CPRI market remains resilient – WTW

The credit and political risk insurance (CPRI) market remains resilient amid global uncertainty, according to a new study from WTW.

The CPRI market has access to more capacity than ever before, with notional maximum capacity increasing across the board, according to WTW’s Credit and Political Risk Insurance Capacity Survey and Market Update, released Thursday.

In January, the survey polled 58 insurers across Lloyd’s and company markets. Of those surveyed, 49 expanded their appetites and capabilities as of Jan. 31. The survey found that there has been a substantial increase in total notional CPRI capacity with:

Approximately US$4 billion contract frustration total notional capacity available per transaction, up from US$3.4 billion at the same time last year – a 20% increase
A 17% increase in transactional trade credit to US$3 billion
A 37% increase for non-trade credit to US$2.2 billion
Overall political risk capacity up by nearly 15% to almost US$4 billion
Increase in capacity across all tenors generally, with particular growth in contract frustration, where notional capacity for 15-year tenors is US$2.5 billion, up from US$1.8 billion the previous year – a 37% increase

When asked about exposures, 32 CPRI insurers named their top three countries by exposure, with the US ranking first, the UK second, and Nigeria third. All respondents listed their top industry exposures, which were, in descending order, financial institution, sovereign, and oil and gas.

“The fact that we are seeing a continued and steady increase in capacity within the CPRI market denotes its stability as well as the market’s confidence in this sector,” said Emma Coffin, head of broking, Global Financial Solutions at WTW. “Each of the three main CPRI perils – contract frustration, transactional perils and political risk – have experienced growth over the past two decades through various market cycles, across the COVID-19 pandemic and the resulting lockdowns.

“Oil and gas has declined from first place to third place in respect of top industry exposures, and this survey also highlights a marked rise in renewables and ESG with a positive shift in the number of markets able to support clients with challenging financing structures,” Coffin said. “We foresee all these positive trends continuing through 2023.”

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