capitalisation and liquidity position which was the basis on which the rating was assigned has improved quite remarkably with the disbursements of additional credits by IDA.
Mr. Chairman, ladies and gentlemen, as already mentioned by the Board Chairman, we made substantial progress in achieving the levels of disbursements envisaged in the legal and capital restructuring of the Agency and as stipulated by IDA in the various member country Development Credit Agreements (DCA's). The process of increasing capital for the DRC, and Madagascar progressed well and is expected to be completed in the second quarter of this year. The need to increase capital in the two countries stems from the increased demand for cover that has been witnessed in these countries over the last one year. As for our member countries which have not completed their membership requirements, we are pursuing discussions with the relevant authorities to assist the countries in their fulfillment of the remaining conditions.
Mr. Chairman, as we expand our underwriting business, we recognize that forging partnership with other players in the market is important in helping us manage our risks and leverage our strength and comparative advantage with those of regional and international, private and public investments and credit insurers. We have during the fiscal year 2008, re-insured the Multi-Lateral Investment Guarantee Agency (MIGA), Atradius, various private insurers in Lloyd's of London, Sovereign Risk of Bermuda, Zurich Insurance and South Africa's EDC. These partnerships have allowed us to provide solutions that respond to changing market needs and support projects in both the public and private sector in our member countries. During 2008, ATI supported transactions in most of our member countries including, Kenya, Malawi, DRC, Tanzania, Zambia, and Uganda.
Mr. Chairman, I am also happy to report to the AGM that we are making good progress in decentralizing our operations so as to move our services closer to our member countries. We believe that this strategy will enhance the Agency's ability to respond promptly and effectively to private sector demands in terms of a quick and efficient delivery of ATI services in our member countries. In December 2008, our underwriting office in Zambia became operational with its location at the Zambia Development Authority. I would like to express our gratitude to the European Commission and USAID in Zambia for their financial support for the initial period until the office becomes self supporting. Arrangements are also at an advanced stage to open the Tanzania field office which is to be situated at the Tanzania Private Sector Foundation through the support of the World Bank. Our plans, depending on business volumes is to open further underwriting field offices in Rwanda to take care of Rwanda and Burundi business and in DRC.
In recognition of the need to put in place a structure for risk management processes and risk tolerances, and to identify potential events that may affect the agency, ATI engaged the services of a consultant to assist in implementing an Enterprise Risk Management (ERM) project. The ERM process was to compliment a number of risk management and corporate governance policies and procedures that have been approved by the Board of Directors over the past years. The ultimate outcome of the ERM exercise revealed that ATI's existing risk management frameworks and practices are relatively robust and in keeping with generally accepted practice for an insurer of its size and profile. ATI's position with respect to key risk factors was found to be fairly sound. The established ERM framework will help ATI to have a solid risk management platform to sustain its current and future business growth. The ERM framework will now allow the Agency to regularly evaluate the effectiveness of its internal control, and to manage its risk from an agency-wide risk management perspective in line with the approach of other Multilateral International Financial Institutions like MIGA, and IFC.
Mr. Chairman, I would like to end my remarks by expressing my sincere gratitude to the General Meeting, the Board of Directors and the staff of the Agency for the roles they have played in helping the Agency attain growth and stability. I wish to thank especially Mr. Astere Girukwigomba, ATI's long serving Board Chairman who retired from the Board after serving as Board Chairman for five years. Mr. Girukwigomba provided invaluable leadership to the Board and to the management of ATI during his term. I finally wish to thank our development partners, the World Bank, the EU, and the USAID for their financial assistant without which the Agency would not have attained the success
It is now my privilege to invite the Chairman of the General Meeting Hon. Fred Jachan Omach to make his statement.
I thank you
Peter M. Jones