The Export-Import Bank of the United States (EXIM), the official US export credit agency (ECA) and a wholly owned federal government corporation, has revealed that it intends to expand on the pilot $1 billion reinsurance program it launched in April 2018.
EXIM has now begun the process of looking for a contractor to secure a larger program to build off the success of its pilot and reduce risk in its portfolio.
The purpose of EXIM is to support U.S. exports by providing export financing through its loan, guarantee, and insurance programs where financing is unavailable through the private sector, or where support is necessary to level the competitive playing field for US exporters.
The program represented the largest public-private risk-sharing arrangement for a US government credit agency, and the maximum allowable coverage permitted under EXIM’s charter.
EXIM is not obligated to operate any form of reinsurance program, but recognises the potential for reinsurance coverage to help encourage private capital investment in its financings, as well as to support the management of its portfolio.
The Reinsurance Association of America (RAA) expressed support for EXIM’s plans to expand its reinsurance risk transfer pilot program, noting that government risk transfer programs are fundamental in helping to protect taxpayers from the financial risk in these programs.
As part of its work to support long-term EXIM reauthorization legislation in 2019, the RAA worked with EXIM officials, Members of Congress and other industry stakeholders to encourage EXIM to use its underlying statutory authority to expand its risk transfer pilot program.
“The RAA has long worked with various government agencies, including the National Flood Insurance Program (NFIP), the Export-Import Bank of the U.S. (EXIM), and government-sponsored enterprises (GSEs), including Fannie Mae and Freddie Mac) to consider transferring risk to the private sector,” said Frank Nutter, President of the RAA.
“The RAA applauds EXIM’s decision to further expand their reinsurance risk transfer program to the private sector. Risk transfer programs improve Federal program risk analysis and management, while easing the financial burden for risk now borne by the Federal government and ultimately, the American taxpayer.”
