On 24 July 2015, Luxembourg Export Credit Agency (ODL) presented the results of its 2014 operations and stated its intention to implement a new strategy in 2015 to offer a range of products which better reflects the needs of exporting companies.
The agency, which was established in 1961, functions under the authority of the Ministry of Finance and works with the Luxembourgish state to act as a one stop shop for export companies in the Grand Duchy. Last year marked the appointment of a new President, Arsène Jacoby, to the company, who took office on 1 June 2014.
ODL stated that 2014 was a year of challenges for the corporate clients of the agency, as global growth did not live up to full expectations. National economies failed to take the necessary impetus to finally transcend the economic crisis and support a favourable climate for international contracts. The agency claimed that key figures for the year 2014 reflected this, with ODL recording a consolidated loss of €4.6 million for the financial year.
New insured transactions fell from €775,622,210.68 in 2013 to €543,925,224.47 in 2014. Premiums incurred a dramatic reduction from €13,922,357.32 in 2013 to €3,077,703.35 in 2014, but net earned reinsurance premiums rose from €3,471,339.05 in 2013 to €3,537,870.88 the following year.
Real commitments were cited as standing at €884,863,514.75 on 31 December 2014 in contrast to €997,560,687.92 the previous year. Benefits paid increased from €2,482,270.05 to €8,088,843.54 between 2013 and 2014. Recovered compensation also grew from €379,472.90 in 2013 to €855,558.83 in 2014.
With regards to the field of credit insurance, ODL reported that the financial year 2014 was marked by a significant reduction in hedged transactions due to the termination of policies for commercial contracts which were smaller in volume than previous years; and a significant increase in compensation due to an aggregate of small claims in the field of coinsurance and reinsurance, a number of claims made from several debtors in Latin America, and a high rate of late payment in the financing sector in India.
ODL stated that in order to continue to support struggling exporting companies in countries where the private credit insurance market has reduced or completely eliminated coverage, the agency will be maintaining its 'Top Up Individual' policy, especially for Greece. The 'Top Up' insurance is managed by the ODL on behalf of the State, and represents an additional cover to private credit insurance.
In addition, the ODL announced in 2014 that it would be offering a new insurance product for banks concerning an insurance of bank guarantee commitments, from 1 January 2015. This product was reported to meet the demand of Luxembourg's banks and exporters and ODL cited the product as promising for the year 2015.
ODL reported that in 2015 it decided to also focus on the development of new insurance products for banks financing Luxembourgish companies. To this end, contacts have been established with the European Investment Bank (EIB).
The COPEL (Committee for the Promotion of Luxembourg exports) component was presented by André Hansen from the Ministry of the Economy. The componenet related to export promotion, either in the form of partial reimbursement of costs related to the promotion, training in export and participation in trade fairs, or as a repayable advance under certain conditions, amounted to €2,227,129.80, of which 80% formed part of expenses related to participation in fairs. Of the 646 applications submitted, 32 submitted negative feedback. On 31 december 2014, valid promises amounted to €1,222,178.11. Thus, 163 companies received support from COPEL, of which 44% reported a staff of fewer than 10 people, 32% had a workforce of between 11 and 50 people and 24% represented a workforce of greater than 50 people.
ODL also stated that since 2014 it has been offering a new COPEL support platform with an annual cap of €10,000, specifically aimed at newly established companies in Luxembourg. It was reportedly found that 10% of companies which received financial support in 2014 were start-up businesses.
Photo by Ministry of Finance (L-R: André Hansen, President of COPEL ; Arsène Jacoby, President of Office du Ducroire)
