The Arab Investment & Export Credit Guarantee Corporation “Dhaman”

DHAMAN CORPORATE PRESENTATION

2015

Who we are

Dhaman is a multinational institution with full juridical

personality and multilateral status, the first institution of

its kind to be established in the world.

Established by Arab Countries in 1974 and

headquartered in Kuwait with a regional office in Riyadh,

Saudi Arabia.

Permanent and founding Member of Aman Union,

Member of the Prague Club, Member of Coface Credit

Alliance.

In Arabic DHAMAN literally means GUARANTEE

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Who we are: mission

Our Mission is to participate in Member Countries‟

following development areas by providing Credit and

PRI solutions:

Industrial development

Agricultural development and food security

Infrastructure development

Domestic and foreign trade development

Foreign Direct Investments development

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Who we are: Dhaman milestones

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1974 Establishment of “Dhaman”.

1975 Dhaman starts providing political risk insurance cover for inter-

Arab investments.

1986 Dhaman starts providing cover for trade between Member

countries against commercial and non-commercial risks.

2000 Increase of the capital by USD 100 million

2001 Dhaman extends export credit insurance to cover exports from

Member to non-member countries.

2008 Dhaman obtains its first rating ever by S&P @ “AA- Stable

outlook”.

2009 Launching of “AMAN UNION", the Union of Commercial & Non-

commercial Risks Insurers & Reinsurers in the Arab and Islamic

countries.

Who we are: Dhaman milestones

2009 Dhaman extends its eligibility criteria to:

Existing investments,

Non-Arab investors investing in Arab member countries,

Import credit insurance: exports from non-Member countries to

Member countries.

2011 Dhaman starts providing domestic credit insurance as part of a

portfolio that includes both exports and domestic sales.

2014 S&P affirms for the eighth consecutive year its 'AA' Stable

Outlook long-term foreign and local currency counterparty credit and

financial strength ratings on Dhaman.

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Who we are: Member Countries

Algeria, Bahrain, Djibouti, Egypt, Emirates, Iraq, Jordan,

Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman,

Palestine, Qatar, Saudi Arabia, Somalia, Sudan, Syria,

Tunisia, Yemen.

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Who we are: capital and reserves

Shareholders:

Dhaman is 100 % owned by 21 Arab countries, 60% directly and

40% indirectly through 4 financial institutions themselves owned by

the Arab countries.

Capital:

Subscribed: USD 337 MN.

Paid up: USD 259 MN.

Reserves:

USD 140 MN.

Total Capital Distribution

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Saudi Arabia 10%,

S&P 'AA' Kuwait

9%, S&P 'AA'

Libya 8%

UAE 8%,

S&P 'AA'

Qatar 7%,

S&P 'AA'

Morocco 3%,

S&P 'BBB-'

Other 15 countries 15%

The Arab Fund for Economic and Social

Development 20%

The Arab Monetary Fund 11%

The Arab Bank for Economic

Development in Africa (BADEA)

8%

The Arab Authority for Agricultural Investment and Development

1%

Who we are: Rating

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Current Rating By S&P

AA Stable Outlook

Who we are: Rating

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Rating Rationale :

Extremely strong risk-based capitalization,

Strong financial flexibility:

- Membership Convention pertaining to recoveries under Political

Risk: preferred creditor status.

- key government shareholders are all at least strongly rated by S&P

- Implied financial support by key member states.

Strong liquidity,

Dhaman's credit risk is low to moderate, with demonstrable control of its

exposures.

Benefits of its multilateral status, reflecting its ownership by Arab

governments and its overtly political/economic development role for the

region,

Clear focused corporate strategy.

Who we are : Governance structure

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Shareholders’ Council: Governors of Central Banks,

Ministers of Finance, Int. Cooperation, Economy.

Board of Directors Investment Committee

Audit Committee

Director General

Operations Committee Investment Committee

Internal Audit

Risk management functions

Shareholders’ Council

Legal Department Investment Department Operations Department Research

& Studies

Department

Admin & Finance Dept

Contracts

Consultancy &

Research Export Credit

Investment Insurance

Accounts

HR & Admin.

IT

DG & PR Office

Board of Directors

Internal Audit

Director General

Business Development

Outsourcing

Financial Resources

Invest. back office

& Settlements

Secretary to the

Shareholders’

Council

& to the Board

Regional Offices

Financial Institutions

Operations Committee

Investment Committee

Who we are : Organizational structure

Audit Committee

WHAT WE DO

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What we do: Business Model

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CREDIT

INSURANCE

INVESTMENT

INSURANCE

Export Credit Insurance

Import Credit Insurance

Domestic Credit Insurance

Direct & Indirect Investments

Lenders’ & Shareholders’ loans

Mobile Assets

What we do: Underwriting approach

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Qualified and long

experienced

underwriting team.

Leverage

Dhaman’s high

level relations with

Member Countries

to mitigate

transactions risks

Excellent knowledge

of risk countries:

rectify common risk

misperceptions in the

insurance market

Mitigate risks through

treaty and facultative

reinsurance

Form strategic

alliances with ECAs,

brokers and financial

institutions to

exchange

underwriting

knowledge

Our underwriting philosophy: properly

evaluating a risk and making rational,

reasonable decisions on acceptability,

pricing and level of coverage.

Own in house scoring

model (corporate and

banks) and country

risk analysis

What we do: Risks insured

Non commercial risks:

CEN: Confiscation, Expropriation, Nationalization.

War and public civil disturbances

CI: Currency inconvertibility, non-transfer.

Breach of contract (includes arbitral or judicial award

default).

Commercial risks:

Protracted default.

Bankruptcy.

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What we do: Waiting Periods

Waiting Periods:

Political risks:

6 months.

Commercial risks:

Bankruptcy: 1 month.

Protracted default: 4 months.

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What we do: compensation rates

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What we do: Maximum line size

Maximum per transaction line size is

USD 80 MN

Can be enhanced through reinsurance

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Business Insured 2005/2014

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0

200

400

600

800

1000

1200

1400

1600

1800

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Business Insured (USD MN)

What we do: Claims & recoveries

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We maintain that an insurer‟s service should be

judged by the quality of its claims handling.

Prevent and mitigate loss and exposure to loss.

Contain a loss, should one occur.

Get claims paid quickly, efficiently and appropriately.

Market best practices.

Highly qualified technical and legal staff.

Claims payment decisions taken internally without

referring to any external authority.

Our approach

Claims

handling

Recoveries

Political risks: unsurpassed recovery rate

Preferred Creditor Status.

Commercial risks: exceptional recovery rate.

What we do: Historical claims paid

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12.4 Mn (7.57%)

151.5 Mn (92.43%)

Claims Paid 1975-2014 reached USD 164 MN

Commercial

Non commercial

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Historical claims paid by type of risk

140.1

5.6 5.7

12.4

1975-2014 USD MILLION

Non Transfer

Conf. Nationalization

Non Payment Gov. Entity

Non Payment Priv. Entity

Historical claims recoveries

24 0

20

40

60

80

100

120

140

160

12.4

151.5

2.9

149.9

Claims Paid 1975-2014

Recoveries 1975-2014

Commercial Risks Recovery rate: 23.4%

Non commercial Risks Recovery rate: 98,95%

USD MN

Our Reinsurers

Treaty Facultative

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Scope: Medium to long term

business, specific transactions

export credit and investment

insurance.

Percentage ceded: varies.

Our reinsurers: main

international reinsurers and

Lloyds„ syndicates.

Scope: Short term business

Percentage ceded: 50%

Our reinsurers:

Munich Re (leader): S&P: AA-

(Very strong), outlook.

Hannover Re:

S&P AA- "Very Strong“, Stable.

Catlin Re Switzerland:

S&P: A "Strong“, Stable.

PRODUCT MIX

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Dhaman‟s Product mix

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For suppliers

1- Comprehensive short term policy.

2- Single transaction policy.

For Financial Institutions

1- Confirmed LC Insurance

2- Buyer credit Insurance

3- Loan Insurance

4- Leasing Insurance

5- Factoring Insurance

6- Loss payee assignment for

credit insurance policies.

For Investors

1- Equity Investment

2- Non Equity Investment

3- Mobile Assets

For ECAs

1- Quota share reinsurance

2- Facultative reinsurance

3- Excess of loss reinsurance

For suppliers: eligibility

1- Member Countries‟ (MC) exporters exporting

worldwide: all goods and services of MCs origin.

2- Non MCs‟ exporters exporting to Member

Countries: commodities, equipment, food and other

developmentally sound goods and services.

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For Suppliers: policies

Comprehensive short term policy: covering revolving

receivables generated from pre-agreed foreign buyers.

The cover may be extended to buyers in the local market

(Domestic Credit Insurance). Maximum tenor: 360 days.

Single Transaction Policy: Short to Medium Term

Policy (up to 7 years) covering a single transaction with a

public or private obligor. Medium term transactions are

usually associated with project finance.

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For investors: eligibility

Arab and non Arab investors.

Greenfield and existing investments.

Project should be in an Arab member country.

Host country approval (non-objection) is required beforehand.

Contract duration: 10 years and can be extended to 15 years.

Policy limits of up to $ 80,000,000 for any one risk, can be increased

through reinsurance.

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For investors: policies

1- Equity Investment Insurance Policy

Portfolio and direct equity investments,

Ownership rights in the assets of an unincorporated branch,

Shareholder loans for investment purposes,

2- Non Equity Investment

Franchising agreement,

Licensing agreement,

Turnkey contract,

Management contracts

3- Mobile assets insurance

Cover is available to contractors owning and operating land based mobile

assets on a temporary basis in Member countries.

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Banks & FI solutions

1- Confirmed LC Insurance

Master Insurance Policy or Specific Insurance Policy

Protects Confirming Bank from the default of the Issuing

Bank

Risks: Political & Commercial

Full / Partial cover on large ticket items

Enhances Confirming bank‟s Country & Credit limits

Preapproved limits for 450 issuing banks worldwide

Response time between 3 hours (for preapproved

banks) to 3 working days.

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Banks & FI solutions

2- Buyer Credit Insurance

Trade Finance related.

Protects lending banks against the default of the importer or the

bank of the importer as the case may be.

Medium to long term.

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Banks & FI solutions

3- Loan Insurance

Project Finance related.

Loans to / Guaranteed by Public Entity whereby Policy

protects against the default of the Public obligor: Non

honoring of Sovereign Financial Obligation.

Loans to Investment Projects in Member Countries:

Policy protects lender against Political Risk only.

Loan tenor must exceed 3 years.

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Banks & FI solutions

4 - Leasing Insurance

Financial & Operational Lease.

Policy protects lessor against default of the lessee.

Commercial And / Or Non-Commercial Risks covered

Covers capital equipment leased to Member Countries

regardless of the origin of the equipment.

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Banks & FI solutions

5- Factoring Insurance

Protects factors against the default of debtors

Insured risks: commercial and non commercial

Applies to both domestic and export factoring

Short Term tenor

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Banks & FI solutions

6- Loss payee assignment for credit insurance

policies. Supplier enters into a Export Contract with the buyer.

The Supplier concludes an Insurance Policy with Dhaman and pays

premium.

The Supplier assigns the financing bank as a loss payee on the policy.

The bank offers the supplier export finance facilities against assignment

of export contract proceeds or bills discounting.

In case the buyer fails to pay, Dhaman pays the bank 90% of the loss.

Dhaman recovers from the buyer and returns 10% of the recoveries to

the bank.

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Export Credit Agencies

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1. Reinsurance Facilities Agreement:

This is a facultative reinsurance arrangement offered to ECAs in the Member

Countries to provide them with additional capacity for specific transactions. Similar

Agreements are signed with non-Arab ECAs where the underlying policy covers

exports from non-Member Country to Member Country.

2. Inward Quota Share Treaty

This is a proportional reinsurance support offered to ECAs in the member

countries where Dhaman takes a percent share of the entire portfolio of the ceding

Member Country ECA.

3. Excess of Loss

This is a non-proportional reinsurance support to ECAs in the Member Countries

to help them protect their own retention and underwrite large transactions.

INDUSTRY RELATIONS

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Brokers

Dhaman is fully approved by the major brokers

worldwide, especially in the UK, France, USA and

India.

Cooperation with brokers includes insurance,

reinsurance and coinsurance.

Dhaman can front transactions.

Dhaman uses either its own wording or the

brokers‟ wording once approved by Dhaman.

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International Associations

Dhaman is: Founding Member of Aman Union: association of

Commercial & Non-commercial Risks Insurers &

Reinsurers in Member Countries of Dhaman and the

Member Countries of the Organization of the Islamic

Conference (OIC).

Member of COFACE Credit Alliance: a worldwide credit

risk insurance network.

Member of the Prague Club: network for export credit

and investment insurers in emerging countries.

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Dhaman value proposition

1- Strong position in Arab Markets:

40 year operational experience in the region.

Long lasting capital support from member countries mainly

GCC countries (A+ rated).

Preferred Creditor Status.

Access to decision makers and information sources.

2- Resources Mobilization Capabilities:

Strong S&P rating.

Strong international network.

Strong and permanent reinsurance support from the market.

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Thank you for your attention

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The Arab Investment & Export

Credit Guarantee Corp.

Contact details:

Tel: +965 24959555

Fax: +965 24959596 / 97

Email: operations@dhaman.org or:

chatti@dhaman.org

Website: www.dhaman.org

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