Apicorp signs IDB credit insurance policy
Dubai, November 20, 2013
Arab Petroleum Investments Corporation (Apicorp) has signed a documentary credit insurance policy (DCIP) with the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC).
ICIEC is an affiliate of the Islamic Development Bank (IDB) Group which has been Aa3 rated by Moody's.
It is the only Shariah compliant export credit and investment insurer in the world and the leading insurer of credit & political risk in the Mena region.
A multilateral development bank owned by the ten member nations of the Organization of Arab Petroleum Exporting Countries, Apicorp said the agreement supports its trade-finance business growth by easing risks in trade finance transactions.
The DCIP will help the bank effectively manage risks affecting its Letter of Credit (LC) transactions and LCs of petroleum products exports in ICIEC member countries, said a statement from Apicorp, which is 17 per cent owned by the UAE government.
The policy is an effective tool to mitigate risk of non-payment of LCs arising from a variety of factors including insolvency of the buyer/ issuing bank; failure or refusal of the issuing bank to provide reimbursement on due date; currency inconvertibility and transfer restrictions imposed by issuing bank's country; expropriation, confiscation or government intervention in the business of the issuing bank; and war or civil disturbance in the issuing bank's country.
The DCIP provides insurance coverage to transactions in which a minimum of 30 per cent of the added value in the products transacted come from ICIEC member states.
Apicorp CEO and general manager Ahmad Bin Hamad Al-Nuaimi said: "We are extremely happy to advance our co-operation with the ICIEC by signing the DCIP. Trade finance forms an important focus of our diversification strategy and contributes significantly to our mandate to support Arab energy industry development."
"The DCIP will help us reliably protect and control risks in trade finance transactions, which in turn will help us better support the trading needs of Arab energy companies and enhance our trade-finance business growth," stated Al Nuaimi.
"The ICIEC’s extensive geographical remit and its mandate to encourage exports from member countries, some of whom are our own shareholders, make it a highly strategic partner for us. Partnerships like these are key to our ability to expand our trade finance business and create value and growth for energy companies in the region," he added.
Dr Abdel-Rahman El-Tayeb Taha, the ICIEC chief executive officer said: "Events in the region show clearly the important role credit and political risk insurance can play in supporting trade and attracting foreign investment into countries which need it the most."
"We are confident that the signed policy will help Apicorp in mitigating risks related to the default and non-payment of Letters of Credit confirmed by APICORP and thereby help to expand their trade transactions and ultimately increase exports from member countries," Dr Taha noted.
“This DCIP is the first signed between ICIEC and a joint Arab Financial Institution and represents a beneficial alliance between two sister multilateral institutions,” he added.-TradeArabia News Service