The New Zealand Export Credit Office (NZECO) and its Danish counterpart, Eksport Kredit Fonden (EKF) have signed a reciprocal reinsurance agreement.
The agreement is intended to support projects that source goods and services from both New Zealand and Denmark, including in the renewable energy, food processing and agritech sectors.
“The globalisation of supply chains and multi-sourced delivery of international projects provides opportunities for New Zealand companies that provide niche or bespoke goods and services. This agreement is intended to facilitate increased opportunities for New Zealand and Danish firms to collaborate together on international projects”, says Chris Chapman, Head of NZECO.
Under a reinsurance arrangement a lead export credit agency underwrites political and commercial risks on an export contract, and then reinsures a portion of this contract to another export credit agency whose exporter is a subcontractor.
For example, EKF may underwrite the financing of a multimillion project in China where a Danish exporter is the Primary Contractor. If a New Zealand exporter provides goods and services as a subcontractor to this project then NZECO can reinsure this portion.
NZECO has established other reinsurance arrangements with Australia's Export Finance and Insurance Corporation (EFIC), and the multilateral agency Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC).
NZECO continues to explore other reinsurance opportunities, in order to help New Zealand exporters access larger contracts and for the NZECO to manage its prudential limits or risk concentrations.
