The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) and the Saudi Eximbank have signed two reinsurance agreements.

Under the agreements, the Islamic Development Group member will provide reinsurance cover under its Documentary Credit Insurance Policy (DCIP) for commercial and political letter of credit (L/C) risks for the Saudi export credit agency.

L/C guarantees

The DCIP protects against losses arising from the non-payment at the due date of an import L/C due to commercial or country risks.

The policy protects up to 70 per cent of Saudi Eximbank's exposure to the risk of non-payment of an irrevocable L/C issued by the importer's bank.

L/C growth potential

The DCIP will help to protect Saudi Eximbank's balance sheet against non-payment of L/Cs, which in turn should enable the export credit agency to safely and securely grow its L/C confirmation business.

The agreements aim to support export development and foreign direct investment in Saudi Arabia.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.