NEXI’s transformation to a stock company and its future

During the 2015 ordinary session of the National Diet of Japan, the Act for Partial Revision of the Trade and Investment Insurance Act has been enacted. Under the Act, the Japanese government is to take necessary measures to change Nippon Export and Investment Insurance (NEXI) into a special stock company fully funded by the government, abolish the Trade Reinsurance Special Account of the Government, and have NEXI succeed to the assets and liabilities of the Account after NEXI changes into a special stock company, to be implemented in April 2017.

The revised act is to change NEXI into a stock company in order to enhance its governance, and also to make the government hold all the issued shares of the organisation, considering the characteristics of trade insurance which will cover risks not covered by private insurers.

The revised act is to abolish the Trade Reinsurance Special Account of the Government as a reinsurer for NEXI, and to have NEXI succeed to the assets and liabilities of the account with the view to centralising accounts related to trade insurance, thereby streamlining the government’s administrative and fiscal system.

In addition, aiming to ensure the payment of insurance claims even in case of an emergency, e.g., frequent occurrences of insured events, the revised act stipulates that the government shall take necessary financial measures when it is deemed difficult for NEXI to procure funds necessary for conducting business operations.

The revised act requires the government to stipulate the criteria for insurance coverage for NEXI, which is an organisation to implement the national policies including the fields to be focused on, in order to reflect the government policies in the coverage of trade insurance. It also stipulates that the government may deliver opinions to NEXI concerning certain significant projects.

The new NEXI will continue to promote international transactions by Japanese companies including infrastructure export by improving its managerial flexibility, efficiency and agility while maintaining unity with the government in terms of trade policy.

In May 2015, Prime Minister Shinzo Abe announced the Partnership for Quality Infrastructure to accommodate huge demand for infrastructure in Asia by providing highquality investments. It was announced that Japan, to strengthen its collaborative relationship with Asian Development Bank (ADB), will provide approximately $110 billion (about a 30% increase) for “quality infrastructure investment” in Asia over the next five years. This initiative is to play a catalytic role in further mobilising financial resources and know-how from the private sector across the globe to Asia, a region full of potential, in such a way that promotes infrastructure investment that the region needs, both in terms of quantity and quality.

Also in May 2016, Prime Minister Abe delivered an initiative titled Expanded Partnership for Quality Infrastructure. Through the initiative, Japan will encourage exports of its high-quality infrastructure and construct win-win relationships that contribute both to domestic economic growth and to economic development of partner countries. To this end, Japan will aim to provide, among all, financing of approximately $200 billion in the next five years to be allocated to infrastructure projects across the world, including those for natural resources, energy, etc. In addition, Japan will further improve related measures for promotion of quality infrastructure investment.

Following the announcement, NEXI started various capability enhancement measures including creation of insurance for subsovereign transactions. NEXI also made efforts to help Japanese companies to increase competitiveness in the overseas market by actively supporting their infrastructure projects including power and telecommunications and agriculture.

To survive in the international competition in the ongoing economic globalisation, public and private sectors must continue to work together. NEXI will continue to provide quality insurance services that meet diverse business needs.

Kazuhiko Bando

Chairman and CEO - NEXI