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Strengthening partnerships in Egypt

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LCI’s General Manager discusses innovation in trade receivables management

LCI took part in the official conference hosted by GIG Egypt and the Ministry of Trade and Industry in March, 2019. The aim of the conference is to strengthen investment and collaboration opportunities between Egypt and Syria. LCI’s General Manager, Karim Nasrallah, shed light on the innovation in trade receivables management, to drive trade globally.

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Digitization will impact the trade industry

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Every day, fleets of huge ships dock in ports over the world and every hour, a plane carrying cargo lands, in one country or another. With every docking and landing, a stack of paperwork will need to be processed. Whilst this practice has been the standard process adopted by governments and countries for decades, the cost of processing trade documents still remains high.

Based on figures released by the World Economic Forum, the cost of processing the paperwork for shipped goods, can reach as much as one fifth of the cost of shipping the actual goods. Many institutions, including banks and technology companies, are trying to streamline this process, as the benefits are numerous. Experts indicate that simplifying the administrative procedures can actually lead to notable growth in international trade.

Apps, technological innovation & block chain solutions are simplifying procedures of shipping goods.

In comes digitization, which is already underway in the trade sector. Apps, projects, technological innovation and even block chain solutions are simplifying the once complex administrative procedures of shipping goods. Electronic-based documentation lowers costs, simplifies workflow, and takes up less time in terms of analysis and storing. Depending on the electronic documents along with the use of standardized ID numbers for transactions, traders can benefit from a smoother process, expand to new markets and deal with new clients, with less requirements when it comes to due diligence, collecting and tracking credit, performance and commercial dispute data.

The advantages of digitizing the trade sector are clear, but will governments and private institutions move fast enough?

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LCI Expands its Debt Collection Services to 11 New Markets in Africa

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The servicing arm of the Lebanese Credit Insurer (LCI), LCI Services, has expanded its Debt Collection Services to cover 11 new African markets, which include Mauritania, Senegal, Gambia, Guinea Bissau, Guinea, Liberia, Ivory Cost, Ghana, Togo, Benin, Nigeria, Cameroon, Gabon, Congo, Democratic Republic of the Congo, Angola, Madagascar, Tanzania, Kenya and Sudan, in addition to existing markets which it covers.

“Businesses operating in the Middle East and Africa face recurrent difficulties in securing payments for the goods and services they supply. It is widely known that these regions achieve inadequate rankings when it comes to debt collection, and many businesses are suffering when writing off bad debt,” shared Karim Nasrallah, General Manager of LCI.  “With our expanded reach of debt collection services, we are supporting clients in their regional growth, and protecting their biggest asset – their trade receivables. The addition of these new markets will allow LCI to extend credit insurance cover in these markets in Africa,” he added.

Delays in payments are mainly due to lack of a proper payment behavior framework and a lenient payment culture in these markets, which leads to buyers defaulting and extending supplier credit limits for over 180 days. Debt collection is key for companies to recover outstanding balances. The Debt Collection Services offered include: recovery management, verbal negotiations, dunning letters, final demands, solicitor’s letters, drawing up repayment plans and legal action.

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Berne Union hosts Annual General Meeting in Belgrade

The Berne Union hosted its 2017 Annual General Meeting (AGM) in Belgrade in October, gathering 260 participants representing 70 of the 82 Berne Union member organisations, inclucing external guests. The Meeting was hosted by Serbian Export Credit Agency (ECA), AOFI.

Members reported strong growth in new business across all committees, and although claims remain high, and the global risk environment challenging, most are optimistic about the coming months and into 2018.

Short Term Trade Credit Insurance (ST)
Members of the ST Committee have collectively issued credit limits of USD 1,188 billion at the mid-point of the year. This is 18% higher than the situation at year end 2016, where they stood at USD 1,007 billion. Two thirds (67%) of members surveyed expect further increases in business volumes over the coming 12 months, and the majority of the remainder (27%) anticipate a stable continuation of the current state.

Growth is expected across developed markets generally, especially North America and the European Union, where economies are benefitting from improving fundamentals, relaxed lending conditions and increasing domestic demand. Any changes to interest rates are likely to have a significant impact on this situation.

There is some caution with respect to the impact of fluctuating oil prices – with the potential to adversely affect both oil exporters or net importers, depending on the direction of travel.

For those countries reliant upon commodities exports more generally, there are also concerns, especially in Sub-Saharan Africa, where levels of national indebtedness are also high.

Members are keeping an eye on the banking sector in Asia, while in OECD countries traditional retail brings greater concern, due to competition coming from online sales. Notwithstanding the challenges highlighted, 94% of ST members express optimism overall with respect to prospects for global economic growth in 2018.

Business Focus and Challenges

In most areas, members of the Berne Union report competitive pressures presenting a challenge for their business. In short term business, 26% cited the soft market as a concern, while 30% focused on digitisation of processes and 19% on better provision for SMEs.

INV members cite concern about soft market pricing as well, but also see a challenge in distribution. In some areas a lack of demand, which may be overcome by improvements in marketing awareness of products to potential clients.

According to Secretary General, Vinco David, “The market for commercial credit insurance has seen a number of new well-capitalised entrants offering credit insurance at competitive rates. Due to the current low interest rates, capital markets parties are seeking higher returns and credit insurance may offer this. However, when interest rates begin to rise, this situation will reverse. As supply and demand establish a new balance, we would expect to
see higher premium rates as a consequence”.

For more information, visit www.berneunion.org

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ExCred 27 Conference takes place in London

The ExCred 27 Conference took place in London from February 28 to March 1, 2017, in the presence of over 300 senior representatives from ECAs, insurers, banks and corporate exporters. The ExCred conferences tackle the global export credit and political risk industry, bringing together experts from the world over, to discuss various topics and share insights on issues of importance.
Karim Nasrallah, GM of LCI, took part in a panel entitled ‘How Middle East Governments Can Foster Growth Through Trade and Innovation. Joining him on the panel, was Dr. Andreas Klasen, Professor at the University of Offenburg, Germany, CEO of ITFC Hani Sunbol, ICIEC’s CEO Oussama Kaissi and chaired by Diana Margaret Smallridge.
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Prague Club elects HBOR’s Ante Alić as ‘Rotating Member’ on the Berne Union Management Committee

The Prague Club has announced the election of HBOR, represented by Mr. Ante Alić as the first ‘Rotating Member’ on the Berne Union Management Committee. Mr. Alić of HBOR was elected by the Prague Club members, and will be taking part in the next Management Committee meeting in London in February, followed by the Prague Club Plenary Spring Meeting in Botswana.
Congratulations to HBOR and Mr. Alić for this new role.
adminPrague Club elects HBOR’s Ante Alić as ‘Rotating Member’ on the Berne Union Management Committee
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ICIEC CEO visits LCI

Mr. Oussama A. Kaissi, CEO of the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), visited LCI on January 14, 2016.

Several discussions were held with regards to further development and cooperation between ICIEC and LCI in the region, both strategically and technically. Furthermore, the upcoming Aman Union Annual meeting, which will be held in Beirut during November 2016, was discussed and planned.

About ICIEC

The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) is a member of the Islamic Development (IDB) Group. ICIEC was established on August 1, 1004 as an international institution.

The idea for the establishment of an entity to provide investment and export credit insurance for Islamic Countries originated from the Agreement for the Promotion, Protection and Guarantee of Investment among Member Countries of the Organization of the Islamic Cooperation (OIC).

This Agreement provided that the OIC, through the Islamic Development Bank, establishes an Islamic Insurance Company operating under Shariah principles, to provide insurance products for investments and export credits. The driving ambition behind the Agreement as a whole, and the creation of ICIEC, was to strengthen the economic relations between member countries of the OIC on the basis of Islamic Shariah.

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IFG and FCI join forces

Factors Chain International (FCI) and the International Factors Group (IFG) have signed an Agreement to create a single organization to represent the interests of the receivables finance and factoring industry with over 400 members in 90 countries dedicated to open account trade finance. Effective January 1st, 2016, the combined organization will be under the legal auspices of FCI, a non-profit association under Dutch law headquartered in Amsterdam, Netherlands with a branch office in Brussels, Belgium. This means that all of IFG members will be transitioned to become active members in FCI. It is expected that the organization will adopt a new name and mission statement, to be considered during the FCI annual meeting in Cape Town, South Africa 23-28 October 2016.

The organization will be run by a single Secretariat, managed by Mr. Peter Mulroy, Secretary General and Mr. Erik Timmermans, Deputy Secretary General.

This decision will bring multiple benefits to its members as well as expand the influence and reach of the organization. Members will have increased country coverage in over 90 markets to generate increased cross border business as well as a larger trade network with over 400 members.

LCI has been an Associate Member of IFG since December 2014.

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Cooperation Agreement with Triglav in Serbia

In December 2015, Triglav Osiguranje A.D.O. and LCI Services finalized a cooperation agreement intended to jointly develop credit insurance activities within Serbia.

LCI Services will bring technical know-how and expertise in underwriting the risks in the region, as well as Re-insurance support through top tier Reinsurers; while Triglav will issue credit insurance policies within Serbia. Triglav,on the other hand will be able to provide their corporate customers with credit insurance services.

LCI Services will help Triglav set up its own adapted Microsoft Dynamics CRM dedicated to manage their policies as well as follow through the credit insurance cycle from Client Application, Risk Assessment, Policy Management to Debt collection and Recovery.

Both companies are very keen on increasing the penetration and awareness of Trade Credit Insurance in Serbia and helping companies benefit from the stability and expansion potential credit insurance provides.

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Aman Union’s 6th Annual General Meeting

LCI attended the 6th Annual Aman Union Meeting which took place in Muscat, Oman between the 7th and 9th of December 2015. The meeting was held at the InterContinental Hotel in Muscat. This year’s meeting was hosted by the ECGA of Oman.

The Meeting addressed topics of common interests amongst the members and served as a great opportunity to share member knowledge and expertise in the industry. It also marked significant milestone in the development of Aman Union with the establishment of a dedicated Secretariat. In addition to the Union members, experts from various industries such as credit and political risk insurance, reinsurance, banking and credit information, were in attendance.

LCI was represented by its General Manager, Karim Nasrallah; Advisor to the Board, Michael McPhilimey and Risk Assessment and Credit Information Manager, Bahaa Merhi.

The topics presented covered ideas relevant to the commercial and non-commercial risk insurance industry in member countries and the entire MENA region. The meeting was made up of multiple presentations as well as panels that tackled the following areas of discussion:

  • Awareness of insuring trade default risk in the market
  • The Role of Risk Management in ECAs
  • Managing Policyholder Engagement into the Recovery Process
  • Risk Appetite for MENA Region Markets: Credit & PRI Trends in 2015
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