NEXI doubles up with UK private insurer to provide export reinsurance

The Japanese ECA is expanding its cover in the UK with the Mitsui Sumitomo Insurance Company

Japanese export credit agency (ECA), Nippon Export and Investment Insurance (NEXI), will partner with the London based Mitsui Sumitomo Insurance Europe, to provide reinsurance services to Japanese firms operating in the UK. The scheme can be expected to reduce premiums at a time of uncertainty for Japanese companies in the UK in light of the upcoming referendum on membership of the European Union.

As part of the contract, which is active from 1 May 2016, the Mitsui Sumitomo Insurance Company, will act as the primary insurer while NEXI will provide 100% reinsurance cover. The product will serve exports and domestic and intermediary trade contracts up to one year, covering bankruptcy and defaults with an indemnity ratio of 90%.

In a statement NEXI said: “The partnership with the UK insurer will enable NEXI to meet the insurance needs of Japanese companies operating in the UK. NEXI will actively support Japanese businesses operating overseas by providing its stable underwriting capacity based on the fronting program.”

If the seller is unable to collect payment due to the buyer going bankrupt, for example, each will cover half of the loss. Such ‘fronting’ services are already available in Hong Kong, Singapore and Thailand. And since 2014, NEXI has operated a similar policy with France’s ECA, Coface, which was the first time the state-owned entity had partnered with a private sector insurer.

NEXI intends on expanding its coverage in the UK – a strategic entry point for Japanese firms exporting within the single market. As Prime Minister Shinto Abe said during his visit to the UK this month: “Many Japanese companies set up their operations in the UK precisely because the UK is a gateway to the EU.”

There are about 1,000 Japanese companies operating in the UK which is the second largest number in Europe after Germany. They employ around 160,000 people, more than anywhere else in the EU, and account for 30% of all the workers employed by Japanese enterprises in Europe.

Mitsui Sumitomo Insurance Europe is a natural partner for NEXI with its national interest remit. The firm, which acquired Amlin late last year, is a partner of Lloyds of London and a regional subsidiary of Mitsui Sumitomo Insurance – Japan’s largest non-life insurer. The firm was founded in Japan in 1615 with the founding mission that business “should benefit the country and the community as well as Sumitomo.”