The IACPM and the ITFA (International Trade and Forfaiting Association) partnered in 2023 to conduct a periodic global survey on private Credit and Political Risk Insurance (CPRI), excluding ECA cover, looking at banks’ own balance-sheet management.
Conducted every other year, the survey focused on current practices for CPRI policies eligible as Basel-compliant financial guarantees and used by banks as a credit risk mitigation (CRM) tool to release capital and/or increase lending capacity at single loan/single borrower level. The survey covers insurance protections provided by private firms, and therefore excludes government backed protections like ECA covers.
Globally, 48 IACPM & ITFA member firms participated in this survey, including 45 banks and three multilateral development banks. Ninety percent of those contributing to the survey are current users of CPRI to mitigate risk in the credit portfolio.
Survey results demonstrate the high relative importance of private Credit and Political Risk Insurance (CPRI) as a tool to mitigate credit risk across all regions and for all banks regardless of size. This relative importance of CPRI is reflected in the increasing total insured exposure among participating banks which has grown by 35% over the past four years from US$130 Billion in 2019 to US$167 Billion in 2022. The insured exposure facilitates a total of US$360 Billion in credit transactions across all asset classes, including corporate loans, asset-based finance, and trade finance, but increasingly also financing related to SMEs. In 2022, three-quarters (73%) of the total insured exposure had been contracted by European firms (EU 60% and non-EU 13%).
The increase of lending capacity is the main goal for banks globally when using CPRI across any asset class. Therefore, CPRI fulfills a unique function as a Credit Risk Mitigant for banks to support core lending to the real economy, as well as specialized finance.
To receive the full survey results, please inquire to find out if your firm participated.