African Trade Insurance Agency (ATI)

The African Trade Insurance Agency (ATI) is a multilateral African insurer of political and credit risk, owned by its member states. A treaty adopted in May 2000 at Grand Baie, Mauritius, by a handful of East and Southern African states, with World Bank support, created the African Trade Insurance Agency in 2001, headquartered in Nairobi. ATI is a multilateral insurer: its shareholders are mostly African states, joined over the years by a few financial institutions and export credit agencies, and it covers political risk, trade credit and surety on the continent. Its product list looks like that of an underwriter in the London CPRI (credit and political risk insurance) market: confiscation, expropriation, currency inconvertibility and transfer restriction, political violence, breach of contract by a public entity, nonpayment by a buyer or a borrower. The difference lies in its status. When a member state causes the loss, ATI pays the insured and then turns to that state, which is also its shareholder and which agreed, through the treaty, not to treat it as an ordinary creditor. That preferred creditor status is what gives its paper value. A government tempted to block dividends from a power plant thinks twice when the policy was issued by an institution it belongs to, and that it will need for its next project. ATI often writes on a coinsurance basis alongside the private market and cedes part of its exposure to reinsurers, which lets it show larger lines than it would retain on its own. Banks also find a capital argument in it for their cross-border loans, to be discussed with their regulator case by case. The practitioner's caveat is the map. The deterrent effect works fully only in member countries, and membership does not cover the whole continent: outside that map, ATI becomes one insurer among others, and the risk is benchmarked against what MIGA (Multilateral Investment Guarantee Agency) or Lloyd's syndicates offer.