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On the 5th of December 2011 The Lebanese Credit Insurer s.a.l. (LCI) was named to the first ever Arabia500 according to the ALLWORLD Network. LCI achieved a growth rate of 201% between 2008 and 2010.

AllWorld’s Arabia500 winners were announced during the 2nd global summit on Entrepreneurship in Istanbul, which was hosted by Prime Minister Recep Tayyip Erdogan and attended by United States Vice President Joseph Biden.

The entrepreneurs of the Arabia 500, spanning from Morocco to Pakistan are succeeding against the odds, growing at 40 percent yearly in the toughest downturn in 80 years, and two-thirds reporting stronger profitability compared to a year ago. While the companies of the Arabia500+Turkey are largely unknown, their combined GDP is greater than 80 countries. Collectively, the Arabia500+Turkey represent $15 billion in sales and 100,000 employees. Each entrepreneur on the ranking has created an average of 200 jobs, in industries from web technology to transportation, energy to education, and construction to consumer goods. At an average of only 42 years old, nearly all of them plan to found another company in the next two years.

About AllWorld Network (www.allworldlive.com)

AllWorld was co-founded by Deirdre Coyle, Anne Habiby and Harvard Business School Professor Michael Porter. AllWorld systematically identifies private growth companies and ranks the fastest growing for the Arabia500, Africa500, Asia500, Eurasia500 and Latin America500. Being on an AllWorld ranking puts companies on the world map, drawing the market to them – what we call Visibility Economics™. Ranked companies ‘go public’, attracting new investors, customers, joint venture and talent to increase their odds of success.

LCI participated in the second annual meeting of Aman Union, which was held in Istanbul o n the 4th and 5th of October 2011, under the aegis of the Turk Eximbank.

The meeting was attended by delegates representing 17 Export Credit Agencies (ECA) in addition to financial institutions, reinsurance, credit information and debt collection companies. They addressed several issues related to the underwriting methodology, domestic credit insurance, international standards in export credit insurance and investment insurance in Arab and Muslim countries.

Mr. Michael Mcphilmey, advisor to the Board of LCI, discussed one of the most important issues; insuring risks in post-conflict countries.

The reunion was concluded by the announcement of the third meeting of the Aman Union in Malaysia. The proposed agenda for that meeting will include bonds insurance and new credit insurance products.

Stewart Kinloch has been acting Chief Executive Officer of African Trade Insurance Agency Ltd since July 31, 2009 till October 2011 and serves as its Chief Underwriting Officer. Mr. Kinloch has nearly three decades of international banking and credit insurance experience with such notable institutions as the Royal Bank of Scotland, QBE, where he served as Deputy Head of Trade Credit and Surety for Europe, and with Atradius as the Regional Director for Underwriting.

Stewart Kinloch writes about LCI and Lebanon:

“From 30 August to 9 September, I visited LCI and had the opportunity to visit all departments. In my view, and based on 16 years of experience in Trade Credit Insurance and Political Risk Insurance, LCI is a very professional organization that belies the modest number of staff employed. The underwriting team at the heart of the organization is highly skilled and has a solid command of credit risks within the Middle East and beyond.

I would like to thank all members of staff for their time and for their enthusiasm when faced with many questions.

I would also like to record that I think the Lebanon and Beirut are beautiful. I was lucky enough to visit both sites of antiquity and to go hill walking. I will now consider myself an ambassador for tourism in the Lebanon and hope to return with my sons to make a proper holiday someday.”

An Exporter is More Competitive if He Insures His Business

Source: Newspaper DELO, author: Milka Bizovicar, 1st July 2014

Interview with Karim Nasrallah: “There are opportunities for companies in the Middle East, but there isn’t much financial information about the companies there.”

Ljubljana – “The challenge for export credit agencies is that their products are neither well-known nor well-developed in our club’s member states,” assessed Karim Nasrallah, president of the Prague Club, which unites export credit agencies from the countries of Southern and Eastern Europe, the Middle East and North Africa.

The SID bank is also a member of the club, which operates under the auspices of an international union of credit and investment insurers – the Berne Union. The bank hosted a Prague Club meeting in the middle of June, and it was on this occasion that we had a talk with the association’s president, who comes from Lebanon. “Our first challenge is to create awareness that the option of risk insurance for exports exists and then to explain the advantages of this product. The second challenge of our agencies is to be able to cover the risks that companies take when conducting business abroad. We need to have the right information about companies abroad in order to correctly access the risks,” said Karim Nasrallah and he explained that these kinds of insurance agencies usually only provide services to companies from their same country.

What is the purpose of the Prague Club and your regular semi-annual meetings?

One of the purposes of the club is to exchange information about the opportunities, difficulties and obstacles that individual members face. We put all this on the table and see what other members can learn from it and what advice they can offer. The fundamental objective of the club is to support the members with the development of insurance services for exporters and companies investing abroad.

The Prague Club was founded as a special association within the Berne Union that unites companies that are associated with you from countries such as Germany, France, and Great Britain. Why have you pursued this sort of arrangement?

The Prague Club is part of the Berne Union. The latter was founded 80 years ago, while the Prague Club was founded two decades ago, for newly founded (export insurance) agencies. Back then, every country had to set up its own export credit agency if it didn’t already have one, in accordance with new legislation. For example, that was when the Soviet Union and Yugoslavia collapsed and the new countries had to set up agencies. These agencies started conducting business from scratch, which is why they needed cooperation and support. And so the Prague Club was founded to meet the needs of smaller agencies. After that we expanded by accepting members from Asia, the Middle East and Africa.

Which export risks do agencies insure?

The first and most topical is commercial risk, which is a delay in payment from the exporter’s clients due to commercial reasons such as bankruptcy or delayed payment for a certain period. The second is political risk, for example if the exporter’s client cannot pay for the order due to political reasons, moratorium, transfer risk, war, etc. Investments can be insured as well. For example, if a Slovenian company is investing in a company based in another country, it insures its investment. That is investment risk.

How often do exporters choose credit insurance?

That depends on various factors. The exporter opts for it if he believes that he needs protection for his claims, especially if he cannot secure a guarantee of payment from the buyer. For example, when a Slovenian exporter asks a buyer in France to open a bank guarantee to secure payment obligations yet the buyer wishes to operate on an “open account”. That is when the exporter needs to use credit insurance.

What is the value of transactions that members of the Prague Club insured last year, and how many insurance policies were realised?

The data I have is for the year 2012. We supported export in the total value of 26.5 billion euros in 36 agencies, while having 151 million euros worth of claims. If we take a look at consolidated numbers, we see that the activity of Prague Club members is gradually rising since the year 2008. This is probably due to problems that are becoming increasingly more common. We’re also getting more claims.

Do you mean non-payments?

The economic cycle has affected companies, some have gone bankrupt, others cannot pay for what they bought. The reason could be the economic crisis or their political situation.

Based on insurance claims, which countries’ companies are less safe to do business with?

Looking at the financial and euro crisis, the countries in which bankruptcies have statistically increased are Spain, Greece and Italy. The companies there had more problems than, for example, the companies from Germany. The numbers are now improving.

In which countries do companies insure their business more frequently?

When talking about insurance penetration, it is obvious that companies in countries where credit insurance has been present for many years are more aware of this product and more used to utilising it than companies from other countries.

What does the exporter gain by insuring his business?

If anything happens, he won’t have problems with non-payments and will be able to search for new markets. He is also more competitive. Credit insurance isn’t just insurance, it also includes a number of services. Firstly, the insurance agency has access to credit information about companies. If a company carries out an operation without insurance, it needs time to get to know its partner and can get left behind by competition. Secondly, the company that insures its business may operate via “open account” payment – without demanding a bank guarantee from the buyer. The company also gets better financing terms from banks, since their balance sheet is protected, they recognise their higher liquidity.

Is there any sense in insuring new deals with a partner that the company has known for a long time?

An exporter that has been conducting business with a client for 20 years and never had any problems might ask himself, why would I get credit insurance now. But the reality is different. The economic situation may change, as may the conditions within a company. Therefore problems with a client may appear, even when there have been none before. And also: if you increase the scope of business with an existing client, you only stand to profit from insurance.

What are the costs of these kinds of insurance policies?

Usually a percentage of the realisation of the insured account.

The reputation of a country from which the business partner of the insured party comes must be very important for the insurance company?

Of course. Our approach is from the macro level to the micro level. First we take a look at the country, then at the sector that the company operates in, and then at the company itself. If we were to, for example, conduct an analysis of a Slovenian construction company, we would first assess that the Slovenian market is doing fine – not great, but fine. Then we would take a look at the construction sector and see that most of the big players are bankrupt, or gone from the market. In this case we would decide against insuring such a risk. However, we would still insure the risk of a company that operates in, for example, logistics or the food sector, as they are doing better than the rest. We would then also take a look at the company and assess whether it is good enough for operating via “open account” payments or not.

As the president of the Prague Club, you are familiar with the economic environment of the countries of your members. In which sectors of the of the Middle East and North Africa are there presently business opportunities for Slovenian export companies?

We must examine those areas separately. In some countries we have seen an Arab spring that has turned into an Arab winter. Markets such as Libya, Tunisia, Egypt, Syria, and Iraq are riskier for exporters, while Lebanon, Jordan, Saudi Arabia, Bahrain, Oman… are countries with high economic growth that offer many opportunities. When talking about sectors it is hard to highlight something specific. In general, trade and industry are promising: trade is growing very fast, the demand for goods is high. However, there are also many obstacles for trade there. One of the main issues in the region is transparency. Companies do not publish financial results because they are not obligated by the law to do so. That is why there isn’t a lot of information about them. A Slovenian exporter will be hard-pressed to find out who the client is, how they conduct business… That is why cooperation with a local consultant is very important.

You come from Lebanon and are also the president and founder of a credit insurance company there. There are some 60 Slovenian companies already exporting into your country, what are the areas where they can find opportunities?

Some sectors in Lebanon have lately been affected by the events transpiring in neighbouring countries. The Syrian problem especially has hurt our tourism, which is one of our most important economic areas, as are services in general. Good sectors are logistics, electronics, technology, nutrition, and the petrochemical industry.

Lebanon is traditionally known as a trading country and also as the Switzerland of the Middle East. What is the economic situation after the civil war that ended in the beginning of the ’90s and with the millions of refugees that are in your country because of the crisis in Syria?

The country, with its four million inhabitants, is small, so there is little export; our most important business is services. A lot of people have emigrated: the Lebanese diaspora numbers about 12 million people and supports the economy in its country of origin quite a bit. The country picked itself up quickly after the war, but the Syrian issue has a dramatic influence on our economy. We cannot afford for 25 percent of our population to be refugees. They’ve spread over the country and are getting employed, which has increased unemployment and lowered the price of the workforce. That is why foreign investments have currently gone into hiding. There is some concern that the trouble in Iraq and Syria will spread to Lebanon.

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LCI has recently signed a Memorandum of Understanding with Company Watch, a specialist provider of corporate risk management services based in the UK.

Under the MoU, LCI and Company Watch have agreed to work together over the coming years to develop a ground breaking Joint Venture that will create a new product for the riskassessment and rating of both public and private companies initially within Lebanon and thereafter within the Middle East Region.

Within the context of the MoU both companies will immediately start to share both international and local knowledge, know-how and resources.

Company Watch is a London based provider of corporate risk management services to the insurance, banking, accounting and corporate sectors across the world. Its unique H-Score® measure of financial health has historically identified around 90% of companies that fail in advance. Company Watch is an Approved Source for a number of trade credit insurance policies.

Following Jordan, Oman and United Arab Emirates, Lebanon hosted the 7th Pan Arab Web Awards Ceremony at the Phoenicia Intercontinental Beirut on June 7, 2011.

The Lebanese Credit Insurer’s website, designed by IDM, was announced 1st prize winner in the financial institutions and insurance category. The Pan Arab Web Awards Academy also honored winners from Bahrain, Egypt, Jordan, Lebanon, Oman, Qatar, Saudi Arabia and United Arab Emirates.

The ceremony highlighted creativity and outstanding achievements which were witnessed by Ambassadors of UAE, Oman and Jordan in Lebanon and representatives of Ambassadors for Egypt and Saudi Arabia. The festival also attracted a selected audience of over 450 guests from Lebanon and the Arab world interested in the digital sector.

On the 3rd of June, 2011, the Lebanese Credit Insurer (LCI) and the Croatian Bank for Reconstruction and Development (HBOR) signed a Memorandum of Understanding. This agreement will allow both parties to support and encourage trade and investments between the two countries, Lebanon and the Republic of Croatia and to strengthen the co-operation in export credit.

Within the framework of this co-operation, LCI and HBOR will exchange services which include Debt Collection, Credit Information and IT services.

LCI and HBOR aim to promote trade and other forms of economic co-operation between their two countries.

The Lebanese Credit Insurer (LCI) and its 50% owned subsidiary, Levant Factors, sponsored the first Levant Region Trade & Investment Conference organized by Exporta which took place at the Intercontinental Phoenicia hotel in Beirut on June 1st, 2011.

This inaugural gathering of leading regional figures brought together various actors to discuss how best to maximize the business opportunities provided by the Levant area, whose long standing adherence to core banking principles has insulated against the harsher effects of global recession, with special emphasis on trade finance and the need to mitigate  against risk.

Being the first event to focus on the importance of trade and trade finance within the region, the conference covered a range of issues, from market performance to overseas expansion, corporate financing priorities, risk assessment, investment climate and alternative financing methods.

Expert opinion and insight was provided by both local and international banks, the corporate market, insurers, multilaterals, lawyers, consultants and other leading players.

Mr. Karim Nasrallah, General Manager at LCI and Levant Factors conducted the discussion panel regarding corporate priorities within the Levant marketplace. Dr Fady Gemayel, Chairman and General Manager at Gemayel Frères sal & Société Libanaise de Carton Solicar, Me Roger Tanios, Legal Department Manager at INDEVCO, Mrs. Hadia Minkara, General Manager at Allchem and Mr. Vicken Sarkissian, Finance Director at Obegi Chemicals Group shared their experience regarding SME financing methods and pointed out the importance of the presence of new approaches for obtaining SME financing.

LCI, the leading credit insurance company in Lebanon and the Middle East, reached a milestone as it celebrated its 10 year anniversary with a special event held on June 1st, 2011 in the presence of LCI’s clients, partners and shareholders at al Mandaloun Club.

During the celebration, LCI Chairman, Mr. Gerard van Brakel, congratulated LCI’s management and team and confirmed the commitment of Atradius and Atradius Re to LCI.
Mr. Karim Nasrallah, LCI managing director, spoke about how LCI started by insuring domestic Lebanese risks and quickly expanded the scope of its business to cover the world, taking credit risks on companies located on all 5 continents, in more than 60 countries.

LCI has managed to position itself strongly in the GCC region, providing an indispensable tool for companies to protect their receivables and increase their sales. In addition to credit insurance, LCI is also providing its clients as well as international credit insurers, with debt collection and corporate rating services on regional companies.
Over the last 3 years LCI’s business has grown at an average of 70% per annum. This has earned LCI the 12th ranking in the Lebanon 25 fastest growing companies in 2010.
Again over the last 3 years LCI has succeeded in maintaining an average loss ratio below 10%, thanks to tight credit control and proactive debt collection.

During the celebration, Mr. Nasrallah unveiled the recent joint venture of LCI and FIMBank (LCI’s Malta based strategic partner) to launch Levant Factors which will offer invoice financing and sales ledger administration mainly to SME’s in the Levant Region.

Mr. Nasrallah concludes: “This makes us a unique stop shop! A unique provider of credit management services and alternative trade financing tools.”

The speech was followed by a dinner and a long evening of entertainment and live music shows that LCI’s guests enjoyed till late night.

The world’s leading figures in trade, export and commodity financing gathered in Dubai to discuss the huge opportunities available within the Middle East region at Exporta’s 8th Annual Trade & Export Finance Conference, which took place at the Jumeirah Beach Hotel on February 21-22, 2011.

The event was inaugurated by Her Excellency Sheikha Lubna Bint Khalid Al Qasimi, Minister of Foreign Trade for the Government of the United Arab Emirates, who delivered a keynote address focusing on the emergence of the UAE at the world’s leading trade hub, assessing future trade growth prospects, the role of exports in fuelling development and the strategic importance of the wider region.

As a region of crucial economic and geopolitical significance, the conference welcomed in addition to 230 delegates from across the region, key trading allies such as Europe and the US, along with representatives from other key emerging markets such as Asia and Africa.

The conference combined informed content with engaged discussion and debate. Mr. Karim Nasrallah, Managing Director of LCI, discussed the assessment of the latest trends in risk coverage across the Gulf.
He announced that the Levant region has experienced a less important drop in demand and liquidity gaps as the rest of the world.
The current situation has triggered a raise in demand for credit insurance due to an increase in awareness.
Large credit insurers in Europe have put many countries in the region off-cover (Lebanon, Syria, Egypt…). However credit insurers in the region such as LCI, being closer to the risks, still cover the risks within these countries nevertheless, a steering of risk approach and strategy remains necessary.
Regarding the growth of additional value-added services provided by credit insurance companies, Mr. Nasrallah explained that LCI has recently witnessed an increase in demand for its ancillary products such as credit reports, rating services and debt collection.

Finally, Mr. Nasrallah concluded regarding the severity of the problems faced in the GCC that, “being from the Middle East and from Lebanon specifically, we became somehow used to do business in difficult circumstances. Therefore we should not let the risks of instability influence plans otherwise what would be the point of living and doing business in the region”.