Reinsuring Export Credit Agencies: What Drives Demand?

Abstract

In this study, we assess factors influencing the demand for private reinsurance by public export credit agencies and export-import banks (ECAs), focusing on their specific characteristics. ECAs play a crucial role in bridging market gaps by offering trade credit insurance and investment guarantees, as well as equity and export financing. Together with private actors they were supporting more than USD 2.5 trillion of payment risk protection for trade and foreign direct investment (FDI) in 2023. Our findings show a strong relationship between reinsurance demand and the intervention principle, full faith and credit, managerial discretion, services of risk transfer and business diversification. The influence of regulation and financial strength is less clear. Our findings lead to the development of a framework outlining the contextual factors affecting the demand for reinsurance of public export credit agencies. This exploratory study contributes to existing theories of reinsurance demand and integrates practical feedback into the theoretical framework. Furthermore, it provides important recommendations for policymakers, public financial institutions and private actors supporting global trade and FDI.