Tinubu Square, a leading provider of credit insurance, surety and trade finance solutions is predicting that with changes in the risk landscape, increasingly volatile markets, and the continued threat of company insolvencies, the credit insurance industry will face its biggest challenges for at least the last ten years as we move into 2019.
This stark warning comes on the back of increased pressure on portfolio management coupled with new strategies that are being developed around insurance products, risk assessments and risk monitoring. Tinubu expects demand for greater governance and transparency to grow in 2019, particularly in the assessment of exposure across different business functions and by industry.
The company points out that whilst reinsurance capacity has been plentiful over the last five years, this is likely to change with shifts in local and global economic markets. This will result in less capacity, starting in 2020, and the need for proven and sustainable models that have already embarked on digital transformation to lower costs and improve customer satisfaction. Alternatively, reinsurers will favour well-governed and transparent innovative models if they can provide long-term value creation and cost-efficiency.
“Well established reinsurers are looking for insurance models that notably reduce the transfer of value to distribution and intermediaries,” said Jérôme Pezé, CEO and founder at Tinubu Square. “These models will be the ones that continue to attract capacity.”
Whilst insurance companies need to shift their focus to manage new pressures, there are also positive opportunities. Tinubu Square has identified an increase in risk pricing for the New Year and believes that the appetite of corporate organisations and banks for risk transfer offers new business prospects to insurers who are able to respond.
“We have had five years of soft pricing and a tangible slow-down in credit insurance premium growth, and during this time corporates have often reduced their credit risk management investments. We foresee that in 2019, this will change, and companies will actually start to ask for insurance policies and services that suit their specific needs. This is why insurers need to be ready with reactive, transparent and flexible products,” Jérôme Pezé continued.
Two other significant challenges for the trade credit insurance industry will be to meet government demands for better foreign trade support and the need to be more effectively integrated with the extended ecosystem. This includes receivables finance, new trade platforms, supply chain and technologies such as blockchain.
“Whilst it is still quite early in the digital transformation lifecycle for the insurance industry, those who are already engaged in the process will be winners in 2019. As the demands of customers for more bespoke insurance services grows, the losers will be those who have not embraced digitalisation at all, or have simply paid lip-service to it. The loyalty of investors, and worse, customers, will be seriously put to the test.” concluded Jérôme Pezé.
Oil set for steady gains as economies shake off pandemic blues – Reuters poll
By Sumita Layek and Bharat Gautam
(Reuters) – Oil prices will stage a steady recovery this year as vaccines reach more people and speed an economic revival, with further impetus coming from stimulus and output discipline by top crude producers, a Reuters poll showed on Friday.
The survey of 55 participants forecast Brent crude would average $59.07 per barrel in 2021, up from last month’s $54.47 forecast.
Brent has averaged around $58.80 so far this year.
“Travel and leisure activity look set to catch up to buoyant manufacturing activity due to the mix of stimulus, confidence, vaccines, and more targeted pandemic measures,” said Norbert Ruecker of Julius Baer.
“Against these demand dynamics, the supply side is unlikely to catch up on time, leaving the oil market in tightening mode for months to come.”
Of the 41 respondents who participated in both the February and January polls, 32 raised their forecasts.
Most analysts said the Organization of Petroleum Exporting Countries and allies (OPEC+) may ease current output curbs when they meet on March 4, but would still agree to maintain supply discipline.
“With OPEC+ endeavouring to keep global oil production below demand, inventories should continue falling this year and allow prices to rise further,” said UBS analyst Giovanni Staunovo.
Oil demand was seen growing by 5-7 million barrels per day in 2021, as per the poll.
However, experts said any deterioration in the COVID-19 situation and the possible lifting of U.S. sanctions on Iran could hold back oil’s recovery.
The poll forecast U.S. crude to average $55.93 per barrel in 2021 versus January’s $51.42 consensus.
Analysts expect U.S. production to rise moderately this year, although new measures from U.S. President Joe Biden to tame the oil sector could curb output in the long run.
“A structural shift away from fossil fuels” may prevent oil from returning to the highs of previous decades, said Economist Intelligence Unit analyst Cailin Birch.
(Reporting by Sumita Layek and Bharat Govind Gautam in Bengaluru; Editing by Arpan Varghese, Noah Browning and Barbara Lewis)
Japan’s jobless rate seen up in January due to COVID-19 emergency measures – Reuters poll
TOKYO (Reuters) – Japan’s jobless rate is expected to have edged up in January as service industry businesses suffered renewed restrictions on movement to fight spread of the coronavirus in some areas, including Tokyo, a Reuters poll of economists showed on Friday.
While industrial production activity picked up in Japan, emergency curbs rolled out last month such as asking restaurants to close early and suspending the national travel campaign hurt the jobs market, analysts said.
The nation’s unemployment rate likely rose 3.0% in January, up from 2.9% in December, the poll of 15 economists found.
The jobs-to-applicants ratio, a gauge of the availability of jobs, was seen at 1.06 in January, unchanged from December, but stayed near September’s seven-year low of 1.03, the poll showed.
“As the impact from the coronavirus pandemic prolongs, it is hard for firms, especially the service sector, to expect their business profits to improve,” said Yusuke Shimoda, senior economist at Japan Research Institute.
“So, their willingness to hire employees appear to be subdued and it is difficult to see the jobs market recovering soon.”
Some analysts also said the government’s steps to support employment and existing labour shortages will likely prevent the jobless rate from worsening sharply.
The government will announce the labour market data at 8:30 a.m. Japan time on Tuesday (2330 GMT Monday).
Analysts expect the economy to contract in the current quarter due to the emergency measures to counter the spread of the disease.
(Reporting by Kaori Kaneko; Editing by Simon Cameron-Moore)
China’s economy could grow 8-9% this year from low base in 2020 – central bank adviser
BEIJING (Reuters) – China’s gross domestic product (GDP) could expand 8-9% in 2021 as it continues to rebound from the COVID-19 pandemic, Liu Shijin, a policy adviser to the People’s Bank of China, said on Friday.
This speed of recovery would not mean China has returned to a “high-growth” period, said Liu, as it would be from a low base in 2020, when China’s economy grew 2.3%.
Analysts from HSBC this week forecast that China would grow 8.5% this year, leading the global economic recovery from the pandemic.
If 2020 and 2021’s average GDP growth is around 5%, this would be a “not bad” outcome, said Liu, speaking at an online conference.
China is set to release a government work report on March 5 which typically includes a GDP growth target for the year.
Last year’s report did not include one due to uncertainties caused by the coronavirus. Reuters previously reported that 2021’s report will also not set a target.
(Reporting by Gabriel Crossley and Muyu Xu; Editing by Sam Holmes and Ana Nicolaci da Costa)
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